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2024 Update coming soon Published- Feb 2021 Number Of Pages -118
Business risks are constantly changing around the globe and maritime risks are no exception to it. With the advent of new technology, advanced systems, the maritime insurance industry has its risk management work cut out for it.
Among the common misconception among yacht owners is the lack of awareness. Most of the owners believe, it is as simple as buying a car insurance while completely ignoring the multi-faceted requirements.
There has also been a concern among insurance companies that the yacht owners often don’t read the entire policy. This often results in a lot of confusion and argument in the event of insurance claim. A lot of yacht insurance policies, globally are purchased by word of mouth.
Yachts are becomingly increasingly popular, and are an international status symbol that many aspire to own. Yacht insurance is accordingly a growing market. In most of the cases it’s the accidents followed by fire mishaps which result in an insurance claim.
In 2017, there were about ~750 yachts on order which has remained more or less constant in the past 5 years. Expedition yachts have continued their growth story in recent years whereas the sail yachts have been declining. As of May 2018, ~60% of yachts are made to order whereas the rest are speculative.
In the superyacht segment,as of Feb 2021, ~89% of global Superyacht fleet is under 50M in length and average present market value is $16.2 Million
The superyacht insurance market had excess capacity which drove down prices. Combined with losses due to natural disasters such as Hurricane Irma and Maria , the market changed rapidly with increasing premiums and the exit of multiple players
US is still the largest market worldwide, yacht manufacturers are now also investing in new markets globally, especially in Asia. The healthy economy outlook of US is expected to become even better and Russian market tiding over recession will also provide a boost to this market.
Marine tourism and peer to peer boat rental will also play a key role in deciding the outlook of this market over the next few years. Super yachts occupy a sizable chunk of this market by value, since their average cost is roughly 10-15 times of an average 26` boat. The travel location and number of crews on a superyacht has always had a major role in determining the premium of insurance policy.
Boats might seem an odd choice for the peer-to-peer boat rental market but there’s a growing interest in this space. They use it to pay off any debts related to boat purchase and there is a growing opportunity to rent them. Insurance and other guarantees are necessary of course, and it’s thanks to major insurance players that the boat owners are able to insure up to a million dollars in liability coverage, for the company to reassure any frisky boat owners or users.
The global yacht insurance market size is estimated at ~$8.4 Billion in 2021, growing at 4% CAGR till 2026
Due to increased shipyard times and decreased man power because of COVID-19, the concerns regarding damages have increased for shipyard managers and insuring companies.The shipyards are also running at reduced staff capacity which has increased the time taken for repairs to increase.
In the superyacht segment, Hiscox MGA and other insurers are contemplating adding manning requirements to policies before issuing them but has met negative feedback by certain industry factions such as crew members
In 2017, there were over 20 major yacht insurance companies in the global insurance market with new entrants every year. The online insurance wave caught up with the yachting industry post recession.GJW Direct, one of the leading boat insurer of UK launched its online portal in 2012.The insurance companies are facing challenges related to keeping insurance premium in check after frequent hurricanes in the US.
The Superyacht insurance market has seen changes in the past years with premiums now increasing and many players have exited the market. Many insurance firms have combined with other players globally or in specific regions, for example: Pantaneius teamed up with Oversea Insurance Agency in USA
In July 2019, Chubb had brought modification In its marine insurance by offering instant shipment insurance on the network trade platform (NTP) via its value-added service (VAS), in order to insure a wide range of goods including commercial containerized cargo, parcel freight, and other household goods. It is currently available in Australia, South Korea and Singapore.
In 2017, Lloyd collaborated with yech company Windward to make use of data analytics to track and manage an insured vessel flee.It enables the underwriters to identify when vessels are exposed to high-risk situations.It also provides tools that incorporate premise for the accident and allow detailed analysis of claims.
North America
The North American market, particularly the USA, will be one of the prime markets for (Yacht Insurance Market) due to the nature of industrial automation in the region, high consumer spending compared to other regions, and the growth of various industries, mainly AI, along with constant technological advancements. The GDP of the USA is one of the largest in the world, and it is home to various industries such as Pharmaceuticals, Aerospace, and Technology. The average consumer spending in the region was $72K in 2023, and this is set to increase over the forecast period. Industries are focused on industrial automation and increasing efficiency in the region. This will be facilitated by the growth in IoT and AI across the board. Due to tensions in geopolitics, much manufacturing is set to shift towards the USA and Mexico, away from China. This shift will include industries such as semiconductors and automotive.
Europe
The European market, particularly Western Europe, is another prime market for (Yacht Insurance Market) due to the strong economic conditions in the region, bolstered by robust systems that support sustained growth. This includes research and development of new technologies, constant innovation, and developments across various industries that promote regional growth. Investments are being made to develop and improve existing infrastructure, enabling various industries to thrive. In Western Europe, the margins for (Yacht Insurance Market) are higher than in other parts of the world due to regional supply and demand dynamics. Average consumer spending in the region was lower than in the USA in 2023, but it is expected to increase over the forecast period.
Eastern Europe is anticipated to experience a higher growth rate compared to Western Europe, as significant shifts in manufacturing and development are taking place in countries like Poland and Hungary. However, the Russia-Ukraine war is currently disrupting growth in this region, with the lack of an immediate resolution negatively impacting growth and creating instability in neighboring areas. Despite these challenges, technological hubs are emerging in Eastern Europe, driven by lower labor costs and a strong supply of technological capabilities compared to Western Europe.
There is a significant boom in manufacturing within Europe, especially in the semiconductor industry, which is expected to influence other industries. Major improvements in the development of sectors such as renewable energy, industrial automation, automotive manufacturing, battery manufacturing and recycling, and AI are poised to promote the growth of (Yacht Insurance Market) in the region.
Asia
Asia will continue to be the global manufacturing hub for (Yacht Insurance Market) over the forecast period with China dominating the manufacturing. However, there will be a shift in manufacturing towards other Asian countries such as India and Vietnam. The technological developments will come from China, Japan, South Korea, and India for the region. There is a trend to improve the efficiency as well as the quality of goods and services to keep up with the standards that are present internationally as well as win the fight in terms of pricing in this region. The demand in this region will also be driven by infrastructural developments that will take place over the forecast period to improve the output for various industries in different countries.
There will be higher growth in the Middle East as investments fall into place to improve their standing in various industries away from petroleum. Plans such as Saudi Arabia Vision 2030, Qatar Vision 2030, and Abu Dhabi 2030 will cause developments across multiple industries in the region. There is a focus on improving the manufacturing sector as well as the knowledge-based services to cater to the needs of the region and the rest of the world. Due to the shifting nature of fossil fuels, the region will be ready with multiple other revenue sources by the time comes, though fossil fuels are not going away any time soon.
Africa
Africa is expected to see the largest growth in (Yacht Insurance Market) over the forecast period, as the region prepares to advance across multiple fronts. This growth aligns with the surge of investments targeting key sectors such as agriculture, mining, financial services, manufacturing, logistics, automotive, and healthcare. These investments are poised to stimulate overall regional growth, creating ripple effects across other industries as consumer spending increases, access to products improves, and product offerings expand. This development is supported by both established companies and startups in the region, with assistance from various charitable organizations. Additionally, the presence of a young workforce will address various existing regional challenges. There has been an improvement in political stability, which has attracted and will continue to attract more foreign investments. Initiatives like the African Continental Free Trade Area (AfCFTA) are set to facilitate the easier movement of goods and services within the region, further enhancing the economic landscape.
RoW
Latin America and the Oceania region will showcase growth over the forecast period in (Yacht Insurance Market). In Latin America, the focus in the forecast period will be to improve their manufacturing capabilities which is supported by foreign investments in the region. This will be across industries mainly automotive and medical devices. There will also be an increase in mining activities over the forecast period in this region. The area is ripe for industrial automation to enable improvements in manufacturing across different industries and efficiency improvements. This will lead to growth of other industries in the region.
