The Bayesian superyacht that sunk earlier this month on August 29 off the coast in Sicily, killing tech entrepreneur Mike Lynch and six others, could set back its insurer by at least $150 million, as per news agency Reuters citing initial estimates by industry experts.
The superyacht’s hull insurance, which covers physical damage, was provided by yacht insurance provider OMAC and a consortium of insurers including Travelers Companies Inc, Navium Marine, and Convex.
The protection and indemnity (P&I) insurance, which typically covers third-party liability claims such as environmental damage, injury, and death, was provided by British Marine. Insurance sources suggest that the hull was likely insured for around $40 million, while the P&I cover would be significantly larger.
The British-flagged vessel, measuring 56 meters (184 feet) in length and estimated to cost around $40 million, rapidly capsized shortly after being struck by a pre-dawn storm while anchored off the northern coast of Sicily.
“Our understanding is that the cost of the boat was between $40 and $50 million, so the limit of the hull & machinery policy was probably around those values,” said Marcos Alvarez, managing director, global financial institution ratings at Morningstar DBRS.
He further added that the P&I policy would likely be “several multiples” of the hull policy, potentially reaching $200-300 million, and would also likely cover liability payments even if the captain or crew are found to be negligent.
Prosecutors in Termini Imerese, near Palermo, are currently investigating the captain and two other crew members, although an investigation does not imply guilt or guarantee formal charges will follow. The prosecutors have indicated that the probe will take time and require salvaging the wreck.
Oscar Seikaly, CEO of broker NSI Insurance Group, which provides yacht insurance, estimated the hull value at $40-70 million but suggested that P&I cover might not exceed $100 million. Francesco Dubbioso, country manager for Italy for insurer Alta Signa Europe, who estimated the superyacht’s value at $30 million to $40 million, noted that P&I insurance would also cover the recovery of the Bayesian.
The sinking of the Bayesian has left experts puzzled, as the boat was expected to withstand severe weather conditions. This incident compounds the recent challenges faced by yacht insurers, who have already dealt with numerous hurricane-related losses in recent years.
In certain parts of the United States and the Caribbean, premium rates have increased by a factor of four to five over the past couple of years. Consequently, yacht insurers have reduced the amount of coverage they offer due to the associated risks. Industry experts note that insurers have responded by raising rates and reassessing their guidelines and risk appetite.
According to a report by broker Marsh, insured losses have primarily resulted from severe storms, floods, and other weather events in North America, the Caribbean, and Europe.
Seikaly mentioned that four clients who were prepared to purchase boats last week changed their minds due to the high cost of insurance. He also suggested that climate change is likely to exacerbate the concerns of yacht insurers, as it leads to more unexpected events.
The superyacht’s hull insurance, which covers physical damage, was provided by yacht insurance provider OMAC and a consortium of insurers including Travelers Companies Inc, Navium Marine, and Convex.
The protection and indemnity (P&I) insurance, which typically covers third-party liability claims such as environmental damage, injury, and death, was provided by British Marine. Insurance sources suggest that the hull was likely insured for around $40 million, while the P&I cover would be significantly larger.
The British-flagged vessel, measuring 56 meters (184 feet) in length and estimated to cost around $40 million, rapidly capsized shortly after being struck by a pre-dawn storm while anchored off the northern coast of Sicily.
“Our understanding is that the cost of the boat was between $40 and $50 million, so the limit of the hull & machinery policy was probably around those values,” said Marcos Alvarez, managing director, global financial institution ratings at Morningstar DBRS.
He further added that the P&I policy would likely be “several multiples” of the hull policy, potentially reaching $200-300 million, and would also likely cover liability payments even if the captain or crew are found to be negligent.
Prosecutors in Termini Imerese, near Palermo, are currently investigating the captain and two other crew members, although an investigation does not imply guilt or guarantee formal charges will follow. The prosecutors have indicated that the probe will take time and require salvaging the wreck.
Oscar Seikaly, CEO of broker NSI Insurance Group, which provides yacht insurance, estimated the hull value at $40-70 million but suggested that P&I cover might not exceed $100 million. Francesco Dubbioso, country manager for Italy for insurer Alta Signa Europe, who estimated the superyacht’s value at $30 million to $40 million, noted that P&I insurance would also cover the recovery of the Bayesian.
The sinking of the Bayesian has left experts puzzled, as the boat was expected to withstand severe weather conditions. This incident compounds the recent challenges faced by yacht insurers, who have already dealt with numerous hurricane-related losses in recent years.
In certain parts of the United States and the Caribbean, premium rates have increased by a factor of four to five over the past couple of years. Consequently, yacht insurers have reduced the amount of coverage they offer due to the associated risks. Industry experts note that insurers have responded by raising rates and reassessing their guidelines and risk appetite.
According to a report by broker Marsh, insured losses have primarily resulted from severe storms, floods, and other weather events in North America, the Caribbean, and Europe.
Seikaly mentioned that four clients who were prepared to purchase boats last week changed their minds due to the high cost of insurance. He also suggested that climate change is likely to exacerbate the concerns of yacht insurers, as it leads to more unexpected events.