In late December and the first week of January, the single-handed skippers of three round the world race boats took the drastic decision to abandon their yachts in the Southern Ocean: the seriously injured Yann Eliès on the French, IMOCA Open 60, Generali, racing through the Indian Ocean in the Vendée Globe, requested assistance 800 miles from the south-western tip of Australia on 18 December; Dutch solo sailor, Nico Budel, competing in the Portimão Global Ocean Race, issued a MAYDAY on board Hayai eight days later, 240 miles NNE of the Crozet Islands after sustaining severe keel damage, and, on 6 January, a second Vendée Globe competitor, Jean Le Cam on VM Matériaux, requested assistance after the yacht’s keel bulb detached and the boat inverted 200 miles west of Cape Horn.
Happily, all three rescues were successful due to the expertise shown by the global network of Maritime Rescue Coordination Centres (MRCC), the skill of the sailors involved, the support of fellow competitors or fellow mariners and the immaculate seamanship of rescue services local to the incident. While the relief that no lives were lost is immense, little is spoken of the individual responsibilities of a skipper when considering abandonment or the financial implications and moral responsibilities of stepping off a yacht at sea.
There is also growing concern triggered by the astonishing attrition rate in the Vendée Globe (30 boats starting the race and a maximum of 11 now likely to reach the finish line) and the recent carnage sustained by the Volvo Ocean Race (VOR) fleet on Leg 4 between Singapore and Qingdao, that Grand Prix racing yachts risk becoming uninsurable, although some of these dramas may not result in claims against the respective insurers. Furthermore, many believe that the current framework of yacht insurance – a trade littered with archaic phraseology that would be familiar to an Elizabethan deckhand – is unsuited to Formula One offshore racing.
The Notice of Race (NOR) for the Portimão Global Ocean Race is very clear over insurance for competitors: 'Each participating boat shall be insured with valid third-party liability insurance with a minimum cover of €3,000,000 [the same amount required by the Vendée Globe Race Organisation],' states the 14 page document.
However, in a round the world race through predominantly empty oceans, third party damage is most likely to be relevant just after the start of the race, or near the finish when competing yachts are bunched together and non-racing, commercial or private boat-traffic may be present. 'Each individual person taking part in the race shall confirm to the race committee that they have assessed and accepted the risks,' demands the NOR, 'and taken out personal insurance suitable and adequate for their needs having due regard for their circumstances and responsibilities.'
So, third party and personal insurance are a prerequisite for entering a round the world race, but – as is usual when boats are concerned – the situation is far from straightforward. Some race organisers appear to make the assumption that buying such insurance is as easy as buying any other bit of kit for the yacht. In reality however, the availability of anything approaching ‘comprehensive’ or ‘all risks’ type cover, arranged on a correct basis from a securely capitalised source, is anything but widespread, and may indeed be becoming an endangered species.
Richard Power, a Director at Southampton-based Fastnet Marine Insurance Services, is insurance broker for three of the Portimão Global Ocean Race yachts – Nico Budel’s Open 40, Hayai; Jeremy Salvesen and David Thomson’s Class 40, Team Mowgli, and Kazimir Partners, the Class 40 of South African brothers, Lenjohn and Peter van de Wel – explains one of the basic responsibilities of a yacht insurance policy holder: 'If you were anchored in – let’s say - Studland Bay and the wind turned east and you began dragging your anchor. If you simply hopped into the dinghy, rowed ashore, went to the nearest phone box, rang your insurer and told them: ‘The boat is heading for a lee shore and if you get someone here quick enough, it might prevent a total loss,’ you will not get your claim paid,' says Power. 'But if you take every step you possibly can to prevent the boat ending up on the beach, but still fail, you can expect to get your claim paid.
Often, in cases like this, the insurers will apply terminology using the word ‘reasonable’. For example: ‘Were all reasonable steps taken to avoid the situation?’ or ‘Were all reasonable measures taken during the situation?’.'
Although an attractive stretch of the English South Coast is a very different environment from the high latitudes encircling Antarctica, the same principles apply: 'The Budel, Generali and Jean Le Cam situations where they are faced with abandoning a boat could materialise in the English Channel or the North Atlantic,' continues Power. 'In such a location, the possibility of salvaging is very much greater, and therefore the ultimate ‘downside’ faced by the Insurer is reduced. However, the distances you find in the Southern Ocean are a very different matter.' Despite the implementation of ice gates by race organisations to prevent the competing yachts form descending too far south away from the proximity of land, commercial shipping lanes or rescue services, the risks are still high: 'In the Portimão Global Ocean Race or the Vendée Globe or the Velux 5 Oceans, you may find yourself getting off a boat in parts of the world where the option of getting back to land is not available and you have to rely upon those other competitors around you.'
Before Nico Budel activated his EPIRB distress beacon on Hayai at 15:45 GMT on 28th December, he had already advised the Portimão Global Ocean Race organisation that his keel was damaged and a fellow competitor, Michel Kleinjans on Roaring Forty was diverted to assist the Dutch sailor. A week earlier, two Vendée Globe boats – Marc Guillemot on Safran and Samantha Davis on Roxy – were diverted towards injured Yann Eliès on board Generali and shortly after the New Year, Vincent Riou on PRB and Armel Le Cléac’h on Brit Air raced towards Jean Le Cam on his inverted IMOCA Open 60, VM Matériaux. Once Budel issued a MAYDAY, MRCC Reunion diverted the 170,000 ton bulk carrier, CSK Radiance, towards the yacht’s location and although conditions on board Hayai were deteriorating dramatically as the yacht’s keel bulb began to work loose from the keel fin, the Dutch solo skipper remained completely composed: 'He actually asked me, via his son, Frans, what I wanted him to do with the boat,' recalls Power.
'The technical response when a boat is in peril is: ‘You must act as if you are prudently uninsured.’ This is true whether you are in an Open 40, or 150ft superyacht,' he explains, 'but it is not exactly the easiest concept to explain to someone when they are in the sort of predicament that Budel was in.'
With a great depth of experience and knowledge in offshore sailing, this kind of call centre response was not an option for Power. 'In Budel’s case, I told him to do what he felt best for himself and the boat and we’d worry about the rest later.' As broker for Hayai, Power’s work would commence once the Dutchman was rescued. 'When Budel gets ashore, Fastnet Marine Insurance Services have to demonstrate to the insurer that whatever course of action he took was the correct thing to do without prejudicing the insurer’s position.' In other words, Budel took all reasonable steps before, and during, the incident, to try and limit the risks faced by the yacht and, therefore, her insurers. Reality, of course, shows that there was very little he could do to save the yacht, so he had to consider what to do next.
Budel’s decision, with guidance from his insurance brokers, was to scuttle Hayai, opening the sea cocks shortly before climbing cargo netting slung over the side of CSK Radiance. When Yann Eliès was rescued from Generali by the Royal Australian Navy frigate, HMAS Arunta, the French skipper’s sponsor, Generali Group, opted to attempt salvaging the Open 60. However, five days after the rescue, Generali had drifted approximately 200 miles south-east by the time of her last recorded satellite position on Christmas Day, slipping even further away from land and it is likely that the boat now lies on the seabed in around 4-5,000 metres of water 900 miles south-west of Melbourne. For Jean Le Cam, incarcerated, yet also protected, inside the sinking hull of VM Matériaux, the option to intentionally sink the boat was unnecessary before he climbed on board Vincent Riou’s PRB.
'Nico Budel, had to demonstrate that there was nothing that could save the boat,' continues Power. 'Where we come in is to persuade the insurers that this is indeed the case, and waiting for a couple of months for the boat to drift close enough to land for someone to go out and recover it just isn’t a good option.' When practical, there is only one alternative: 'In reality, the most viable option is to scuttle the boat, because if he leaves her afloat, there is a risk that she may become a danger to other shipping,' he confirms. 'The skipper can say: ‘I pulled the seacocks on her because I didn’t want her to become a danger to other ships. I also weighed-up this danger with the possibility of salvaging her and I believed that there was not hope of her being in any fit condition by the time she has drifted across the Indian Ocean’.' With luck, this approach is successful. 'Third party liability is a part of standard yacht insurance policy and includes the liability for removing the wreck and/or salvage,' continues Power. 'When you step off your Open 60 in the middle of the Pacific, you feel more inclined to pull the plug on it and sink the boat rather than try and get it back to land, purely on financial grounds. If you don’t, she drifts around for an indeterminate period of time, unmanned and a hazard to other shipping and, consequently, an ongoing risk for your insurers.'
The devastation sustained by the Volvo Ocean Race fleet in the final week of January during Leg 4 from Singapore to Qingdao produced copious press comment and spectator debate.
Headwinds reaching 50 knots and horrific seas tore through the VOR boats and survival and preserving the boats became paramount. Despite efforts from all crews, three boats suffered severely: Both Ericsson 3 and Telefonica Black developed cracks in the hull and Team Delta Lloyd discovered failure to the bow bulkhead. 'This sort of damage comes under the very old fashioned phrase ‘A Peril of the Seas’,' says Power. 'So, if it’s heavy weather damage, the insurers will pay for that, but structural failure resulting from the yacht being driven too hard as a result – possibly - of competitiveness perhaps eclipsing, to an extent, self-preservation in a bad sea state is a very, very dubious situation from an insurer’s point of view and they may ask why they should be expected to pay for this.'
There is also the issue of a rigid time limit applied in race stop overs. 'There’s no provision in a standard yacht insurance – or even a policy that has been tweaked in this direction – to pay for what is known as ‘The Accelerated cost of Repair’ to get the boat back into race mode. In other words: ‘It’s going to cost x-amount more to repair this, because you need it for the next leg,’ or similar. Insurers will only pay for the ‘reasonable’ - that word again - cost of repairs, and are under no obligation to pay an extra amount that is related to the job being done in a tight timescale.' So, throwing large amounts of money or hired help at the problem to get it resolved super quick, cannot necessarily be covered through insurance alone. 'This must be funded by the team’s budget and carried out by the team’s own repair crew,' he confirms. 'A normal yacht insurance claim can be a very old fashioned and cumbersome process and has no real place in a Grand Prix round the world race where the clock is ticking the whole time.'
With the exceptional fall out rate in the current Vendée Globe sparking debate between skippers, designers, boat builders and the class association as to culpability and the search for a possible solution, the issue of insurance becomes fundamental to the debate. 'The plain fact is that the attrition rate is becoming something that must be confronted and, in isolation, some boats risk becoming uninsurable,' believes Power. 'The old way of insuring the Vendée Globe fleet was to get all the boats together and estimate the value of each boat, then for one French broker to approach an insurance company,' he explains. 'Then factor in the loss of at least one boat. So, with the most expensive boat in the fleet valued at, let’s say, €2,000,000, the whole fleet premium must be €2,000,000 for the qualifiers and the race itself. The Whitbread Round the World Race was the same, but it’s not so easy to do this now. They tried with the Volvo, but the fleet isn’t big enough.'
The solution to this problem is a matter of backscratching: 'The current technique practiced by brokers is to establish relationships with insurers that cover softer boats – big white motor boats – and if you have enough superyachts with them, you might be able to squeeze in a Formula One race boat,' says Power. There also appears to be a general, blinkered misconception that insurance companies will seek a connection with extreme, offshore sailing and cover boats for the sheer kudos of involvement with an event: 'This just isn’t the case anymore,' states Power. 'The insurers have great big motor yachts and they just don’t need to underwrite these boats at all. They are under more pressure than ever to produce and maintain profit, and - from a broker’s perspective - you can only approach an insurer with an expensive racing boat risk if you have fed him a number of more comfortable, superyacht risks.'
Until a resolution is introduced to ensure that some of the very expensive, round the world race yachts stand a good chance of completing a circumnavigation, sponsors and insurers may feel that the returns are too low and the risks are just too high. A viable solution, perhaps, is a round the world race in a fast, robust and relatively inexpensive Class 40.
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