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Navigating hard markets with an Owner Controlled Refit policy

January 22, 2021

The yacht insurance market has experienced turbulence over the last two years and these changes have a number of implications for yacht owners.

Over the past two years, the yacht insurance market has experienced record losses1.

Whether these events occurred while the vessels were under navigation, or at drydock, they have had a significant impact on every yacht underwriters’ appetite for and approach to the associated risks.

Premium increases have reached levels not seen in decades and market capacity is shrinking.

Shipyard insurers saw estimated losses for the period reach an unprecedented US$1.5bn

Globally, shipyard insurers saw estimated losses for the period reach an unprecedented US$1.5bn (including the largest ever marine loss at a well-known German shipyard), or roughly the equivalent of the cumulative premiums over the past decade.1

As a result, the insurance markets for yachts and shipyards are in the process of recalibrating pricing models and reassessing all the related risks on a case-by-case basis. Importantly for owners, insurers are now scrutinising all refits, repairs and routine maintenance.

Underwriters are not only taking these actions to satisfy the demands of their managers, the intensified levels of scrutiny also ensure they continue to adhere to the stricter guidelines and remit imposed by insurance and/or reinsurance providers.

Making insurance a priority

Planning routine yacht maintenance can take a considerable amount of time and due diligence, especially efforts to secure yards and sub-contractors; with time at a premium for busy lifestyles, the importance of securing insurance should not be forgotten.

In new trading and market environments, any delay in securing insurance may leave owners with the inadequate cover when their yacht is at drydock

In new trading and market environments, any delay in securing insurance may leave owners with the inadequate cover when their yacht is at drydock, or with no coverage, if underwriters are unaware the yacht is being worked on.

Key points owners should consider

  • If the yacht insurance policy covers small work programmes, the higher the yard’s liability limit, the smaller the added premium to the yacht insurance policy
  • When evaluating what they consider to be a reasonable level for the liability of the shipyard facility, yacht underwriters primarily consider the value of the yacht and scope of work, which includes hauling, hot work, and duration of work
  • Some refits may not be covered at all and the owner may need to discuss insurance products other than the yacht insurance policy

Depending on the nature of the work, yacht underwriters may deem the risks to be beyond the scope of a standard yacht insurance policy and they may ask to cease coverage.

There is no exact point at which this would take effect, but there are several key triggers. If a number of them are met, coverage may need to be amended.

The triggers may include:

  • Hot works
  • The cost of works being undertaken
  • How long the work is scheduled to take (i.e. beyond 3-6 months)
  • The details of any structural changes to the vessel
Potential refit triggers: Hot work, cost of work, length of work and scope of work
Potential refit triggers

Case study

Earlier this year as the insurance market hardened for yachts and shipyards, one owner was confronted by the perfect storm from the insurance perspective. The yacht was due for work at a recognised European repair yard for a 10-year scheduled maintenance refit and some painting.

In prior years, yacht insurers were likely to have accepted works such as these under a yacht insurance policy, following a review of the limits of the ship repairer's liability insurance (SRL), and the proposed scope of work.

However, the insurers providing cover for the yacht were unable to reach a consensus on how to cover the vessel while the works were taking place, leaving the owner in the uncomfortable position of not having adequate cover and causing costly delays and further uncertainty.


After extensive discussions with underwriters, Willis Towers Watson was able to develop a bespoke ‘Owner Controlled Refit’ policy to replace the yacht insurance policy.

Specifically designed for the yacht refit market, the Owner Controlled Refit policy uses a builder's risk platform. It incorporates coverage for subcontractors to protect the vessel while in the yard; as extended terms and conditions are available, it also offers the flexibility to include additional works.

Furthermore, by leveraging Willis Towers Watson’s substantial portfolio in the yacht market (we arrange insurance for more than 350 yachts annually, 250 of which are valued in excess of US$10m), we were able to overcome the underwriting community’s growing hesitance about offering cover for large, one-off projects under builder’s risks policies.

This tailored policy provides comprehensive coverage with the flexibility to incorporate cover for all parties involved in the refit.


As the goal is to ensure comprehensive coverage for the yacht during work conducted at shipyards, these preferential scenarios allow the owner to:

  • Protect yacht insurance policy statistics. By moving to an Owner Controlled Refit policy, if losses occur during yard work, they would not impact the rating of the yacht insurance policy
  • Access market influence and policy security. The combined strength of our teams’ yacht and builder’s risks portfolios ensures continuity of communication, coverage and markets to help offer a bespoke solution at the most cost-effective levels

How we can help

It is becoming very difficult to predict how insurers will underwrite not only yard risks, but yachts in general. For help and assistance navigating extended yard stays or other yacht risks, please do not hesitate to contact us.


1 Boat International. Yacht Reports - The biggest superyacht disasters from around the world.


Mark Feltham
Senior Director, Global Asset Protection

Ashley Stratton
Associate Director, Superyachts

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