Looking to start boat insurance brokerage

[boatinsurance]

Hey everyone, let me start off by saying that my/our insurance experience is very limited so forgive me for any ignorance.
We own a large marina and boat service center with 1000s of customers coming through every year. We are constantly making recommendations to our customers about where they can buy the best insurance from, or which insurance broker will be the best for them to work with. We have been doing this for years as a way to help our customers, but never getting anything for the referrals other than appreciation. It recently dawned on us that we should be getting a piece of the action for all of the customers that we are sending to these brokers and agents and that we should consider starting our own brokerage. We are located in Georgia and would like the ability to sit down with our customers and be able to offer them insurance options for their boats.

We understand that it can be difficult to get contracts(?) with various carriers in order to advertise their policies to your customers. What is the process for getting access to these carriers? I read just this morning about FMOs / IMOs but I have no idea if that is something that we need to consider, or if that is not something that would really apply to our goals.

We are happy to pay for guidance if there is some sort of class that we can take on starting a brokerage. We do understand that the individual brokers will need to be licensed, however we are trying to get as much set up prior to that as possible and are appreciative of any advice that you guys may offer!

Thank you in advance.

 

[NY independent]

As it is very difficult to get an agency appointment these days, you need to make a connection with an independent insurance agent that knows boat insurance inside and out that has Travelers, Progressive, Markel and maybe Cincinnati as direct markets. You will need to get your insurance license if you expect remuneration and understand that agency contracts generally prohibit sub produced business, but maybe something can be worked out with the agency that doesn't jeopardize that contract. Premiums are low for smaller boats, so there isn't much commission to make for agents to begin with.

 

[Al3x Lee]

Hey everyone, let me start off by saying that my/our insurance experience is very limited so forgive me for any ignorance.
We own a large marina and boat service center with 1000s of customers coming through every year. We are constantly making recommendations to our customers about where they can buy the best insurance from, or which insurance broker will be the best for them to work with. We have been doing this for years as a way to help our customers, but never getting anything for the referrals other than appreciation. It recently dawned on us that we should be getting a piece of the action for all of the customers that we are sending to these brokers and agents and that we should consider starting our own brokerage. We are located in Georgia and would like the ability to sit down with our customers and be able to offer them insurance options for their boats.

We understand that it can be difficult to get contracts(?) with various carriers in order to advertise their policies to your customers. What is the process for getting access to these carriers? I read just this morning about FMOs / IMOs but I have no idea if that is something that we need to consider, or if that is not something that would really apply to our goals.

We are happy to pay for guidance if there is some sort of class that we can take on starting a brokerage. We do understand that the individual brokers will need to be licensed, however we are trying to get as much set up prior to that as possible and are appreciative of any advice that you guys may offer!

Thank you in advance.

You're essentially looking to open a separate division of your business, right? Or are you going to try and have your existing salesmen juggle insurance and boat sales? Don't underestimate how much work an insurance agency is to run, especially right now. It's a very hard insurance market.

Let me try to explain it through the lens of your world.
Picture this: You've got customers lining up for boats like hot cakes, only to find out that the only boats available are inflatable pool toys with a "Buy One, Get None" deal, but the prices are that of a Centurion Ri265.

And let's not forget about the boat options – or lack thereof. It's like walking into a candy store with only one flavor: broccoli-flavored lollipops. Want a fishing boat? Sorry, we're all out. Yacht? We don't carry those anymore, but we do have pool noodles we tied to a couple of planks with fishing wire!

Essentially selling insurance is not a fun time right now. Your salesmen might spend more time dealing with the insurance than the actual boat sales

 

[Policy Monkey]

Your salesmen might spend more time dealing with the insurance than the actual boat sales

Not to mention that the sales people would have to be licensed to sell, quote or even discuss the policies.

 

[marindependent]

never getting anything for the referrals other than appreciation

There are a lot of reasons for this. One main reason is that many consumer boat insurance policies cost a few hundred dollars a year, so the commission is often just $30 or $40. In that scenario there is often nothing to share. [According to Marketwatch the average boat insurance policy is about $200 to $500 per year. Try and make that math work in your head at a ten percent commssion.]

We own a large marina and boat service center with 1000s of customers

Is the marina on the Ocean or a Lake? What types of Boats/Yatches/Ships are we talking about here.

Marine Insurance is complicated and much different than reguar P&C. I would not under any circumstances suggest you jump into Marine Insurance with no experience. Go work with an insurance group in this field of specialty for a year or two before hanging out your own shingle.

I realize that it may sound appealing to start an insurance business because you feel like you have lots of natural foot traffic. However foot traffic is a two way street, it can come in and it easily go out. Especially with little experience or contacts in the trade.

Yes, you can probably do this, but I would plan on losing money for the first five years, at least.

I have a better idea for you. Lease out a small nook of your "marina" to an insurance broker that specializes in Marine Insurance. Get to know them, get the insurance foot traffic coming in, talk with her or him and learn the trade. Then, when the moment is right shut down their lease and then consider opening up your own shop.

 

[fed up]

I've sold personal lines insurance for nearly 20 years and there were a few policies that I hated to discuss; flood, condo, and boats.
Boat policies you will need multiple carriers because your go-to carrier won't write a certain class of boat, or engine size, or lack of full Coast Guard inspection. Policies can be a real pain to place.

 

[marindependent]

This article from My New Markets: How to Sell Yacht Insurance Amidst a Rising Tide made me think of this post.

"The market for yacht insurance has hardened in recent years, due to the frequency and severity of catastrophic (CAT) claims. Widespread losses incurred along the West Coast of Florida and the Atlantic Coast from Hurricane Ian in 2022, for example, resulted in more than $112 billion in damages. Because of catastrophes such as Ian, many watercraft insurance carriers - both admitted and non-admitted - have pulled out of the market in coastal areas.

For carriers that continue to provide coverage in hurricane-prone states, premium costs have doubled or tripled. The increased coverage costs and the difficulty in securing boat coverage has deterred some from purchasing them - but not all. Brokers today are challenged with securing coverage for their high-net-worth clients even in high-risk areas.

In this market segment, there are three tiers of coverage for high-end boats, based on cost and size of the boat:

• Top tier boats have values of $2 million or greater, are at least 65-feet long or larger and must have a full-time captain.
• Middle tier boats are valued between $350,000 and $2 million and are between 35-feet and 65-feet long and the owner-operator is typically the full-time captain.
• First tier boats cost up to $350,000 and are 15-feet to 35-feet long.

Incidentally, middle tier boats are the most difficult to secure coverage for, due to the number of high claims filed and the types of boats covered within this tier. Premiums can run comparatively higher than other tiers as a result...."

Its a solid read for all P&C insurance agents.

 

[Al3x Lee]

I imagine the recent bridge collapse isn't going to help premiums, especially in the marine category

 

[adjusterjack]

I have a better idea for you. Lease out a small nook of your "marina" to an insurance broker that specializes in Marine Insurance. Get to know them, get the insurance foot traffic coming in, talk with her or him and learn the trade. Then, when the moment is right shut down their lease and then consider opening up your own shop.

It's that kind of thing that discourages brokers from getting involved with amateurs. I would hope that the broker would be smart enough to put something in the contract that would make that kind of behavior expensive for the amateur.

 

[RickyG]

Hey everyone, let me start off by saying that my/our insurance experience is very limited so forgive me for any ignorance.
We own a large marina and boat service center with 1000s of customers coming through every year. We are constantly making recommendations to our customers about where they can buy the best insurance from, or which insurance broker will be the best for them to work with. We have been doing this for years as a way to help our customers, but never getting anything for the referrals other than appreciation. It recently dawned on us that we should be getting a piece of the action for all of the customers that we are sending to these brokers and agents and that we should consider starting our own brokerage. We are located in Georgia and would like the ability to sit down with our customers and be able to offer them insurance options for their boats.

We understand that it can be difficult to get contracts(?) with various carriers in order to advertise their policies to your customers. What is the process for getting access to these carriers? I read just this morning about FMOs / IMOs but I have no idea if that is something that we need to consider, or if that is not something that would really apply to our goals.

We are happy to pay for guidance if there is some sort of class that we can take on starting a brokerage. We do understand that the individual brokers will need to be licensed, however we are trying to get as much set up prior to that as possible and are appreciative of any advice that you guys may offer!

Thank you in advance.

In simple terms- you would probably make more servicing one boat than you would in an entire month of writing policies. Now add in taking the time to get a P&C license, signing up with a cluster because you won't get appointed saying you are just writing boats (I'd assume). Then once all is in place you can expect to clear 10-20k a year for doubling your workload if you do not hire a CSR to help.