To maximise value and enjoyment of owning a yacht, there are important issues that, if not handled correctly, can turn the dream into a nightmare. Colin Dawson from The George Group has 30 years’ experience of looking after insurance and risk management matters for yachts, their crew and owners. In a Column for Yacht Style, he takes a view from both sides of the coin.

100 Sunreef Power; Photo: Sunreef Yachts

Moving towards the end of the European summer, we reflect on a Mediterranean season of fun, high jinks and sublime relaxation, quiet evenings on the aft deck alongside raucous parties celebrating something or other … or simply the fact that there doesn’t always need to be a purpose to party. All this catered to by exceptional service from amazing crew.

In parts of Asia, we move from a very hot summer to cooler weather where cruising and racing are altogether more pleasant. The southern hemisphere moves from winter woollies to T-shirts. There are yacht owners cruising between these areas, seeking untouched, almost private waters without a care (or seemingly another soul) in the world.

The above can only reliably be achieved if a vessel is well catered for operationally wise, including properly trained and qualified crew. Having been around the yacht industry for the past 30 years, the happiest owners I’ve come across are those who realise the true value of putting the right resources into their yachts to gain maximum enjoyment from them, while also ensuring a premium resale value.

I often compare a yacht to a racehorse. If it’s not given the best-possible attention, it will fail and cost you more in the long run.

In Asia, I think the single biggest challenge we have is persuading owners to put the right resources into their yacht. The owner and his office are constantly being approached by people who promise the earth for a discounted price. It’s hard to ignore this. However, it’s too late by the time owners realise that these people were not the saviours they promised to be.

To be honest, anyone basing service on a discounted price should raise big red flags anywhere. A pedigree yacht is not bought based on a low price and neither should the running of it be. Often, we find that decisions are left to admin staff who don’t understand the yacht or the complex contracts that surround it.

Important discussions should be taken together with the owner, captain and the staff handling the day-to-day side of yacht operations.

When contracts are to be signed, a lawyer should be involved, looking after the owner’s best interests and protecting those in the owner’s employ who are not legally minded. Before an insurance quote is obtained, a broker should be interviewed well in advance of the inception date, so their true level of knowledge and experience can be assessed.

100 Sunreef Power; Photo: Sunreef Yachts

I’m often told that another quote has been received that has identical cover, but a cheaper price. Price is plain to see, but the level of cover provided, the experience and integrity behind the person offering it, along with the insurer’s ‘willingness to pay claims’, are not.

All too often in our industry we see a purely price-based decision that comes back to haunt people. Of course, I generalise and there are fantastic owners out there who really do place a great importance on the operational requirements of their yachts. I’m lucky enough to count a number of these as my clients and am very grateful for them.

Generally, people I speak with worry about increased premium, less cover and higher deductibles. The yacht insurance market has been a ‘hard market’ since 2017. As we see other areas of insurance fall into a ‘soft market’, yacht insurance continues to struggle to find a happy place.

This said, today the average cost of insurance is about 5 per cent of the annual cost of running a yacht. Thus, even if a quote is 20 per cent higher than the next, the dollar amount won’t make a difference in real terms to the yacht’s operating costs.

Underwriters have relied on increased premiums, higher deductibles and reducing cover to mitigate claims. Certain risks are excluded, although often these exclusions are slapped on without any examination into the ‘real risk’ versus ‘perception of risk’. While these will help a bit, the real difference will come if the numbers of claims are reduced. This would benefit insurers and owners.

To achieve this, insurers, brokers and owners need to work together to reduce the likelihood of claims arising. This involves higher standards all round, from maintenance to crew, and more trust in the quality providers of services rather than cheaper ones. With this, insurers need to be on hand to give incentives to owners who make the effort to reduce the risks to their yachts.

In March 1799, Patrick Henry’s last public speech included the phrase: “Let us trust God and our better judgment to set us right hereafter. United we stand, divided we fall.” All of us in this industry have a part to play in its future, and by working together everyone will get the best out of it.

COLIN DAWSON

Based in Hong Kong since 1994, Dawson is a specialist yacht insurance broker with three decades of experience in the Asia-Pacific market. In 2009, he set up The George Group, which partnered with Expat Marine until Howden Group acquired the latter in 2021. The George Group now partners with Howden’s Hong Kong and regional offices. Dawson is also a member of Global Marine Business Advisors and was the Founding Chairman of the Asia-Pacific Superyacht Association, a post he held until 2016. A passionate conservationist, he set up The Elephant Foundation in 2014, hosts the annual Elephant Week in Hong Kong, and runs the San Fernando Race Foundation for underprivileged children in the Philippines.

colindawson@tgg.com.hk / www.howdenhk.com