U.S. Approves Boat Insurance For Cuba Travel

U.S. Approves Boat Insurance For Cuba Travel
Posted on 29 June 2016 Written by Peter Swanson

Common sense has finally prevailed. Pantaenius, a U.S. marine insurer,
said it will offer coverage for American boats traveling in Cuban
waters. This should eliminate a major barrier to cruising and fishing in
Cuba, in my opinion.

Ten months ago the division of the U.S. Treasury Department that
regulates interactions with Cuba under the U.S. embargo announced that
U.S. citizens with a legal reason to travel to Cuba could do so by boat
— their own boat. However, the regulations did not permit U.S. insurers
to offer hull insurance.

Thus insurance issues have proved the major disincentive for the many
American boaters dreaming of visiting Cuba. This was true when AIM
Marine Group, our parent company, organized a rally that went to Cuba in
April and as articulated to us by the many boaters who have sought to
visit the island nation on their own.

Pantaenius is a German insurer with a U.S. division. Cary Wiener, the
president of Pantaenius USA, said his legal team petitioned OFAC months
ago, seeking a change in regulations to allow his company to pay claims
that happened in Cuban waters. The problem was an embargo prohibition on
paying dollars to Cuban government entities or individuals.

OFAC, which stands for the Office of Foreign Assets Control within the
U.S. Treasury, recently updated its online Frequently Asked Questions
page with this language:

80. May persons subject to U.S. jurisdiction provide certain
insurance-related services (such as cargo or hull insurance, or
reinsurance) to persons subject to U.S, jurisdiction who are engaging in
authorized activity in Cuba?

Where the provision of insurance-related services is directly incident
to activity authorized by general or specific license, then the
provision of such services is authorized as well ...

And:

81. Does a person subject to U.S. jurisdiction require an OFAC specific
license to pay an insurance claim that arises from authorized activity
in Cuba if the payment involves a Cuban national?

Where the provision of insurance-related services is authorized by
general license, either expressly or as a transaction ordinarily
incident to a licensed transaction, this authorization extends to the
payment or settlement of claims, including to a Cuban national.

Pantaenius may have stolen a march on the competition, but it is certain
its advantage will be short-lived because U.S. insurers, such as AIG and
the Gowrie Group, also have demonstrated their interest in the market
for Cuba coverage.

Wiener says Pantaenius offers a navigation area for Florida and the
Caribbean, which has heretofore excluded Cuba. Now, he says, customers
will be able to "buy back" Cuba coverage for up to 20 days for an
additional 10 percent of their total premiums with a $500 minimum.
(Pantaenius only covers boats valued at $200,000 or more.)

If that seems steep, consider Pantaenius' rationale. Wiener says he
believes that many damage claims short of a total loss will require that
the vessels in question be towed back to Florida for repairs because of
the lack of marine infrastructure in Cuba and remaining obstacles in the
embargo.

According to Wiener, Pantaenius will require applicants for Cuba
coverage to affirm that they qualify for one of the 12 so-called
"general licenses" that let U.S. citizens travel legally to Cuba — no
different than what the travel agencies require to book air travel to
the island.

AIM's rally participants, for example, qualified under the
"people-to-people" educational license. Another popular license for
Americans with boats is international competitions, such as sportfishing
tournaments and sailing regattas.

Wiener says the customers will affirm that they are traveling to Cuba
legally and will abide by U.S. regs, but Pantaenius will not investigate
further. The company's honor system for applicants reflects the U.S.
government's own almost non-existent enforcement policy.

What boaters have done until now — those not brave enough to go "naked,"
or uninsured — is to purchase a policy from a "London syndicate" such as
Lloyd's. In my own case this represented an increase in the cost of my
boat, valued at $65,000, from $1,400 a year to $2,100. Lacking a
presence in the U.S. market, these syndicates operate outside the
confines of the U.S. embargo, although some experts will debate that point.

One of the participants in AIM Marine's program, "Rallies to Cuba: Learn
the Lingo," says he paid an additional $8,000 for syndicate coverage of
his boat during the rally. That's a lot, considering the risk. The only
period during which his previous insurer would have declined a claim
consisted of transit from the Cuba 12-mile limit to the docks of Marina
Hemingway, where it would remain for two weeks before heading back to
international waters.

All in all, this is a huge improvement and is certain to fuel further
exploration of Cuba's coast by America's boaters. The downside is that
Havana's only marina likely will be overtaxed in the immediate future as
it struggles to expand the number of berths. And it's bad news for those
brokers who have been making hay while the sun shines, selling Lloyd's
policies.

Peter Swanson is a contributing writer for Soundings and the event
content manager for the Active Interest Media Marine Group.

Source: U.S. approves boat insurance for Cuba travel | Soundings Online
-
http://www.soundingsonline.com/news/todays-top-stories/295077-us-approves-boat-insurance-for-cuba-travel