With the official start of the hurricane season being less than a week away, the memories of the aftermath of last years hurricanes leave a raw emotion in most of the Caribbean’s yacht owner’s hearts. Too many yacht owners had seen their pride and joy devastated by the named tropical storms that have flattened the west Atlantic Islands, without as much as a chance to do something to stop their loss.

Hurricane Irma Florida 2017

History has shown an ugly change in trend that was brought on by Hurricane Irma on the 6th of September 2017. A trend that revealed there being no such thing as a ‘hurricane hole’ anymore and that no matter how much preparation you do ahead of the storms, the likeliness of that being a waste of time purely because of the vast magnitude of the storm, is ever increasing.

Prior to 2017, the yacht insurance industry has had a profitable and secure run in the Caribbean. Storms Katrina and Ivan were the two main hurricanes that made their dent in the big yacht insurer’s pockets because of their unique pathways through the Caribbean Sea. What we have seen different in 2017, is that Hurricane Irma formed a lot further out into the Atlantic and therefore had a much longer opportunity to gain strength and power with the warm Sahara winds it brought across the Atlantic Ocean.

Yachts damaged after storms

However what most people don’t consider is that the insurers have very robust structures in place to ensure that they don’t fail. The yachts that are insured in Caribbean and Florida are bundled into the same pools and categories as yachts all across the world. The principle behind insurance is that the premiums of the many cover the losses of the few. This principle means that the less claims are made in a ‘pool’, the lower the premiums of all the policy holders will be at their next renewal and the more secure an insurance company is against future catastrophes. And vice-versa.

The insurance industry has stayed strong and solvent after the 2017 Hurricane Season through reinsurance of their own policies. In simple terms, this is the insurance policy that an insurance company takes out to protect them against making financial loss, albeit at a reduction of their own forecasted profits.

Chart showing Hurricane Formation

What hasn’t stayed consistent is the way that yacht owners approach yacht insurance and yachting in general, in the Caribbean and East coast of the USA. Premiums are going up, underwriters are enforcing more rigorous Hurricane Preparedness Plans and fewer insurers are writing risks in the area; leaving yacht owners uncertain of what is going on in the insurance world.

Yacht owners are now facing a hard decision. Do they keep cruising in the Hurricane infested waters or do they take their cruising back into the Mediterranean or Eastern Pacific. Perhaps the solution is for yacht owners to stay on the ball with their hurricane plans, and opt to move their yachts out of the way of any oncoming hurricanes. Results from September 2017 have thus far shown that those yachts running south towards Trinidad and Tobago or north towards the Tri-state area of New York, New Jersey & Connecticut, are nearly always completely evading the risk of being caught out in a hurricane.

 

Atlantic storms path Caribbean

A parting lesson that can be learnt is for yacht owners to diligently review their policies. Pay specific attention to the warranties and conditions implied by the insurers and make sure that they are complied with. These will all differ amongst various sailing yacht, motor yacht and general marine insurers, therefore it is vital to make sure that the policy you have is tailored to your needs. It’s important to not go for the cheapest policy, but rather obtain a comparison of a variety of policies that gives you the most coverage for a reasonable and affordable price.