The superyacht’s hull was insured against physical damage by yacht insurance provider OMAC and a consortium of insurers including Travelers Companies Inc, Navium Marine and Convex, Reuters reported last week. Its protection and indemnity (P&I) insurance, which typically covers third-party liability claims including for environmental damage, injury and death, was provided by British Marine.
The hull was likely insured for around $40 million, while the P&I cover would be larger, insurance sources said.
“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 DBR. The P&I policy would likely be “several multiples” of the hull policy, or $200-300 million, Alvarez added, noting it would also likely cover liability payments even if the captain or crew are found to be negligent.
Prosecutors in the town of Termini Imerese, near Palermo, are investigating the captain and two other crew members. An investigation does not imply guilt or mean formal charges will follow. Prosecutors have said the probe would take time and require salvaging the wreck. Oscar Seikaly, CEO of broker NSI Insurance Group, that provides yacht insurance, estimated the hull value at $40-70 million, but said P&I cover might not total more than $100 million. P&I insurance would also cover recovery of the Bayesian, said Francesco Dubbioso, country manager for Italy for insurer Alta Signa Europe, who estimated the superyacht’s value at $30 million to $40 million.
Reuters is the first to report the potential insurance costs. OMAC, Travelers and Navium Marine did not immediately respond to Reuters’ for comment. Convex declined to comment. The Bayesian disaster, which has puzzled experts who said the boat would have been built to withstand a severe storm, adds to recent woes for yacht insurers, who have faced a raft of hurricane losses in the past few years. Premium rates have risen by four to five times in the past couple of years in parts of the U.S. and the Caribbean, and yacht insurers have cut the amount of cover they provide because of the risks, Seikaly said.
As a result, insurers have increased rates and re-evaluated their guidelines and risk appetite, according to industry experts. As well as hurricanes, insured losses have mostly stemmed from severe storms, floods, and other weather events in North America, the Caribbean, and Europe, according to a report by broker Marsh. Seikaly said four clients had last week been ready to buy boats but changed their minds because of the high cost of insurance.
Climate change was also likely to add to yacht insurers’ worries, Seikaly added, as it throws up more unexpected events. “Whoever thought a storm in the Mediterranean in the month of August is going to sink a ship?” The captain of the yacht, James Cutfield is recovering at his home in Mallorca, according to sources close to him, while a team of lawyers, led by Aldo Mordiglia, is working on his defence. The captain is said to have arrived on the island, where he lives with his family, on Tuesday night aboard a private jet which flew from Palma to Palermo to collect him. Although his passport has been withdrawn by the Italian judiciary, Cutfield has a certified photocopy which allows him freedom of movement.
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"Who would have thought" ............ Those that know the power of the wind and sea, and they "prepare for the worst and hope for the best".