The sunken superyacht could cost insurers at least $150 million, experts say

Insurers of the Bayesian superyacht that sank this month, killing tech entrepreneur Mike Lynch and six others, could be on the hook for at least $150 million, according to early estimates from industry experts.

The 56-meter (184-foot-long) British-flagged yacht, which experts estimated cost about $40 million, capsized and sank on August 19 within minutes after being hit by a storm before dawn, while anchored off the north. Sicily.

The superyacht’s hull was insured against physical damage by yacht insurance provider OMAC and a consortium of insurers including Travelers Companies Inc, Navium Marine and Convex, Reuters reported last week.

Related: Yacht insurer OMAC is hull carrier for sunken yacht off Sicily, sources say

Its protection and indemnity (P&I) insurance, which typically covers third-party liability claims, including for environmental damage, personal injury and death, was provided by British Marine.

The hull was probably insured for about $40 million, while the P&I cover would be higher, insurance sources said.

“Our understanding is that the cost of the boat was between $40 million and $50 million, so the policy limit on the hull and machinery was probably around that,” said Marcos Alvarez, managing director, global financial institution ratings at Morningstar DBRS.

Related: How Mike Lynch’s Luxury Yacht Sunk in Minutes

The P&I policy would likely be “several multiples” of the hull policy, or $200 million to $300 million, Alvarez added, noting that it would also likely cover liability payments even if the captain or crew are proven negligent.

Prosecutors in the city of Termini Imerese, near Palermo, are investigating the captain and two other crew members. An investigation does not imply guilt, nor does it mean that formal charges will follow. Prosecutors said the investigation would take time and require the wreckage to be salvaged.

Oscar Seikaly, CEO of broker NSI Insurance Group, which provides insurance for yachts, estimated the value of the hull at $40 million to $70 million, but said P&I coverage might not exceed $100 million.

The P&I insurance would also cover the recovery of the Bayesian, said Francesco Dubbioso, country manager for Italy for insurer Alta Signa Europe, who estimated the value of the superyacht at $30 million to $40 million.

Reuters is the first to report any insurance costs. OMAC, Travelers and Navium Marine did not immediately respond to Reuters for comment. Convex declined to comment.

The Bayesian disaster, which baffled experts who said the boat was built to withstand a strong storm, adds to the recent woes of yacht insurers, which have faced a series of hurricane losses in the past few years years.

Premium rates have increased four- to fivefold in the past two years in parts of the U.S. and the Caribbean, and yacht insurers have reduced the coverage they offer because of the risks, Seikaly said.

As a result, insurers have raised rates and reassessed their guidelines and risk appetite, according to industry experts.

In addition to hurricanes, insured losses mostly came from severe storms, floods and other weather events in North America, the Caribbean and Europe, according to a report from broker Marsh.

Seikaly said four customers were ready to buy boats last week but changed their minds because of the high cost of insurance.

Climate change could also increase concerns for yacht insurers, Seikaly added, as it causes more unexpected events.

“Who would have thought that a storm in the Mediterranean in August would sink a ship?”

(Additional reporting by Sinead Cruise; Editing by Michelle Price and Sandra Maler)