The following article written by our very own Al Val has recently been published in and Insurance magazine called Post. It’s an interesting read about a hot topic in cycling – how do we go about insuring ourselves, our equipment and 3rd parties?
The original article was published on Post Online, an Insurance Magazine.
On a related matter for those of you that haven’t turned on the security settings in Strava, Garmin Connect, MapMyRide, etc. the following article published in Cycling Weekly explains why you should and how to go about it!
When a cyclist is killed in a road traffic accident, it’s a headline incident that grabs attention. Frequently, and naturally, a makeshift memorial will emerge at the scene, while in some instances, communities will come out in honour of the deceased, helping to raise consciousness about the dangers that cyclists face.
Last year, 113 cyclists were killed on UK roads, representing 6% of all 1775 fatalities, according to the Department for Transport. That is a roughly stable figure. However, the number of seriously injured cyclists rose by 8% to 3401 in 2014. This is well above the 2174 reported in 2004. “This long-term increase indicates that there is an ever increasing problem with pedal cyclist casualties,” says the DfT.
Peter Allchorne, partner in DAC Beachcroft’s motor claims team, explains: “It is perhaps not surprising that while the frequency of incidents involving deaths and serious injuries on Britain’s roads is falling as a result of safer cars and safer roads, those involving cyclists continue to increase proportionately due to the increased road usage of bicycles.”
Pedal cyclists have a casualty rate similar to motorcyclists’ and a fatality rate similar to pedestrians, which are all far higher than the rates for car occupants.
Those devastating accidents are not the most common of issues facing cyclists. Far more regular are thefts. Direct Line reported last month that bicycles make up 17% of all theft claims it handles, proving to be a more popular target than mobile phones or tablets.
Cycling on the up
With all those dangers around the corner, who would want to cycle? As it happens, it’s not an entirely gloomy story, notes Chris Raine, head of technical personal lines underwriting – property at UK General.
“According to the National Transport Survey, about 35% of the UK population, or about 22 million people, cycle at least once per year – that’s an increase of more than 2.5 million since 2008,” he says.
“Halfords recently revealed sales topped £1bn for the first time in 2014, which is a 6.8% increase from 2013. This included 1.3 million bike sales, which works out at more than 3500 a day.”
In some ways, this surge is not surprising. After all, in major cities like London, transport is expensive and cycling can be an effective way to commute to work and cut back on costs. It’s also a great way to exercise for free, something that the government is keen on promoting. Added to this is a greater investment in infrastructure to encourage people to cycle, such as the £1bn funding for the cycle superhighway in London, which aims to provide a more continental approach to cycling. And British wins in the Tour de France and the London 2012 Olympics also boosted interest and got people back on their bikes.
An open space for insurers
So, with an increasing number of people wanting to take up cycling, and a potentially growing appetite for insurance cover, where does the insurance industry fit into the mix?
According to Adrian Scott, head of affinity and direct at Thistle Insurance Services, which operates Cycleguard, this is still a relatively open space for insurers.
“When you look at the number of active cyclists, about 8% are using them three times a week and that totals about four million people,” he says. “The insurance sector is still scratching the surface of accessing that opportunity.”
Cycleguard was established in 1998 as a specialist policy that came out off the back of another product dedicated to musicians. Having quickly realised there were numerous pockets of people needing specialist insurance, Thistle worked with partners such as British Cycling and Evans Cycles shops to establish what was most important for cyclists in an insurance policy.
Scott, who is a cyclist himself, says the landscape has shifted dramatically since the product first came out.
“It’s moving from being a leisure interest into a working tool as a mode of transportation, while in the dynamics of our book we have seen far more female policyholders than at the start,” he says.
Low consumer adoption
Today, there are more than 20 providers with a specialist policy in the area, with aggregators eyeing up the space, he says. Still, many consumers simply do not consider specialist cycle insurance as important to their day-to-day lives.
“We have a long way to go in terms of education,” Scott says. “People are starting to become more aware of insurance as something they should consider in the same way it’s rare for people to be seen without a helmet. But there is still a reliance on or assumption that household insurance will cover and protect them entirely. Our job and challenge is about changing that perception.”
Supercover Insurance, part of Markerstudy Group, is another player in the field. Operations manager Amanda Kerry-Wallington agrees that consumers need to be made aware of exactly what a household policy would cover them for, since it often falls short when they’re out on the roads.
“All of our bicycle insurance policies include personal accident cover up to £10,000 as standard, whereas most home insurance policies only offer personal injury cover, if at all, as an add-on to their basic policy. Since most serious bodily injuries relating to bicycles would occur on the road rather than while the bike is kept at home, these terms are unlikely to cater for most cyclists’ needs,” she warns.
Taking into consideration the excess fees applicable to home insurance policies is also important, she adds. “If you have a policyholder with an excess fee of £250-500, then a claim on this policy may not be cost-effective. A typical excess fee on a specialist cycle policy is 10% of the value of the bike, which is on average around £100.”
Reading the small print of any policy is key, since each one will also stipulate the type of lock you need in case your bike is stolen.
“Bike security is a serious concern for cyclists and we’ve seen a major surge in the number of claims arising from cycle thefts. This is in stark contrast to the numbers of motor vehicle-related thefts, which have been falling steadily for years,” Kerry-Wallington notes.
Digital technology giving clues
Alan Vallance, head of complex loss for Cunningham Lindsey, and a keen cyclist since the age of 13, remarks that digital technology may facilitate thefts.
“There is this app called Strava, which is very popular among serious cyclists because you can download your ride onto a website, and rank yourself against other users,” explains Vallance, who is a member of a cycle club. “However, most people tend to also upload details of their bike, where they live, their name. So if anyone was intent on stealing a bike, they’ve got everything they need. We became aware of it because a few of the guys have suffered thefts from their garages. So now we’re all using nicknames on it and not putting our full details.”
Being part of a club can help to raise awareness of all issues around cycling, and Vallance recommends it. One established player in the space is the CTC, the national cycling charity. Alongside advice and training, it has also offered insurance longer than anyone else: since 1910. It currently has around 68,000 members, all of whom automatically get £10m third-party liability insurance coverage as part of their £41.50 annual membership fee.
“Insurance is as important as having a good lock,” says Sam Jones, the CTC’s campaigns and communications coordinator. “It’s about peace of mind. If someone makes a claim against you, you’re covered. And, the reality is if a cyclist is in a collision, they’re nine times out of 10 going to come out worse than what they’ve collided with, so it’s about protecting themselves as well.”
Jones says the CTC focuses on getting the public to see that “getting on your bike and pedalling to work should be just as normal as getting in your car”. He observes this is becoming the case. “It’s gradually creeping into our lives as a normalised activity, and no longer part of the loony fringe of people cycling around in lycra.”
Awareness and training
With many roads in the UK’s big cities already packed with traffic, it’s hard to find space to fit everyone. A lack of awareness from drivers and the absence of mandatory training for cyclists can both exacerbate problems and incite anger towards one another.
Paul Morpeth, solicitor and deputy manager of complex claims at Winn Solicitors, says that while there are always two sides to a story, more often than not it is the driver of a vehicle that will admit liability in an accident with a cyclist.
“In terms of injuries, most come about from the impact incurred by the cyclist – either hitting the vehicle or the road – commonly resulting in fractures such as to the collar bone, shoulder, arms or legs and head injuries,” he notes. “With regard to head injuries we do have situations whereby wearing a cycling helmet has resulted in the reduction of the severity of a head injury from what could have been an extremely serious, or potentially fatal injury.”
“However, it is important to be aware that if a victim does not wear a helmet, this would not affect liability nor prevent a claim from being pursued, although it could have an impact on the level of compensation that may be awarded, especially if the injury could have been reduced if a helmet had been worn.”
While greater education and training for cyclists could be of use – and is something that groups like the CTC provide – mandatory insurance, registration or licensing is not considered a solution.
“In 2006, the DfT said the costs of establishing a registration scheme would outweigh any benefits,” Jones remarks. “Even if it would not be a costly exercise, it is the bureaucracy of registration which is a real fear. On a practical level, cycles change owners very frequently and are more likely to belong to children than to adults, unlike motor vehicles, making registration a nightmare to administer and adhere to.”
Scott echoes this statement. “As an industry I’m not suggesting we move to a mandatory situation, we’re a long way from that,” he says. “But education and development of cycle insurance as a specialist piece will hopefully give some level playing field to the users of our roadways.”
Commentators agree the focus should be on making things safer for all road users.
A spokesman for Allianz says: “Safety campaigns focusing on getting people to wear cycle helmets or learn more about cycle safety have their place but clearly more is needed. Effective preventative solutions are likely to involve new technology that makes the drivers of cars and lorries more aware of cyclists and in the more distant future automatically adapts the way vehicles behave when near a cyclist.”
Moving forward, for insurers to gain momentum in this space while also offering a value-added product to cyclists, more education needs to take place, something that Scott is keenly aware of.
He concludes: “It has been quite a niche sector and hasn’t necessarily competed with mainstream insurance, and the ability to promote this on a large scale to the audience is something that’s still developing. The industry as a whole needs to ensure that the cyclist is seen as an integral part of our roadways and that they’re afforded the same protection as any other road user, which is improving but is still currently out of kilter.”