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US Crew More Expensive To Insure: The Way The Insurance Cookie Crumbles |
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Monday Brief - 26 January 2009 |
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| by Gary Carroll |
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A number of people have asked me, “Why does it cost so much to insure US crew on foreign-flagged vessels?” One reason is because US citizens have the highest STB factor in the world. What is the STB factor? “Sue the bastard.”
In the US you can hardly watch TV or drive down the road without being encouraged to sue someone to, “get the money you deserve.” In fact, in 2006 Americans filed 38,568,804 lawsuits – more than any other country - that resulted in an estimated 50% of the world’s liability settlements. Actuaries consider this data when building insurance rates. As a result, insurers deem it necessary to charge more for US crew on foreign-flagged and sometimes US-flagged boats.
You see, insurers use a number of factors to build rates for all types of insurance. Rating for a risk factor is a practice that is neither new to nor exclusive to yachting. Rating factors may include age, gender, lifestyle, avocation and even nationality.
Charging extra for US crew is dependent not so much on whether they have triggered litigation so much as on the higher probability for them to do so – according to the numbers. And insurance is all about numbers. Is it fair? Insurers could argue they aren’t charging enough; and US crew could argue it’s discriminatory. Hard to say who’s right or who’s wrong. In the words of Walter Cronkite, “That’s the way it is,” so don’t shoot the messenger.
What’s the solution? Simple: a total overhaul of the US legal system. Until then, insurers will charge more for US crew in order to cover their exposure; and foreign-flagged vessels will continue to favour non-US crew because it’s less expensive to insure them.
For more information on this topic contact Gary Carroll at CYA/Comprehensive Yacht Assurance at 954.604.2888 or info@cyacht.net. |
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Published with permission - www.cyacht.net © CYA/Comprehensive Yacht Assurance |
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