Hi Roger,

Having been a pilot since the mid-1970's, I watched the
insurance debacle in aviation unfold. I expect that you did
also.

IIRC, the problem was not with the insurance companies per
se, but with the change in juries attitudes toward aviation
accidents. Juries became much more willing to blame the
manufacturers and to "send a message" by assessing punitive
damages against pilots estates, repair facilities, component
manufacturers, and the airplane manufacturers. All of the
small plane manufacturers that I know of with the exception
of Beechcraft were either driven into bankruptcy, or stopped
producing small airplanes.
The insurance companies responded to the dramatically
increased jury awards by raising the insurance premiums for
pilots, maintenance facilities, and manufacturers. At one
point, the product liability insurance on Cessna light
planes was higher than the manufacturing cost of the
airplane!! The cost of new airplanes more than doubled in a
couple of years because the manufacturers had to add the new
product liability insurance costs to the sales price. Now
we have new airplanes that cost more than most peoples
houses, and very few insurance companies to choose from.
The few aviation insurance underwriters that are out there
often refuse outright to insure pilots until they meet the
minimum experience criterion set up by the underwriter.

This relates to boating because Florida and the Gulf coast
have been hammered pretty regularly the last couple of
years, and the predictions are that this will continue for
some time. I'm under the impression that most insurance
companies do not "self insure", but hedge their risks by
buying larger polices from groups such as Lloyds, etc. When
the underwriters payouts become too much for what they are
charging, the cost of insurance is going to go up. If the
perceived risk becomes unacceptable, the underwriters are
going to drop out of the market altogether, and insurance
will be unobtainable at any price. Of course that is not a
problem if you own your boat outright, and are willing to
lose it if things go badly. ;-) It is only the bankers who
force people to buy insurance, and only then to make sure
that they don't lose their collateral.

I don't expect boat insurance will be difficult to obtain or
particularly expensive _unless_ you live in an area that is
at risk from the more active Atlantic hurricane seasons.
(Check out all the salvage boats on EBAY that were sunk by
Katrina).

Regards,

Don W.


Roger Long wrote:
There's been some discussion recently about what insurance has done to
aviation. It could come to boating someday.

There was just a post on the owner's forum for my boat that someone is
having trouble getting insurance in the Gulf and Florida region for a
boat more than five years old. Has anyone heard anything similar?
Any chance this is the first high cirrus clouds of approaching bad
weather?