The resounding question amongst yacht owners is how to get to Cuba. Traveling to Cuba by private yacht is on boat owners’ list of must-do excursions. Located just 90 miles from Key West, many vessels can easily navigate the waters. However, U.S. insurance companies are prohibited from providing coverage on private vessels traveling in Cuban waters creating a barrier between U.S. yacht owners and their desired navigation experience.
In 2014, the U.S. and Cuba re-established diplomatic relations. Travel to the country by U.S. citizens is permitted if the visit fulfills guidelines within 12 distinct categories as codified by Cuban Assets Control Regulations (CACR). Authorized travel that does not require prior approval can easily comply within these very broad categories, such as education, professional research, executive meetings, journalistic pursuits, and artistic performances and exhibitions, among others. Tourism travel, however, is not permissible for U.S. citizens.
Yacht owner excitement of cruising to Cuba has stirred imagination and a sense of urgency. Yet, insurance companies cannot underwrite coverage for U.S. private boat owners due to a U.S. insurance mandate so dictated under the existing trade-related embargo. Restrictions prohibit hull, property and liability coverage for privately owned vessels that are insured by an insurance carrier that has business relationships or industry ties with the U.S. While U.S. citizens are welcome to visit the country, an insurance embargo remains in place on voyage entry of private watercraft. Domestic insurance companies with U.S. affiliations are unable to settle claims that arise from incidents occurring in Cuban territorial waters, extending just 12 miles off the coastline.
Insured demand has spurred industry sector innovation in search of compliant solutions. Confusion over issues regarding private boat owner travel to Cuba has triggered complex risk exposures. For example, is prior authorization required from the Coast Guard and if so, what documentation must be presented for entry? What insurance stipulations or additional travel policy endorsement may be necessary to provide the insured with comprehensive protection of the vessel, crew and onboard travelers that responds to a covered event? Yacht owners, as a voyeuristic demographic, may confront legalities if they wish to disembark in Cuba as part of an extended itinerary that includes expeditions to other port of call destinations. While Cuba has 8 points of entry, with the Hemingway Marina being the most notable, marina infrastructure may not be modernized to safely accommodate today’s large, technologically-advanced yachts.
The insurance industry is being challenged to design coverage solutions to meet pent up demand within the private yacht and recreational boating sector. Marine underwriters are addressing risk factors and insurance carrier options. Underwriting issues are driving the debate. The insurance industry is characterized by innovating solutions for complex, emerging risk scenarios. The U.S. yacht owners’ plight is no different. Insured travel to Cuba by U.S. private yacht owners is on the horizon.
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