Insurance cover for boats. New technologies push back the boundaries for insurers
Today, the nautical insurance sector is facing a number of challenges associated with changes in methods of consumption, as well as weather-related issues. New technologies and especially embedded systems may be of assistance to the risk professionals. But how can these solutions – which are both innovative and simple to use – help insurers to keep heading in the right direction?
Insurers must deal today with the futures challenges of the nautical sector
In the boating industry, insurers must face new consumption patterns that fosters a series of factors pushing an increase of the risk faced by the asset covered:
Greater complexity associated with the vessel itself. Technically, modern pleasure craft provide increasing levels of comfort (air-conditioning units, power generation systems, manoeuvre assistance systems, propulsion units, etc.). While these increased levels of comfort and convenience offer what the market is looking for, they also mean a higher risk of technical problems. Added to that is the risk inherent to every boat: it is both a mobile and moveable asset, which means there is a risk of loss, damage, theft and so on.
The rise in transactions for hiring, leasing co-owning and sharing a boat. Whatever the sector, the risk profile is always higher among people who hire or lease an item: if they don’t actually own the asset, people are often less careful with it. This is definitely the case in a hire/lease market for boats. Yet today, as with all sectors of the economy, the nautical industry is shifting to the era of sharing, renting and co-owning. And for an insurer, that means an overall increase in the risk being covered;
Climate change and weather-related risks. Disasters associated with climate change are on the rise. Just as an example, damage caused by a cyclone can quickly run into billions of euros, as recently shown with Irma.
The difficulty of locating a boat and monitoring it's actual usage: A policyholder may be covered for a specific area, but where exactly is the vessel? Is the skipper taking care of the boat’s technical systems, and their issues? (engines, batteries, rigging...). Generally speaking, the insurer only has knowledge of the navigation area of the boat. But neither its precise location, nor it’s physical “health”.
Pushing prevention, instead of covering claims: Both Insurers and boat owners have a clear, common interest: trying to prevent accidents from happening. But today's modus operandi has reached its limits: lack of information on boat's exact location, as well as boat's actual use, means that insurers have, in the end, very limited options to actively support their policyholders in preventing major issues or dangers.