We like to look in detail at particular sectors within insurance, and the motorcycle market is an interesting one. Partly because the pandemic has curtailed usage over the last 12 months, and also because AI is being brought in as an automated, data-driven, Underwriter by MCE. We expect other brands to follow suit, why? Because rating risk by data, rather than motorcycle engine size, bhp, rider claims history, job or postcode is arguably the greatest step forward since the old NU Rider policy was thrown in the dustbin decades ago.
MCE TAKES POLE POSITION
MCE has a long affinity for this market, being an ex-sponsor of the BSB race series, plus a plethora of shows. Did we just say plethora? Yep, but let’s move onto the good stuff. The cool thing MCE has done this spring is get their AI Underwriting tech in place for the riding season. Many bikers tend to use their machines from April to October, so they only really need laid up theft/damage cover half the year. There is no injury risk or third party risk if the bike is plugged into an Optimate in a shed is there?
The great thing is that AI allows brokers to offer policies like utilities, you can switch the cover on and off, as the weather dictates your riding mileage. MCE has got this advantage on its competitors by teaming up with insurtech data specialist, ICE.
“Bringing the ICE Policy system into MCE Insurance helps move us from a traditional model to a leading tech-led insurer,” said Julian Edwards, CEO of MCE Insurance.
“We have been working towards this point for the last three years and it is a really exciting moment in the strategic development of the business.
“We know our customers want flexibility when they deal with us and by providing a fully-automated, self-service model, we are giving them that flexibility. Our business processes are so streamlined now that our customers can complete the full policy transaction in about a third of the time it would usually take.
“That is a huge step forward in bringing the experience of purchasing insurance in line with other retail markets.”
CAROLE NASH- BENNETTS
The regulator knocked back the merger between Carole Nash (CN) and Bennetts the two market leaders in the UK motorbike cover competition, who probably insure about 350-400K riders between them at any given time. CN are owned by Ardonagh, who also have Hodgson & McKenzie, plus Swinton in their portfolio.
Of the two, Bennetts is in the weaker position, as it owned by Saga Group, who – according to Sky News – have recently been in talks to rejig their debt and look again at the cruise ship market in the wake of Covid-19. Let’s be realistic, even if every wealthy UK pensioner is vaccinated the chances of older people choosing holidays where they trapped on a floating petri dish are slim to none.
If Ardonagh can get a new, PAYG policy into the market by June, they have a real chance of keeping a great number of their customers at renewal time. If not, maybe a VC/Goldman Sachs backed player might buy the Bennetts business and then throw millions at developing new tech? Maybe, maybe not. In the final analysis the entire UK motorcycle market is probably only 1.3m riders – and that includes commuters and Deliveroo jockeys.
Zego are in a great place when it comes to winning over a new army of Covid-sceptic commuters, who do not fancy travelling by bus or train to their essential jobs. Zego already has a micro-payment, PAYG product in the lucrative – and expanding – food delivery market. This is urban based of course, and likely to remain so as food is stone cold once you start transporting it around rural areas.
For those riders who need to get to work on a 125cc-400cc commuter bike, a PAYG policy where each shift at a warehouse, IT service centre or public sector repair depot, can be paid for on a daily basis could be more useful than a season ticket on Arriva trains. Fact is, everyone knows the UK government(s) will be keen to lockdown large sections of the population every winter from now on. The power has gone to their heads. So that means anyone who buys an annual travel ticket – or an annual insurance policy – may end up paying for cover while they loaf at home watching Netflix or being cancelled on Twitter.
HAGERTY AND LEXISNEXIS
For years Hagerty has been a classic car, rather than a bike specialist. But all that may change after a deal with LexisNexis, who are going to supply a supersized data sandwich for Hagerty, so they can calculate risk in much more granular detail, offer a faster claims process and much more.
The beauty of data is that it gives insurance brands the power to make decisions quicker – and with more accuracy. For example, by deciding which repair specialist is best placed to fix it after a little Sunday morning `off’ on the A5. Now that sounds simple, but in reality, if you can take someone’s Ducati 916 to a shop where they know older Dukes inside-out, rather than a multi-franchsie dealer, then you will win bikers over. Partnering with LexisNexis also opens the door for cross-selling, as motorbike owners often have outbuildings, expensive tools, project machines, plus houses, cars, vans etc to insure as well. So having the LN dataset gives Hagerty a head start when it comes to bolting on extra cover.
On the classics front, Hagerty is spot-on by offering agreed values, and tracking those values in real-time, because older Kawa triples, Honda CB750s or Fizzy mopeds are shooting up in value. Classic valautions are a cult thing too, one restored Fizzy moped in purple might fetch say £5000 at auction, but a bedraggled late model Fizzy with non-original parts on it might only be worth £1200.
HOW TO WIN NEW BUSINESS
The short answer is that you need real life expertise, you need bikers, on your insurance team to really succeed in this market. It’s no use thinking you can blag it with someone who has passed their test for PR purposes, but spends more time in their BMW 3 Series than on their BMW R1200GS. The chatbot responses, or call centre scripts that work fine with Ford Fiesta owners will not wash with many bikers, they can spot a bull**itter a mile away.
There is an opportunity this year to design 21st century insurance policies for the many tribes that exist within the two-wheeled world. The day of offering TPF&T or Fully Comp as the binary choice is coming to an end, thank God. From diehard Mods on Lambretta SX200s, to urban cruiser owners who spend as much on tattoos as they do Harleys, people want personal service, bespoke products – probably on a monthly subscription basis. Every biker is different, but data driven cover offers brokers and MGAs the chance to personalise cover for each individual.
Start your engines.