October 14, 2005

Handling motorcycle insurance claims requires a completely different set of skills to four-wheeled motor claims. Although there are only around 1.2 million motorcycles in the UK, compared with perhaps 28 million cars, adopting a specialist approach to motorcycle claims still makes compelling sense for brokers and insurers active in the sector.

What makes motorcycle claims so different? One key difference is owners’ attitude to their machines. More than 80 per cent of motorcycles are second vehicles. They are a hobby, often a passion ‚ not a primary mode of transport. Car owners are often largely indifferent to the inner workings of their vehicles. Not so motorcycle owners. They typically have a much deeper level of knowledge and understanding of their machines.

Motorcycle claims arise in fundamentally different ways to standard motor claims. Bikes behave differently on the road ‚ leading to different types of accidents and collisions which claims people need to understand if they are to handle claims effectively. Motorcycles are also subject to radically different damage and theft claims profiles to other road vehicles.

Motorcycle repair is a highly specialised business, requiring expert knowledge, specialist skills and equipment. Getting motorcycle repairs right is far more critical than other motor repairs. If there is a problem with a car repair, the owner can usually simply drive it back ‚ or at worst pull over and wait for recovery. A faulty bike repair can lead to serious injury or death.

The vast majority of staff in motor claims front-end environments have little or no detailed understanding of motorcycles. They will not know a lever from a peg, a swinging arm from a hero blob ‚ let alone the typical damage patterns if a Honda Fireblade lands on one side rather than the other. This lack of specialist understanding represents a missed opportunity to gather data efficiently, to handle claims effectively, and to build rapport with the client. If in-house staff do not have the necessary specialisation, it will often make sense to outsource to a white-labelled third-party service provider that does.

When it comes to repair, again, there is a huge difference between the standard motor claims approach and one appropriate to motorcycles. It is not uncommon for motor insurers to have panels of several hundred repairers and body shops around the UK. Some of these will have ‚ or profess to have ‚ specific experience in repairing bikes. In reality, there are not many more than a dozen independent repairers in the country with an outright specialisation in motorcycles who have the expertise and who have invested in the specialist machinery and equipment (e.g. for straightening or jigging frames, realigning the headstock, plastic welding, paint matching, or X-raying critical parts) to offer a genuinely bike-specific service. The logistics of routing all motorcycle repairs through such specialists require some management ‚ but there are very strong arguments for doing so.

Whilst the instinct of non-specialist repairers (or repairers linked to bike dealerships) is often to replace any damaged part, a specialist will quickly recognise what can be repaired more cost-effectively. Often this can cut repair costs by as much as 25 per cent and dramatically compress timescales. Through an expertly managed specialist motorcycle claims infrastructure, it is possible to arrange expanded recovery radiuses five to six times over the industry norm. Dedicated motorcycle repairers also have the specialist recovery and delivery equipment to ensure safe collection and delivery ‚ avoiding the all-too-common scenario where a bike that was repairable at the scene of an accident is a write-off by the time it arrives at a motor body shop after a roller-coaster ride in the back of a truck.

Again, when it comes to the engineers who inspect the damage on the carrier’s behalf, specialisation is the key. Understandably motor insurers do not tend to have the volume to establish a nationwide network of dedicated bike engineers ‚ but working with a third-party specialist can achieve the same benefits. The average motor engineer is unlikely to have the knowledge to challenge any bike repair estimate with which the body shop presents them, whereas a competent and educated motorcycle engineer can protect the account considerably. In terms of fraud prevention and non-disclosure, they will also be able to identify non-standard parts such as racing suspension, wheels and bodywork that other engineers would miss. This gives the carrier the option of re-rating or repudiating, either of which puts money back in the pot.

Working with closely managed and trusted repairer partners it is perfectly possible today to operate an effective remote engineering function. Half a dozen digital images supplied by the repairer including plates, clock and main areas of damage from a variety of angles can enable expert bike engineers to carry out desktop engineering ‚ cutting costs by 50 per cent or more and cutting timescales by up to 48 hours.

Another key component in the motorcycle claims process is replacement. Working with a partner who can source any type of bike at a cost well below retail prices allows the insurance provider to offer a replacement that will be acceptable to the policyholder (assuming their expectations have been expertly managed further up the chain) thereby retaining a satisfied customer for renewal. Where a stolen or written-off bike elicits only a disappointingly small settlement cheque, the odds are it won’t go to fund another bike ‚ and yet another customer will be lost forever (one more set of leathers left to languish in the loft). Statistics suggest that the lost customer would not have had another claim for an average 4-5 years ‚ even before taking account of their greater security and safety consciousness following an incident. Consequently the opportunity to recover some of the claims cost in premiums is missed to both the insurer and broker.

Across all these stages in the claims process ‚ and many others too numerous or detailed to set out here ‚ specialisation is the key to operating profitably in the motorcycle insurance market. If considerations of scale prevent brokers or insurers establishing their own specialist infrastructures, it is well worth considering working with specialist providers who can offer the relevant specialist services on an outsourced basis.

– Andy Jones, Director, Bankstone Limited


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