How could the Russian sanctions effect you?
The matter of fact is that no one truly knows what the knock-on effect of the Russian sanctions are to the yachting industry. It’s easy to think that Russian owned superyachts not being able to cruise certain waters of the world is the only outcome, however consideration needs to be paid towards the support industries and workers on these superyachts, along with what insurers are left with debating.
A large proportion of the world’s superyachts are owned by Russian Oligarchs. This means that they are no longer allowed to cruise European waters, and further to that, there are restrictions on professional superyacht crews from working on these yachts. Earning a salary linked to a sanctioned entity is in direct conflict of sanction laws, and therefore a lot of captains and crew will have to be repatriated back home. This is likely to cause a sudden influx of crew into the market, where it is already tough to land more than a seasonal job. The likely impact of this increased competition in the job market will be a reduction of crew wages and a potentially higher skilled workforce operating these superyachts as there won’t be any room for employing under skilled professionals.
The same ramifications will likely apply to the support industries, such as marina worked, refitters, surveyors and engineers. They will have less projects to work on, so they too will have to make their services more competitive by either increasing their value add, or decreasing their fee bills.
Insurers on the other hand have a more complex conundrum to navigate. There almost certainly will be yachts that have had sanctions flagged against their owners, where there are ongoing insurance claims. The Sanctions laws prevent any further payments being made on these claims, as well as preventing insurers from collecting any more premium. Whether or not this will be lifted in the near future is unknown, so there are a lot of insurers who will be setting aside financial reserves to deal with the long exposure to these types of claims. After all, if the sanctions get lifted, then the contractual obligations on behalf of the insurers will come back into force.
Where the sanctions effect every day yacht owners, it’s a little bit murkier. We foresee that insurers premiums are likely to stay relatively stable over the next months and years as there is evidently a decrease in large superyachts on the insurers books, which entices the insurers to provide favourable terms to bring in ‘new business’. This is something that we refer to as ‘capacity’, and there being less Russian insured vessels frees up a lot of capacity on the market.
The best thing we can advise at this stage is to evaluate all you options. Speaking to your insurer to see if the policy terms are still fair and accurate for you is a good starting point, and our service is still available to any yacht owners who would like to get a free quote from one of the many insurers on our panel.