Tugs Take on Different Jobs but Underwriting Elements Are the Same
Moving 30 barges at once takes the sure hand of a tugboat pilot who knows how to maneuver a flotilla through the twists and turns of the Mississippi River. Lashed together, three across and 10 long, the barges cover more than twice the surface area of a modern aircraft carrier.
Most would agree that the best river pilots are artisans, deeply skilled in methods to meet the challenges of that particular job. Equally skilled, however, are the tugboat captains in a crowded ocean harbor, jockeying into port a ship that towers above them, dwarfing their own vessels and offering just as many challenges when it comes to maneuverability as the river barges.
These widely disparate jobs are both part of the workboat world, the segment of the ocean marine industry that makes its living by pushing or towing other vessels, moving oil platforms, serving as icebreakers and performing salvage operations. While the risks each of these businesses face are different, the approach for determining the right insurance coverage for them is similar.
When seeking insurance protection, the goal for workboat owners or operators should be to find the most suitable coverage at a competitive price to protect their assets and their business viability. Start by seeking out an insurance agent with ocean marine expertise who understands the quality of insurance companies with long experience in the industry.
A critical step beyond finding the right agent is to understand what an insurance company will be looking for before a new policy is issued. To get the most value for their insurance dollars, workboat owners and operators will want to put their best foot forward, manage their risks wisely and make sound insurance decisions.
Four Aspects of Underwriting Workboats
When an insurance company is considering taking on a new account, its underwriters carefully review risks and exposures by assessing the business, which typically includes examining these four aspects:
Hull. Much like someone considering the purchase of a used car who looks under the hood, kicks the tires and tests mechanical components, the underwriter will try to thoroughly understand the characteristics of each workboat. He will take note of a number of factors: How well is it maintained? Are the engine and other mechanical parts in good repair? Is the safety equipment stowed on board where it should be, and is it adequate for the vessel? Even the overall cleanliness and tidiness of the boat can be an indicator of how high the owner or operator has set the bar for taking care of his equipment.
Crew. One indication of a crew’s suitability is having Coast Guard licenses and certificates that reflect training. Beyond that, the underwriter wants to see signs that the crew is skilled and knowledgeable. This includes time in grade, familiarity with the company’s vessels and business operations, and breadth of experience beyond the current job. A crew member can have the right paperwork, but it is often the time on task that builds their level of expertise and experience – and which can reduce the likelihood of errors that can lead to accidents or other problems.
Operations. There are two sides to operations – land and water – and the underwriter will want to look at both. Shoreside, the business may have employees operating vehicles, or the owner/operator may use outside vendors that open the door to contractual liability. There may be real estate and other property that should be secured, and other business practices that can lead to different liability exposures.
On the water side, the underwriter wants to know about the type of business the workboat is involved in. Are the operations focused on pushing barges up a river, pulling ships into port, towing ocean-going vessels, or moving yachts from one location to another? Different businesses involve different risks that must be taken into account when considering the type and level of coverage.
Navigation area. Finally, what is the geographic area of operation? Does the workboat operate in a short stretch of one particular river, or is it an ocean-going tug with a wide area of operation? There is a big difference between pulling a tandem tow across the North Pacific and moving a single barge up a small waterway.
Risk Management Practices
Even after all of the “hard” data has been gathered, there are still “soft” nuances that an owner or operator can use to demonstrate the quality of their operation.
For example, while no one expects a business to be risk-free, a business that is open to improving its risk management practices – such as increasing the level of safety training, or implementing better maintenance procedures – can be a much more desirable customer than a business that has no interest in learning new ways or changing bad habits. By working closely with its agent, a business can identify ways to improve its risk analysis and get better value for its insurance purchase.
Once an insurer understands all four aspects of a workboat business, the insurer and agent can work together to create the right mix of coverage and liability limits. An agent who is well versed in the nuances of ocean marine insurance can help make sure the coverage is properly aligned with any shore side property and casualty insurance that is in place.
It may sound complex, but in the end, the formula for making sure a company has the right insurance is straightforward. Deal with an agent who understands not only the ocean marine business but also the key factors that are involved in an underwriting assessment. Insist on having an insurer that is experienced in ocean marine coverage and has a good track record of meeting the needs of ocean marine businesses. And finally, be a customer that is involved in every step of the process, from having the best risk management practices to making sound decisions about coverage and limits.
(As published in the November 2012 edition of Maritime Reporter - www.marinelink.com)