How Codifying Safety Standards Can Lower Risk and Attract More Underwriters
Marine insurance in the British Virgin Islands (BVI) has become a significant challenge for yacht owners, charter companies, and brokers alike. As underwriters pull out of what is increasingly considered a high-risk market, insurance premiums have skyrocketed. Many brokers report an alarming lack of available aggregate, while yacht owners are burdened by policies that are either prohibitively expensive or riddled with exclusions. This, in turn, is hampering the growth of the BVI’s vibrant marine industry, with many businesses struggling to adapt their models to cope with the rising costs of insurance.
In the absence of reliable, reputable underwriters, “bad actors” have stepped in. These underwriters, often from questionable jurisdictions, offer vague policies that bear little resemblance to the established Institute Yacht Clauses. When claims are made, policyholders are met with unresponsive insurers and unclear terms. This erosion of confidence in the market is creating a dangerous cycle—high premiums and inadequate coverage are deterring yacht owners from expanding or upgrading their fleets, further shrinking the market for insurers.
At Mainstay Consulting Group Ltd, we believe this challenge is not insurmountable. Our founder and managing director, Andrew Ball, has spent over eight years as an accredited marine surveyor and loss adjuster, specializing in claims and mass casualty events throughout the Caribbean whilst also performing as the Chair of the local Marine Trades Association. His experience in operational practices, legislation, and—most critically—the distribution of risk has given us the insight needed to turn this situation around. Through targeted risk management strategies, we can work to reduce the perceived risks of insuring yachts in the BVI and make the market more appealing to reputable underwriters.
Managing Marine Insurance Risk with Codified Best Practices
The core of the problem lies in the perception of the BVI as a high-risk market. As a region with a dense concentration of yacht charters and owners, the BVI should ideally be seen as a valuable opportunity for marine insurers. Yet, due to an increased frequency of extreme weather events, escalating operational costs, and the challenges of effectively managing a dispersed fleet of charter vessels, insurers are retreating. What the industry needs is not only to reduce this perceived risk but also to codify and formalize the risk management strategies that are already in practice but often overlooked by insurers.
The Institute Yacht Clauses form the foundation of most reputable marine insurance policies. These tried-and-tested clauses outline fundamental coverage but are often accompanied by various warranties and exclusions that adjust the policy to suit the insurer’s needs. We are not suggesting a departure from these well-established clauses. Instead, our solution involves introducing an additional set of codified requirements specific to the BVI (or similar jurisdictions) that will enhance the appeal of the market to underwriters by mitigating risk.
Codifying BVI-Specific Operational Norms to Manage Risk
Many of the risk management practices already in place within the BVI’s marine industry go unrecognized by insurers, resulting in a higher perceived risk profile than is warranted. These practices, which are often voluntary, could be codified into insurance policies to ensure that all vessels operating within the region adhere to uniform safety standards. By doing so, we can help reduce risk and, in turn, encourage more competition among underwriters, leading to better policy options for yacht owners.
Examples of operational norms that could be codified include:
• No operation at night or in limited visibility except in cases of emergency. Operating vessels in such conditions dramatically increases risk, yet most operators in the BVI voluntarily avoid nighttime navigation. Formalizing this into policy would lower underwriter exposure.
• Mandatory recall to base in sustained winds forecasted over 40 knots. Many charter operators already recall their vessels when strong winds are predicted. Requiring this practice as a standard part of insurance policies could reduce the likelihood of claims resulting from extreme weather.
• Limitations on distance from shore. Codifying a 6NM (nautical mile) distance limit from shore for charter vessels would reduce risk in open waters and simplify rescue operations.
• Enhanced charterer screening and checkout procedures. Properly screening bareboat charterers for experience and qualifications, along with thorough checkout procedures, would mitigate risk. This practice is already common among reputable operators, but formalizing it would protect both the charter company and the insurer.
By recognizing these practical measures, we can create an insurance model that reflects the real-world operating environment in the BVI, rather than lumping it into broader Caribbean insurance categories.
Tackling Dinghy Theft with Tracking and Securing Solutions
Dinghy theft has been a significant pain point for operators and insurers alike, and it’s on the rise. In 2024, affordable tracking solutions are widely available, offering live digital tracking as well as long-term identification methods for tenders, dinghies, and outboard motors. For operators, utilizing these solutions is a no-brainer—it’s an affordable way to protect valuable company assets while simultaneously lowering the risk of theft for insurers.
Beyond tracking, it’s also time to get serious about securing dinghies. As much as we may not want to admit it, the statistics are clear: dinghies are frequently stolen when left unsecured. Many charter companies now mandate the use of locks for dinghies as a requirement for coverage, but the message isn’t being delivered strongly enough. In practice, dinghies are still left unlocked far too often, creating unnecessary risk for both operators and insurers. Codifying stricter locking requirements into policies—and ensuring they are enforced—would reduce the occurrence of theft and provide insurers with greater peace of mind.
The Importance of Emergency Response Infrastructure
One of the greatest advantages the BVI offers is its proximity between key locations and its robust emergency response infrastructure. From local salvage firms to Virgin Islands Search and Rescue (VISAR), and well-established charter company chase teams, the BVI is equipped to handle emergencies with impressive speed and efficiency. This response system significantly lowers the overall risk to insurers, but it is rarely reflected in current policy terms. By incorporating these response assets into insurance policies as a codified requirement, insurers can reduce their exposure to major losses and improve policy attractiveness.
Addressing Named Storm Risks
Named storms are a major concern for underwriters in the Caribbean, and rightfully so. Following the devastation caused by Hurricanes Irma and Maria in 2017, our founder spent almost 18 months handling claims, learning valuable lessons about the root causes of vessel damage. One recurring issue was the failure of strong points, such as cleats, during storms. As yacht manufacturers have increasingly shifted to infusion moulding, hull skins have become thinner, reducing their structural integrity in extreme conditions. Requiring yachts to be fitted with appropriate backing plates for strong points is an example of a low-cost preventative measure that could greatly reduce storm-related claims.
Additionally, the BVI is home to some of the Caribbean’s best storm shelters, such as the Paraquita Bay Hurricane Shelter and the newly rebuilt boatyards and marinas at Nanny Cay. These facilities provide critical protection during named storms, yet their use is not always mandatory. Codifying the use of such shelters into storm plans, and ensuring proper maintenance and operation of these facilities, would significantly reduce the risk of major losses during storm events.
A Collaborative Approach for Insurers
At Mainstay Consulting Group Ltd, we are not suggesting a radical departure from established practices. Instead, we are advocating for a collaborative approach where underwriters and operators can work together to codify proven safety measures and operational norms into insurance policies. This approach not only reduces risk but also helps ensure that underwriters’ “eggs aren’t all in one basket.”
The BVI is an ideal testbed for this model. With its high market concentration, small geographic area, and well-controlled risks, we can demonstrate the effectiveness of these strategies before expanding them to other jurisdictions. By proving the model here, we aim to create a blueprint that underwriters can apply to other high-risk areas, ultimately increasing competition in the market and offering better policy options for yacht owners.
We invite underwriters and insurance professionals to contact us to discuss how we can work together to develop and implement these risk management strategies. By formalizing these practices, we believe we can make marine insurance in the BVI more affordable and secure for yacht owners while attracting more reputable underwriters back to the market.
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