Boat Insurance Industry: Rising incomes and a move to the internet will drive industry growth
As the economy stabilizes, insurers are expected to benefit from higher premiums and improved investment returns, according to IBISWorld, the nation’s largest publisher of industry research. Growth will be heavier toward the latter half of the coming five years because disposable income is forecast to recover slowly, while oil prices are projected to continue increasing. Overall, industry revenue is estimated to rise to $31.0 billion in the five years to 2016.
The Boat Insurance industry struggled to stay afloat over the past five years due to low demand in the wake of the Great Recession. An annualized 9.6% increase in oil prices also made boating more expensive over the period. Combined with low disposable income, new boat sales plunged more than 15.0% annually between 2008 and 2010. Likewise, existing boat owners chose to downgrade their boat insurance policies in order to cut costs. Consequently, industry revenue is projected to sink 0.3% annually on average to $25.0 billion over five the years to 2011.
Higher competition stemmed from online retail, facilitating the comparison of boat insurance products. It also led to increased market share for major companies like Allstate (ALL) and State Farm, which were best positioned to offer discounted insurance to consumers seeking savings. The number of boat insurance companies increased slightly in the past five years at a 0.4% annualized rate to 1,305 in 2011.
According to IBISWorld analyst, Agata Kaczanowska, profit in the Boat insurance Industry contracted in the past five years partly because insurance companies boosted marketing spending to better compete with other boat insurers as demand contracted. “Further denting margins, damages from recent natural disasters have squelched industry profit,” says Kaczanowska. Hurricanes, like Ike in 2008 and Irene in 2011, caused significant damages to boats, and a tsunami from the 2011 Japan earthquake damaged some boats with debris. As a result of the disasters in 2011, profit is anticipated to average about 10.2% of industry revenue, which is lower than the 13.1% share of revenue boat insurers earned in 2006. Ahead of storm damage boat insurance claims, however, the three most common claims according to the National Boat Owners Association include hitting a submerged object while cruising, theft while anchored and collision with other boaters.
Disposable income is estimated to recover 1.6% in 2011, so people are more likely to be out on the water. Therefore, consumers will be more likely to upgrade their boat insurance. As disposable income increases, industry revenue is expected to increase 4.1% in 2011. It is expected to rise further over the next five years at an annualized rate of 4.4% to $31.0 billion by 2016. For more information, download the full report from IBISWorld on the Boat insurance Industry
The Boat insurance Industry market research report from IBISWorld provides key industry analysis and industry statistics, measures market size, analyzes current and future industry trends and shows market share for the industry’s largest companies. IBISWorld publishes the largest collection of industry reports so you can see an industry’s supply chain, economic drivers and key buyers and markets.
Tags:
