Marine insurers shift focus from historic losses to climate resilience

Hurricane season may only just be beginning, but for marine insurers the rules have already changed. Across much of the sector, storm preparation is no longer viewed as good housekeeping – it’s becoming a prerequisite for obtaining affordable insurance. According to Seafarer Marine CEO Thomas Murphy, underwriters are increasingly rewarding businesses that can demonstrate resilience while placing greater scrutiny on those that cannot.

Murphy works with numerous vessel owners and marinas exposed to hurricane-related risks.

He says: “Extreme weather has accelerated and sharpened marine risk assessments. It has significantly changed how most exposures are assessed, pushing underwriters to rely more on catastrophe modelling and accumulation data, rather than just pure historical loss figures.”

Insurers mitigating losses from policyholders

Across much of the marine market, insurers have strengthened their policy conditions in response to weather-related losses. “While the specifics vary by carrier, the overall direction is to mitigate losses from their policyholders,” says Murphy.

“Examples of this would be ‘named’ storm deductibles or excluding losses caused by wind, flood or weight of ice and snow.”

And now, detailed storm plans are required for facilities and vessels located in CAT-prone areas.

CAT (or catastrophe) prone areas are regions frequently subjected to severe natural disasters. These locations face high financial risks and property damage from specific natural hazards like hurricanes, earthquakes, floods or wildfires.

Marine industry exposure to weather risk

MIN has reported extensively on the marine industry’s exposure to hurricane damage in recent years.

Last year, IBEX announced it was shifting its dates in order to avoid hurricane season. That came after 2024’s Hurricane Helene touching down in Tampa four days before the show was due to open, and in 2022, Hurricane Ian wrecked much of the Florida coastline, causing IBEX to be cancelled. In May this year, Legacy Harbour Marina reopened its doors to boaters, marking the end of a year-long rebuild after Hurricane Ian devastated the downtown Fort Myers waterfront facility in 2022.

Coverage has also included the widespread destruction caused by Hurricanes Helene and Milton across Florida, where marinas, boatyards and marine businesses faced billions of dollars in losses and lengthy recovery efforts, as well as the financial support made available to affected businesses. Extreme weather can trigger not only immediate physical damage but also prolonged operational disruption, strengthening the case for insurers’ growing emphasis on documented storm preparedness and resilience planning.

Murphy’s words follow those of yacht and superyacht insurance broker Richard Power who last year warned that climate change isn’t just rewriting weather patterns – it’s rewriting the rules of yacht insurance. At Metstrade’s Marine Impact Lab, Power said the cost of climate inaction is already hitting the marine market. With reinsurance losses soaring, insurers retreating from volatile regions and the threat of named windstorm exclusions spreading, the future of insuring performance and other yachts is becoming increasingly uncertain. He calculated that, since 2017, the reinsurance market (the marketplace of insurers who insure insurance companies) has paid out $750 billion in losses from natural catastrophes, much higher than the previous 15 years.

Power was specifically worried about the growing practice of naming storms. The phenomenon was started many years ago in the Caribbean by the US Weather Service. But he’s concerned that the practice will spread. And if it does, it may present insurers an excuse to exclude loss or damage from named windstorms for example, in the Mediterranean.

Measures need to be taken to mitigate losses

While hurricanes will always be a major concern for marine-related risks, there is an increased focus on other weather-related events that are becoming more frequent and, in some cases, less predictable, adds Murphy.

He cites severe convective storms like thunderstorms, hail and straight-line wind events (non-rotational, thunderstorm-generated winds that blow horizontally across the ground in a single direction); excessive rainfall and flooding; extremes in temperatures causing extended periods of heat or excessive cold spells; and ice and snow accumulations.

“Underwriters are putting greater emphasis on the measures being taken by vessel owners and facility managers to mitigate losses from these events.

“The challenge is not to prepare for the big loss but to manage exposure to the number of smaller, more frequent losses that collectively impact safety and profitability.”

Within this framework, Murphy says insurers are becoming more selective about the types of marinas or boatyards they’ll insure, but it’s more about the services offered by the marina than the marina location.

“Underwriters are looking for marinas that have a proven track record with minimal losses – facilities that take loss control seriously and limit the high-hazard operations, such as dry stack accumulation, hot work (maintenance or repair activities that involves open flames, produce heat or generate sparks), repair facilities, ageing docks and property and large rental exposures.”

USA and Americas-centric warnings

Based in USA, Murphy’s warning about specific exposures.

He says there are parts of the coastline where insurance is becoming more difficult to obtain for marinas and yacht owners. Primarily that’s along the US Gulf and Atlantic coast: “Specifically Florida and the Caribbean, and we are just starting to see things firm up in Mexico.

“Coverage remains available, but carriers are imposing higher deductibles, named storm exclusions, navigational warranties, and in some cases excluding wind and/or flood altogether. Many admitted carriers are reducing their CAT-exposure, leaving customers to search for a surplus lines option,” says Murphy. (Admitted policies are backed by state funds.)

“Carriers continue to pull back from CAT-exposures such as wind on the coast or the weight of ice and snow accumulations in the Midwest.

“In addition, carriers favour larger, more established marinas with a proven track record versus a new marina with new and inexperienced ownership.

“Also, as mentioned before, the type of work performed at a marina can be an issue as well. Hot work, fuel docks and large rental exposures can be deemed more of a risk for underwriters.”

Climate resilience moves into marina boardrooms

Murphy says that insurers are now rewarding facilities with lower premiums and broader coverages when the marina takes the time to implement loss control procedures that minimise and, in some cases, eliminate risks.

“There are Clean Marina programmes throughout the country that implement procedures to minimise risk to the facility and to the vessels moored there.” The programme’s voluntary and based around Florida Department of Environmental Protection’s environmental best management practices.

“The marinas with these designations are provided with better pricing that is often passed down to the boat owners who use the facility.

“These Clean Marinas attract knowledgeable customers who, in some cases, are willing to pay more to be moored or stored at the facility.”

While in some geographies insurance is becoming so expensive operators are being forced to gamble on retaining more risk themselves, Murphy says this is not universal.

“For much of the marine market, insurance is not prohibitively expensive right now, as we are entering into a soft market phase. Rising insurance costs and stricter policy provisions are primarily concentrated in CAT-prone areas like Florida, the Gulf and the Caribbean, or facilities with large storage accumulation or pollution exposure.”

Budgeting for weather disruption as normal operating cost

That said, across the marine world, climate resilience is now a boardroom issue for marina groups with larger, regulated facilities.

Weather disruptions are now considered recurring events that potentially could cost a marina millions of dollars in damages, Murphy notes. “Marinas are now developing and implementing strategic plans to minimise the effects of the weather, and their annual budgets take into account the cost of these precautionary actions.

“Preparedness is now a prerequisite for coverage, and not just a nice thing to do. Vessel haul outs and storm preparation are now part of the facility’s standard operating procedures.”

He emphasises the importance of having a comprehensive plan in place to prevent losses, noting that marine businesses and boat owners that plan for secondary effects are generally better positioned to recover quickly and are often viewed as a more favourable risk by insurers. Secondary events are things like power outages affecting fuel pumps, IT systems, security, refrigeration and other operations at a marina.

“Contaminated waterways such as fuel spills or floating debris from weather related events can delay the movement of vessels and increase environmental cleanup costs. Damage to bridges, roads and ports can cause transportation disruptions leading to loss of cargo and other service expenses. The biggest losses increasingly arise not from the initial weather event alone, but from the secondary consequences that follow.”

According to Murphy, experienced owners of marinas and yachts are generally becoming more risk aware. “They’re investing in better monitoring systems, storm plans, professional captains and caretakers, and overall preventive maintenance for their facilities and vessels. Insurers have pushed owners to be more proactive by requiring documented storm plans and pre- and post-event control procedures.”

Investing in a marina?

If he was to invest in a marina today, Murphy says he’d be looking for resilience features prior to committing capital.

Top of his list would be long term leases, deep protected waters and the ability to rebuild after a loss.

“Good marinas and good investments are not one [and] the same. Marinas may take actions today that make them a good marina, for example having the facility sprinklered, but that does not necessarily make it a good investment.

“For example, a marina owner who is unable to secure a long-term lease or a facility that does not have deep protected waters limits the long-term success of the facility. In addition, many marinas are ageing and the ability to rebuild and replace piers, docks and buildings are critical to their long-term success. Older marinas face changes in local and state codes, environmental rules that may prevent them from rebuilding or replacing existing structures and properties.”

Insurance irony in extreme weather market

Murphy warns against complacency. “It is common for policy holders to not read their policies and assume they have coverage. But within a policy, there are exclusions and warranties that, if violated, can lead to a claim being denied or the policy being void. Some examples would be captain warranties, navigational warranties and undeclared hot work. When this happens, not only is the insured without coverage, but they are now personally exposed to additional financial losses to claims made by third parties.”

He concludes: “The irony in all of this is that despite rising weather concerns, the broad marine space is currently in a soft market with rates dropping.”

The industry’s direction is clear. While insurance remains widely available across much of the market, climate resilience has become a competitive advantage rather than simply a safety measure. The operators investing in preparation today are not only more likely to recover quickly after extreme weather, but increasingly stand the best chance of securing the broadest cover and most competitive premiums in the future.