As the economy stabilizes, boat insurers are expected to benefit from higher premiums and improved investment returns, according to the latest findings from IBISWorld, a publisher of industry research.
Growth will be heavier toward the latter half of the coming five years because disposable income is forecast to recover slowly while oil prices are projected to continue increasing. Overall, industry revenue is estimated to rise to $31 billion in the five years to 2016.
The number of boat insurance companies increased in the last five years at a 0.4 percent annualized rate, to 1,305 in 2011, according to the report.
According to IBISWorld analyst Agata Kaczanowska, profit in the marine insurance industry contracted in the last five years partly because insurance companies boosted marketing spending to better compete with other boat insurers as demand contracted.
“Further denting margins, damages from recent natural disasters have squelched industry profit,” Kaczanowska said in a statement. “Hurricanes, like Ike in 2008 and Irene in 2011, caused significant damages to boats, and a tsunami from the 2011 Japan earthquake damaged some boats with debris.”
As a result of the disasters in 2011, profit is anticipated to average about 10.2 percent of industry revenue, less than the 13.1 percent share of revenue boat insurers earned in 2006. Ahead of storm damage boat insurance claims, however, the three most common claims, according to the National Boat Owners Association, include hitting a submerged object while cruising, theft while anchored and collision with other boaters.
As disposable income increases, industry revenue is expected to increase 4.1 percent this year. It is expected to rise further during the next five years at an annualized rate of 4.4 percent, to $31 billion, by 2016.