Written by Scott Alle
Photography by Salty Dingo
17 November 2022
Marine insurance has always been a seriously complicated business. Dating back to the Phoenicians, accurately gauging and then pricing the risk of an asset operating in such an inherently unpredictable environment as the ocean, it’s a business that has built fortunes – and where misjudgement has swiftly lost fortunes, too.
But there aren’t many places in the world that can match Australia when it comes to the difficulty of variables that make up the marine insurance equation.
The island continent’s extreme sea conditions, wide range of cruising grounds, exposure to cyclones and damaging low-pressure systems, huge tidal variations in tropical regions, many unmarked rocks, reefs and shoals, plus the sheer scope of Australia’s vast 36,000-kilometre coastline, make it a daunting task for any insurance company operating in the marine space.
Yet, in just 10 short years, Pantaenius Australia has evolved from a market minnow into the second-largest insurer of recreational sailing yachts and motor cruisers in Australia and New Zealand, specialising in vessels with a value of more than AUD$100,000.
The company offers policies covering a big chunk of the boating spectrum; from day sailers to ocean racers, bluewater sport fishers, superyachts and global cruisers, as well as power and sailing multihulls.
Pantaenius is highly regarded by the boating community, which has come to trust its commitment to individual service and appreciate its understanding of the specific needs of boaters and sailors that are very different from those seeking car, home or other forms of insurance.
“We set out to build a brand,” recounts Jamie MacPhail, a well-known yachting industry identity who, as Managing Director, has deftly steered the brand’s introduction and subsequent impressive growth.
With office locations in Sydney and on the Gold Coast, Pantaenius employs 22 experienced staff. “For brand recognition, it was all about consistency and repetition,” he continues.
“Our mantra has always been simple: we believe we have the most comprehensive insurance product on the market. Our challenge was to get to customers, and for them to understand that’s what we had.
“The other defining feature we’ve had since day one,” he emphasises, “is we’ve provided service.”
The local success of Pantaenius has also been underpinned by the insurer’s global reach with a safety net of 15 offices around the world providing 24-hour support in eight languages for more than 100,000 customers. Indeed, the Pantaenius name is a familiar one in European insurance circles, with origins stretching back to Hamburg, Germany, over a century ago.
“As changes have occurred in international marine insurance markets, long dominated by Lloyd’s of London, Pantaenius Australia has been able to offer new products tailored to shifts in boating trends.
“Twenty years ago, if you had your boat in Sydney and you wanted to cruise to Tahiti, you had to go to the London market through a broker,” MacPhail explains. “You put together a convoluted insurance policy that covered you once you left Australian territorial waters.
“Until we came along, there was no one-stop shop. We immediately provided a product for Aussies and Kiwis who wanted to buy a boat in Europe.”
It also took a few years for potential customers to get past the impression that Pantaenius could only insure their boat overseas and didn’t offer much for a boat at a marina here. After two years of operation, in 2014, 50 percent of the company’s business was overseas – now, in 2022, 80 percent of their expanding portfolio is boats kept and used in Australia, with 20 percent being people buying and selling boats overseas.
“Our growth in the Australian market has been phenomenal,” MacPhail notes with some pride, and he’s confident a steady growth trajectory will continue into the medium term, buoyed by the yacht-buying spree during the pandemic.
There’s also the flow-on effect of the passing of legislation in 2019, enabling foreign superyachts to charter in Australian waters, which has encouraged Australian superyacht owners to bring their Med-based boats back here to cruise and be put in charter.
“We’ve probably tripled our portfolio of boats over AU$5 million and over 40 metres in the last three years,” MacPhail reveals. “There has been a huge increase in that space. At least 50 percent or more of those boats are located in Australia.”
But while an influx of first-time owners has been good for business, it has also brought challenges, with many of the debutantes lacking the bank of boat-handling and maintenance experience accumulated by owners who have steadily upgraded their boats over decades.
“We’re working to educate them and to understand what skills they really do have,” he says of the new wave of pandemic purchasers. “In some cases, we’re applying an Approved Skipper Policy that stipulates they have someone on board with the appropriate skills and experience to help them,” he details.
Another new risk that has been spectacularly illustrated, and which Pantaenius is dealing with, is the rapid uptake of lithium-ion batteries.
In April this year, a 27-metre Sanlorenzo SX88 was destroyed in Valencia, Spain, after an alleged fault occurred with the lithium batteries. Then, in early September, the beautiful, century-old classic 29-metre sailing yacht Halcyon caught fire at a marina in Corfu in the Greek islands with devastating consequences, including the total loss of four boats at the marina. MacPhail agrees the installation and management of lithium-ion battery systems are a “huge” concern.
He gives this insight into the Corfu blaze and the wider ramifications of the rush to lithium-ion battery power: “The catamaran [destroyed in the fire], which was next to the classic boat, was one of ours, insured here in Australia. We believe the fire on the yacht was caused by the lithium house battery.
“In the last six months in Europe, there have been a dozen major fires, of which six have confirmed lithium as the cause, and the remainder are believed to be lithium-related.
“It’s a great technology, but the problem that we have with lithium is that generally the fires we’re seeing – and the losses we’re seeing – are installs that have put the battery at risk, mainly through the battery management system, whether it’s an inverter/charger, the BMS itself, the fuses, or the cabling.
“Our advice is really clear. What clients need to do if they’re purchasing a new boat with lithium batteries, is to make sure the install meets the Australian Standard, which contains a full page on the requirement for the installation of lithium batteries. Owners need to make sure they comply,” he advocates.
Pantaenius also assists owners in minimising and managing other risks and hazards, whether they are wintering somewhere in the Med, transiting the Panama Canal, or navigating the dangers of the Sulu Sea, a known piracy zone northeast of Borneo.
As MacPhail rightly points out, situations can change very quickly and, as a case in point, he counsels Tunisia is not a great place to keep your boat due to ongoing unrest.
Indeed, Panteanius puts out regular bulletins updating policyholders of hotspots, and if you choose to winter or leave your boat in the Med for an extended period, from Spain to Turkey and everywhere in between, they do the research and recommend a marina that has a good reputation and a relationship with its European offices.
“We try and direct our customers to a place we know we can service them and where they will be looked after,” MacPhail says.
That drill-down kind of specialist knowledge is just as important back home in Australia, where understanding the storms and the vagaries of the seasons, and even knowing things like the differences in corrosion in different parts of Australia, are all relevant.
“That’s an area where we have a big advantage at Panteanius,” says MacPhail. “When I look at our claims history and our claims numbers, the data speaks for itself.
For a young company with a small book to start with, we’ve done incredibly well in terms of risk – not taking on risk we didn’t want, and pricing dangerous risk at a number the insurers were prepared to accept.”
The marine insurance industry globally, including here in Australia, is still in a consolidation phase as major shake-outs that started before the pandemic continue to reshape the market.
The net result is fewer underwriters available and prepared to take on marine risk. And, like all businesses operating in the post-pandemic landscape, flexibility, innovation and product knowledge will continue to be crucial as companies comply with long-overdue increased regulatory oversight and altered market conditions.
“Going forward, the market here is such that the players that will survive are the ones with experience,” he predicts. “It comes back to an old-fashioned underwriting skill set and knowledge.
“In the past, companies like Club Marine did an amazing job because they had two or three people that had 30 or 40 years of real-life underwriting experience in our market.”
For MacPhail and his dedicated team, a policy is a partnership with a boat owner, and the desired, shared outcome is the protection of a highly valuable and prized asset, which for some is also their home.
“We deal directly with 92 percent of our customers,” he says. “That’s cruising couples, families and catamaran owners – only 8 percent of our business is through brokers.
“No matter where you are in the world, wherever you’re heading, or wherever you’re docked or moored, we have you covered,” says MacPhail, and that’s reassuring to know when the wind is whistling through the rigging and the horizon is pitching in the porthole.