By ERIN GAZICA, associate editor
A yacht is the ultimate status symbol, one that makes a Ferrari Enzo or a multimillion-dollar home pale in comparison. Cruising the high seas--with not a paparazzo, business dispute or Los Angeles traffic jam in sight--is how the wealthy wish to live.
Insuring such vessels--which are being built larger and larger these days--is a feat handled by a niche group of brokers. One of which is the leader of the newly established Willis North American Yacht Practice.
Nancy Poppe recently left her position of the last 10 years as head of Marsh's yacht practice to start up the practice at Willis, an expansion of the brokerage firm's yacht business based in London. Poppe took with her three fellow former Marsh yacht team members.
Settled in Fort Lauderdale, Fla., since joining Marsh in 1995, Poppe enjoys catering to clients and their mammoth vessels. Clients are all individual owners of a high-valued yacht, though the term is open to interpretation. "Yacht" to Willis, for example, means boats 80 feet and larger. While that size is the low end of the scale for their clients--boats are being built 400 feet and longer nowadays--smaller yachts can still command a very high value based on their bells and whistles.
There is no hard data about the number of "yachts" in the world, but Poppe said the closest approximation is around 3,500 vessels fitting Willis' definition. Yacht owners are among the wealthiest people in the world and come from all walks of life--being businessmen, young entrepreneurs and heirs to family fortunes.
"Categorically, they are high-net-worth folks, but where their worth has come from is as varied as each individual person," she said. "Actually, that's what I love about the industry. Every person's wealth came from a different place, and their stories are all fascinating to me."
One of Poppe's most memorable moments, when the diversity of her clients hit home for her, occurred while she waited at an office of a particular client who belongs to a wealthy and well-known American family. Looking at the client's family tree decorating all four walls of the boardroom, she recalled a recent meeting with another new client and had to smile to herself about the sharp contrast between the two soon-to-be yacht owners.
"The young gentleman had just walked into our office with his yacht broker to talk about getting coverage for a boat that he wanted to buy," said Poppe. "He was in his early 30s, and he had developed some technology that he sold to Microsoft. He was in his ripped jeans, he looked like someone you would see in everyday life--a young, very casual and friendly guy who had come into his money very recently."
Although she realizes it could be seen as a clichéused to describe many other industry sectors, Poppe said the yacht arena truly lends itself to an extremely personal broker-client relationship. While yacht owners are frequently surrounded by a team of professionals--a captain, an attorney, a yacht management company, a risk manager--many times the insurance broker is dealing directly with the yacht owner.
"When you need something and you call them, you can always get through because you're calling about their passion, their baby," she said. "(The broker-client relationship) is more personal. It's not so much casual, but when you're having a business meeting--talking about their risks and offering them solutions and suggestions and giving your advice and knowledge of the industry--while sitting on the aft deck doing that, it certainly adds an element of uniqueness to the meeting."
FIRES, SINKINGS AND PIRATES--OH MY!
The more common exposures facing the yacht sector are fires onboard, lightening strikes, groundings, sinkings and collisions. But physical damage to the vessel itself--or "herself," as Poppe said--isn't what keeps brokers up at night. What worries Poppe, what she's paid to worry about, are the lesser visible risks yacht owners aren't aware of.
Crew represents a huge potential risk to a yacht owner. There's a deep pocket perception--or a reality, depending on where you sit--and crew members injured onboard fall under admiralty law, a broad and less clearly defined body of case law that is relatively unknown to most people and is quite favorable to crew.
Other risks include piracy, kidnap and ransom, and war. For those who think a pirate is simply a fictional character Johnny Depp portrays on the big screen, Poppe used a recent event this summer as an example. Deemed piracy by officials, an armed robbery occurred onboard a yacht at anchor in Corisca, a popular place to cruise.
Another risk is the simple fact that these yachts are traveling internationally and at any given point in time are subject to various laws and jurisdictions. It's not uncommon for yachters to do something seemingly innocent that violates a law and they wind up facing major fines or having the vessel repossessed and crew arrested. The whim of a local government is nearly impossible to plan for, said Poppe.
"They go to some quite remote places," she said. "Owners want to go to places that others don't want to go. Traveling up the Amazon. The Red Sea is a very popular area to go diving in. So the fact that they are traveling with their beautiful, large, white yacht to these areas is another--for someone sitting in my position?scary exposure."
As the yacht industry and its vessels continue to increase in size, a new set of emerging risks has begun to arise. The larger the vessel, the more crew needed to operate it, but a major shortage of qualified crew has been hurting the industry.
Also, the larger the vessel, the less chances of finding a marina with the space to dock it and a boatyard to perform repairs on it. The larger the vessel, the further it can travel.
Poppe said there's been a lot of interest in Dubai lately, but to get there yachts must navigate through some areas that at any given time are politically volatile.
"The trend we've been seeing is it's almost crossing into the commercial realm," she said."Some of the boats that are being built are the size of small cruise ships and they are staffed with 60, 70, 100 crew. The (insurance) industry has been changing with that, so opportunities arise for people in the commercial shipping world to translate their knowledge and skills to the yacht world if they are so inclined."
Poppe said the switch over to Willis from Marsh has been exciting. The yacht practice falls under the firm's reputable marine business, which she said has a tremendous depth of talent worldwide.
"The entrepreneurial spirit of this company and the intense focus on clients and execution are really thrilling for us to join that and build upon that," she said.
It helps Poppe that she's been able to start something new while still having the strong base of talent in the team that came with her from Marsh--Christel Mohr, Diana Fabozzi and Kathy Shea.
"We bring separate skills to the table but that are complimentary to each other," Poppe said. "We're not lacking anything with our team of four. What's made it a lot of fun is being able to work with people that you just really enjoy being with and who you know have the same values and integrity that you do."
As for being part of what is presumably the only female yacht quartet in the insurance brokerage world, Poppe said it is something that never really dawned on her.
"I've really only ever just thought of us as a group--we're the best insurance professionals in yacht risk management--but not by gender," she said. "There's only a handful of folks around the world that specialize in this niche, and there is a good mix of men and women. So it isn't as if it's representative of the industry."
October 1, 2008
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