Number of theft claims has risen “by more than 100% since last year” says loss adjuster
THEFT claims and insurance scams from yacht owners are on the rise as the global economic downturn starts to bite the rich, although not yet the super-rich, according to world’s largest yacht loss adjusters, writes Jerry Frank.
Russian oligarchs and the billionaire owners behind the super-yacht sector remain unconcerned over troubles in the financial markets — but it looks like the yacht-owning plain wealthy, whether City traders or even shipbrokers, are having to find new ways to cope with the downturn.
Charles Taylor Adjusting said that the development has come in part as owners try to save money on maintenance, but also because of a growth in fraud as cash-strapped owners look to recoup their investments by claiming from their insurers.
“There’s been a spate of thefts with many more yachts and equipment disappearing than you would normally expect,” said Charles Taylor Adjusting director Nick Smith.
“The number we’re seeing has risen by more than 100% since last year. Whilst many of these insurance claims are genuine, the first question we now start by asking, ‘Is the owner current on his mortgage payments?’”
Charles Taylor, which is an international loss adjuster with offices in nearly 50 countries covering marine and a broad spectrum of insurance areas, also reports an increase in the number of personal injury claims, viewing the falling secondhand luxury yacht values as a contributory factor to the problem.
“Owners who, in the past, would have sold their boats in order to repay their loans, find that’s no longer an option,” Mr Smith said. “Negative equity of 50% or more is not uncommon. Many of them are desperate.”
Most of the false thefts are the result of actions of individuals acting alone, says the loss adjuster, but there is evidence of involvement by gangs of organised criminals
“There’s a well-established infrastructure,” he added.
“Yachts end up in containers and are shipped thousands of miles to be sold.”
Scuttling is another issue of rising concern for the marine insurance market, with this age-old response to economic downturns — most marine insurance law in this era was generated between the late 1920s and early 1930s — at the least a temptation, along with reporting vessels missing, for owners in reduced circumstances.
Charles Taylor also says that the downturn is affecting the number of honest claims, with owners spending less on maintenance and so increasing the risk of an accident.
“It is a misconception that the first cut in expenditure is the mortgage. It isn’t. It’s maintenance,” added Mr Smith.
“The downturn has also stimulated the market for second hand parts, with thefts being carried out to order.
Navigation equipment and engine parts are among the most popular items.”
One recent instance of this involved vital engine components going missing, which, because of their age, the London-based loss adjuster group was unable to replace.
“We may have to install a complete new engine, which would mean the boat is a constructive total loss,” said Mr Smith.
Claims are emanating particularly from the US, where the downturn has been especially marked.
The super-yacht top end of the market, or vessel of more than 80ft, remains unaffected by this blight on the slightly less well-heeled, with demand soaring despite the economic environment and yard delivery times extending from anything from between 2011-2013.
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This article appeared in Lloyd's List on Thursday 7 August 2008. For more information visit www.lloydslist.com
