THE RISE OF THE INSURANCE PREMIUM… … AND WHAT YOU CAN DO ABOUT IT
Q What differentiates marine from other forms of insurance?
According to our interviewees, marine insurance is different to home or car insurance in several key ways. Its policies are usually more tailored and individual; they are often based on agreed values rather than market values; and they tend to involve face-to-face client relationships rather than automated online aggregators. But the most critical difference is that a boat is a relatively expensive and highly mobile asset with a very dynamic risk profile. Jeremy Entwistle from GJW Direct explains: “A house, though valuable, is a static entity; and a car has the benefit of user-friendly road networks and signage to help moderate risk. But whether in harbour or at sea, a boat brings with it the potential for big losses from a wide range of risks, including fire, theft, groundings, sinkage, break-in, collision, poor maintenance, extreme weather events and machinery breakdown. It’s very different and, in some cases, more difficult to write the risk on.”
Q But are the underlying principles the same?
Yes, the calculations and processes are much the same. “An underwriter assesses the risk and applies a rate to that risk against the sum insured,” says Steve Risk from Coleman Marine. “That results in the premium. The premium is the income the insurer will take, minus any that the broker might be earning, and the insurer then applies the premium against any claim activity. If there is a premium of
