The recent sinking of the Bayesian superyacht, which claimed the lives of Mike Lynch and six others, could result in insurance claims exceeding $150 million, industry experts estimate.
Bollywood Fever: The recent sinking of the Bayesian superyacht, which tragically claimed the lives of tech entrepreneur Mike Lynch and six others, could lead to insurance claims totaling at least $150 million, according to preliminary estimates by industry experts.
The British-flagged 56-meter-long (184-foot-long) yacht, estimated to be worth around $40 million, capsized and sank on August 19 after being struck by a pre-dawn storm while anchored off the coast of northern Sicily. The vessel went down within minutes, leaving insurers potentially facing significant payouts.
OMAC, along with a consortium of insurers including Travelers Companies Inc, Navium Marine, and Convex, provided insurance coverage for the superyacht’s hull, which was insured against physical damage. The protection and indemnity (P&I) insurance, typically covering third-party liability claims such as environmental damage, injury, and death, was underwritten by British Marine.
According to insurance sources, the yacht’s hull was likely insured for around $40 million, while the P&I coverage could be substantially higher. Marcos Alvarez, Managing Director of Global Financial Institution Ratings at Morningstar DBRS, estimated that the hull and machinery policy might have been valued between $40 and $50 million. He added that the P&I policy could range between $200 to $300 million, potentially covering liability payments even if negligence by the captain or crew is found.
Prosecutors in Termini Imerese, near Palermo, have initiated an investigation into the incident, focusing on the yacht’s captain and two other crew members. While an investigation is underway, it does not imply guilt or guarantee that formal charges will be filed. Prosecutors have indicated that the probe will take time and may involve salvaging the wreck.
Oscar Seikaly, CEO of NSI Insurance Group, which specializes in yacht insurance, estimated the yacht’s hull value to be between $40 and $70 million but suggested that the P&I coverage might not exceed $100 million. Francesco Dubbioso, Country Manager for Italy at Alta Signa Europe, echoed a similar valuation, placing the superyacht’s worth at $30 to $40 million and noting that P&I insurance would also cover the costs of recovering the wreck.
This incident has added to the growing challenges faced by yacht insurers, who have been grappling with a series of significant losses due to hurricanes and severe storms in recent years. In response, premium rates have surged by four to five times in parts of the U.S. and the Caribbean, and insurers have reduced the amount of coverage they offer due to the heightened risks.
Climate change is likely to exacerbate these challenges, as unpredictable weather events become more common. Reflecting on the unusual nature of the disaster, Seikaly remarked, “Whoever thought a storm in the Mediterranean in the month of August is going to sink a ship?”
The Bayesian disaster underscores the evolving risks in yacht insurance, with insurers now re-evaluating their guidelines and risk appetites in light of increasing climate-related incidents.
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