As personal lines face more disruption from direct writers, captive carriers and InsurTech startups, every policy counts.

Have you been neglecting personal lines prospects and clients who have marine exposures? To earn their loyalty and their business, make sure you pay attention to these three emerging risks:

1) Sharing. The personal marine community has been taking advantage of sharing options far longer than the term “sharing economy” has been around—it’s just taken the form of charters and multiple ownership.

But if personal marine clients use their boats in more of an Airbnb-type capacity, they may be “a commercial exposure,” points out Cathy Smith, chief underwriting officer at American Modern Insurance Group.

“The difference is if you have two neighbors go out and buy a boat together and they know each other, and they were comfortable with each other before they went out and bought the boat together, then you have a partnership that could be two or three people deep,” explains Geoff Phillips, underwriter at American Modern. “That’s a different type of sharing. We still see that as a personal lines exposure, and we charge a little bit obviously for the additional owners, the additional exposure. But that’s different from trying to rent out your boat to defray costs.”

By contrast, if a personal marine client lists their boat on a website as available for rent, “you can call it whatever you want, but we view that as a commercial exposure,” Phillips continues. “‘Sharing economy’ is just a modern way of saying, ‘I’m going to rent out my boat because I’m only using it 10-12 days a month, and I’d like to defer my ownership cost by listing it on a rental website.’”

Unlike home sharing, this specific type of boat sharing is not a risk most personal marine underwriters are willing to take on. Even Progressive Insurance, a major player in the personal marine space, “made the decision, at least for now, that we’re not really interested in that kind of insurance,” says Rick Stern, boat product manager at Progressive. “We have our eyes on it in that we’re interested in how it might affect boat ownership and all that, but we don’t think our rating algorithm is put together with rentals in mind.”

“We do recognize it’s a growing trend, especially with that millennial segment. But Foremost and all our major competitors haven’t gone there yet,” agrees David Knapp, marine product manager at Foremost.

Why can’t personal marine carriers follow in the footsteps of the homeowners market and develop endorsements for this type of sharing? It’s simple: The risk profiles couldn’t be more different.

“The danger with shared boating is that when you’re loaning your boat that extensively, you have no control over the experience of the operator,” Smith explains. “That’s a big underwriting component of boats, especially as they increase in size. And it’s usually the larger ones where owners want to defray the cost the most.”

2) Technology. It’s also the larger boats that pioneer technology advancements for the rest of the market. Stern notes that 95% of motorized registered boats in the U.S. are less than 26 feet long—and “a lot of those smaller boats don’t have more sophisticated electronics,” he says. “But something like a motor yacht might be worth $500,000. You could very easily add $5-10,000 worth of marine electronics on there, and as a percentage of the overall price of the boat, it’s not that big of a deal.”

“As far as the autonomous boats, that is still pretty strictly limited to the yachts and big commercial carriers,” Knapp agrees. “A lot of these new boats have digital screens or touchscreens that can control the GPS and navigation or even the different functions of the boat—for example, a lot of the new wake boats have ways to control the size of the wake with either a wrist band or your iPhone or a touchscreen on the dashboard.”

The progression of telematics in personal marine will likely mirror telematics in the auto space: “I remember back in the day when fuel injection was only available on Ferraris. Now, the least expensive cars have it,” Stern points out. “The same thing happened with ABS and air bags, stability control and down the line. As those technologies become more mainstream and less costly, they’ll start to get driven down into smaller and smaller boats.”

But sophisticated technology has its downsides, as well—in addition to more expensive repairs, it can lead to increases in distracted operating, Knapp points out: “If people are too focused on these screens or their phones, they’re not looking straight ahead at where they’re driving.”

And technology in larger boats is also making them more accessible for less experienced drivers, Phillips notes—which is not necessarily a good thing. “Some of those barriers to buying large boats just aren’t what they used to be, fear being the biggest one. It used to be that no one would go out and buy a 40-foot boat for their first boat, because they were way too scared to ever leave the slip in it for fear of getting in and out of the marinas and maneuvering in tight spaces,” he explains.

Now, with new technology like joystick controls, “it’s like playing a really expensive video game,” Phillips jokes. “The biggest barriers are experience and money, and now the experience one has kind of gone by the wayside. If you are comfortable maneuvering with the joystick and you have the money to spend, one of those big barriers to entry is neutralized.”

If you run into a millennial who just bought a $300,000 boat, the underwriter won’t be satisfied to learn that their only boating experience was helping their dad drive the family yacht when they were 16. To make the risk more appealing, encourage new boat owners to enroll in courses to “learn the ways of the sea,” Phillips suggests. “It’s not quite the same as ownership experience, but there are courses, and most good boat dealers or brokers would help people in that regard.”

3) Usage-based insurance (UBI). Here’s another auto development that has been slow to creep into personal marine, because “people don’t crave that driver behavior feedback on the boating side—at least not yet,” Smith says.

Smith suggests the most practical application of UBI in the personal marine market might be for insurers that include territorial restrictions in their policies. “In some policies, if you go more than a certain number of miles off the coast or you’re not within the territory you’re rated in, the coverage actually stops,” she explains. “That would be a natural application for UBI.”

Still, it would probably only apply to larger, more expensive boats, Smith points out. For watercraft less than 40 feet long, “these owners are usually families with kids, and their boats are not fast boats to start with,” Phillips explains. “So underwriters are probably not worried about the usage of the boats as much as loss history and ownership experience.”

But just because the personal marine market’s not there yet doesn’t mean it won’t get there in the near future.

“At Progressive, we’ve been in the UBI market for about 20 years,” says Stern, who cites the company’s early entry into the usage-based auto insurance market with its Snapshot device, now available as a mobile app. “Within the Progressive special lines world, that technology could lend itself very well to our motorcycle, boat and RV customers at some point down the line. As technology is evolving, that presents opportunity.”

Jacquelyn Connelly is IA senior editor.