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Insuring the World's Super Yachts
Mega Yacht Insurance

May, 2011 -- Last December, Russian billionaire and Chelsea FC owner Roman Abramovich took possession of the Eclipse, the world’s largest super yacht. With nine decks, a cinema, a disco, two swimming pools, its own mini-submarine and a crew of 70, it reportedly cost nearly €800m to build. (www.lloyds.com)

Even so, an even larger yacht is already reportedly being built for an Arab client, while plans are also being drawn up for an even longer craft. It seems that despite the still tough economic climate, billionaires are keen as ever to splash out on their ocean-going toys.

One superyacht builder – whose vessels’ pricetags begin at a cool €50m – was recently quoted as saying that there has never been so much money available to spend on yachts. The latest fashion in these maritime mansions includes showers that squirt champagne, fully equipped mini-hospitals, garages holding 4x4s for onshore excursions and (reputedly in the case of the Eclipse) military-grade missile defence systems.

It’s all a far cry from the 1980s – then regarded as a period of conspicuous consumption. Mega yachts then were mainly owned by shipping magnates, such as Aristotle Onassis and Stavros Niarchos. When it came to insuring them, they were tacked on to the rest of their fleet. But as these craft became bigger and more lavish then they started to merit their own policies, with individual wordings.

Underwriting then, the biggest yacht was valued at $10m. The technology to build much bigger yachts has developed very quickly.

Credit Crunch effect

But the global financial crisis did hit the world’s super-rich (classed as those people with assets of $30m or more). Their number fell by a quarter in 2008, and their assets shrank by 24%, according to data by Capgemini. Their woes had a knock-on effect on the superyacht market, with the number of new orders and deliveries down and a cut in the prices of yachts for sale.

The super-rich’s bank balances have bounced back as the world economy has begun to recover, and, with it, their appetite for floating palaces has returned. 2010 saw 105 new superyacht orders, a 30% increase on the previous year, according to Boat International, the luxury yachtsmen’s almanac. Brokerage sales of new vessels last year were only slightly up on 2009 but the asking prices were much higher: a total valuation of €2.5bn (a 38% rise on 2009’s €1.8bn by Boat International’s measurement) with the average price nearly a third higher at €12.4m, from €9.5m.

From the Diesels to the Dalis

These vessels’ lavish fixtures and fittings, from the marble in the master’s en-suite bathroom to the bronze sculpture and Lalique vases on the dining table, will be covered by superyacht underwriters, as will the tenders and toys, including jetskis and Seabobs – underwater motorcycles similar to those seen in Bond films. Helicopters and submarines are also included while they are on the ship. So too are the crew who work all the year round. Lead Yacht (which has recently agreed to be bought by Amlin) has a maximum capacity of €150m, provided by eight Lloyd’s insurers and others. For so called gigayachts – whose size and luxury put even superyachts in the shade – other Lloyd’s syndicates will follow Norton’s lead and provide additional capacity. The taste for superyachts is becoming more garish. Hot off a UK designer’s drawing board are plans for £700m ship called the Streets of Monaco, built to resemble the famous playboy’s paradise, even down to scale replicas of the Casino, Hotel de Paris and Casino Square, with swimming pools, tennis courts and a mini-waterfall. But it remains unclear whether any of the billionaires who hang out in the principality will stump up the cash to build what would literally be a home away from home for them.

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