Page 55: of Marine News Magazine (November 2011)

www.marinelink.com MN55INSURANCE: THECOSTOF DOINGBUSINESSDominique and Rachel agreed that insurance is one of the largest costs ofdoing business for a small tug compa-ny. ?From what I?ve seen,? Dominique said, ?this is what closes the doors on smaller companies. If you have too many claims, whether it?s just bad luck, or whatever, the underwriters will either drop you or you?ll get higher premiums that you just can?t afford.? This is clearly one of those areas where being a smaller business is a disadvantage. ?Proportionately, the cost of insurance for a one or two-ves- sel company is much higher than fora fleet. It?s about economies of scale. The way the insurance companieslook at it is a distribution of risk. If you have several vessels operating in different markets, your exposure is distributed. But if you just have one boat and it sinks, you?re out,? Rachel said. Consequently, vessel operators with only one or two boats pay amuch higher percentage toward insurance. ?You have to keep a squeaky clean record to keep that cost manageable.??Rachel and I had a big advantage entering this market,? Dominique said, ?because we already had the rela- tionships with our marine underwrit- ers. So if we have a claim or an acci- dent or something of that nature we have direct communications with the underwriter, not just the broker.? ISTHEREA SMALLBUSINESSADVANTAGE ??I?d say one of things we love about being a small business is that we canmake decisions much faster than a bigTradewinds Towing?s second tug, Rachel, is shown here towing the USNS Henry Eckford. (Images courtesy Tradewinds Towing, LLC) MN#11 (50-65):MN 2011 Layouts 10/28/2011 10:23 AM Page 55