The small-boat and yacht insurance market, despite a wave ofsinkings and other damage from monster hurricanes, has seensurprisingly modest rate increases, according to industryprofessionals. However, some say this could change when the finalloss tab for 2005 damages arrives.

Meanwhile, companies have been decreasing their vulnerabilitywith higher wind exposure deductibles, sources note.

The most favored business, those in the trade say, ismega-yachts and craft located on lakes, where some find ratesdecreasing. Northern and West Coast business is also preferred, assome carriers limit the business they do in Gulf Coast states.

Where in the past deductibles for named windstorms werenonexistent or in the 2-to-3 percent range, they are now “prettymuch 5 percent across the board,” and sometimes up to 10 percent,according to Spencer Lloyd, a senior vice president at Brown &Brown Marine in Ft. Lauderdale, Fla.

Debbie O'Sullivan, worldwide yacht underwriting manager forChubb, said deductibles are used for the more expensive boatsapproaching $500,000 in value, ranging from 3-to-5 percent, but canrun as high as 25 percent.

Mr. Lloyd–whose business niche is yachts with a price tag of $1million or more–said the past three years had seen premiums rise10-to-20 percent, but there has not been the “incremental increaseseen on the property side in Florida.”

Given the amount of hurricane losses, Arthur J. Gallagher'sCharlotte Edmonston said she is surprised by the current ratesituation for small boats and yachts.

Ms. Edmonston–managing director of personal insurance servicesfor Gallagher in Baton Rouge, La., which does 40 percent of itswatercraft business with mega-yachts and 60 percent withregular-sized boats–said there had been some increases on yachts of34 feet and bigger, but “below that we're seeing no movementwhatsoever.”

She and others said the price impact from storms has beendelayed because boat loss and damage claims have been a lowpriority. Gallagher has seen more claims the past 60 days than inthe prior six months, while Brown & Brown is still seeingclaims from Hurricane Wilma, which dissipated on Oct. 25, 2005.

“Once that shakes down, every market will take a look at theirboat offering,” predicted Ms. Edmonston, who thinks there will beincreases then.

Another factor noted by Chubb's Ms. O'Sullivan is that manymarine insurers have yet to feel the impact of rising reinsuranceprices, since marine treaties generally renew in April andAugust.

For boaters, in some areas the pricing outlook is friendly,according to Dave Vieregg, national sales manager for special linesat Progressive in Mayfield Village, Ohio. He said he expects ratereductions in the Midwest and on the Great Lakes. That vicinity hasseen better loss trends the last few years and “we're trying tomaintain market share,” he explained.

B&B's Mr. Lloyd said there are competitive rates for a NewEngland boat that remains there for the winter, and evenlower-priced coverage for craft on West Coast vicinities with nohurricanes and fewer rocks.

Progressive, meanwhile, has a coastal program that puts amoratorium on boats over 30 feet and over $100,000–in effect fromTexas to North Carolina, according to Mr. Vieregg.

Tom Conroy, marine director for Markel American InsuranceCompany in Pewaukee, Wis., said Markel had a moratorium on Floridabusiness after Wilma–but it has since been lifted. The company iswriting the entire state now, but for one zone at the southern tipit will only provide boaters coverage without wind exposure.

Ray Stahl, senior vice president for INAMAR Recreational Marine,the ACE USA outlet, advised that the Florida marine insurancemarket tightened after 2004, and since Wilma hit, “boat owners canexpect to see tighter terms and conditions and higherpremiums.”

Among other difficult risks cited by Gallagher's Ms. Edmonstonare new, wooden-hulled boats, for which she believes carriers fear“maintenance issues.”

Mr. Lloyd said insurers shy from covering big, high-techsailboats, which carry the potential for a huge loss if they snap a$1 million carbon-fiber mast.

The pleasure boat that insurers find most alluring is themonster mega-yacht. “There are several markets aggressivelyinsuring them,” reported Mr. Lloyd at B&B. At the same time,they are more restrictive. “Most now require a licensed captain incharge of the vessel at all times,” he explained.

Peter Lafontaine, vice president of marketing and businessdevelopment for INAMAR, said in his company's book, most units aresmall-boat policies, but the largest percentage of premiums is fromyachts–those 26 feet and above–noting that in the last year INAMARmade a concerted effort to get more into the mega-yacht market.

INAMAR, he said, is “one of the few carriers that has thecapacity to insure those values,” adding that the niche is a “veryprofitable business.”

However, at least one producer strikes a negative note regardingthe rates charged for giant craft. “We believe they areinadequate,” said Bill Oakerson, chief executive officer for BoatU.S., the Boat Owners Association of the United States.

Mr. Oakerson–whose boating organization acts as an agency andproducer for CNA, insuring 220,000 members–says insurers underpricemega-yacht business because they are competitive and want the bigpremium dollars.

Meanwhile, small-boat owners who might face some difficulties inFlorida have plenty of competition for their business elsewhere.Ms. Edmonston said insurers see that market as a “huge opportunitybecause the majority of boats are relatively new,” are easilyhauled, and “their owners go get them when there's a storm.”