Sources of insurance

MArtin Clunes with Churchill dog

Churchill motorcycle cover is through broker Devitt

You can buy motorcycle insurance from specialist motorcycle brokers, high-street brokers, price comparison websites, bike clubs, your bank, credit card, other membership clubs, retail giants, newspapers and “direct”.

Motorcycle insurance is mainly sold through intermediaries, so even so-called direct insurers, such as Churchill, actually sell it through broker Devitt.

The two main types of intermediaries are brokers and price comparisons sites – though comparisons sites have come in for such stick from the regulator that they are effectively going to have to behave more like brokers in the future.

Membership clubs, retailers and newspapers either sign up with a single insurer or a broker that provides the services under the club’s brand name. Alternatively they take a white-label service from a price comparison site and dress it up in their colours and logo. They take a cut of the intermediary’s profits.

Different label, same supplier

Choose to buy through biker newspaper MCN and you are actually buying through The Bike Insurer, a brand owned by a software company called Vast Visibility. This is the same provider for Asda or Tesco. It also runs the bike insurance side of Confused.com, Admiral.com and Elephant.co.uk and the likes of Bike Trader.

So if you buy from any of those, you’ll be getting exactly the same offer and you’ll have wasted your time shopping around.

The Bike Insurer (Vast Visibility) is not actually selling; it is just comparing premiums offered by brokers.

Vast Visibility has such a large market share that even Britain’s biggest biker broker, Carole Nash for the first time in 2012 put its Just Motorcycle Insurance brand thorough Vast Visibility’s channels too. It joins the likes of brokers Brightside, which runs the Ebike brand, the AA and Devitt.

Independent?

Similarly, take up an offer from supposedly independent advice website Moneysavingexpert.com and for most lines of insurance you’ll just be pushed through to Moneysupermarket.com, which itself uses Vast Visibility for motorbike insurance. Moneysavingexpert.com also suggests a range of other comparison sites for motorbike insurance, but actually most are just Vast Visibility again.

It does say: “A couple of insurers aren’t included on comparisons and are worth checking separately for a final push. So if you have a few minutes spare, try Aviva and broker Carole Nash.” In fact, you can’t buy motorbike insurance online direct from Aviva.

Aggregator Moneysupermarket.com made so much money from its relationship with Moneysavingexpert.com that in June 2012 it bought the advice site from Martin Lewis, the journalist who had been pretending to be independent, for £87m. Brokers tell me that since selling, Martin Lewis has been heard  recommending people use brokers rather than just comparison sites.

The-zebra.com’s independence

That is why The-zebra.com will never do a tie-in deal with anyone. I am never going to sell you loans or insurance but will provide only independent commentary. I’ve already had offers that I’ve turned down.

It has not been all easy riding for price comparison sites recently. Google-owned Beat-that-quote powers a lot of sites, but is coming unstuck. Argos, for example, had to close its ArgosCompare.co.uk site in early 2012 when it reviewed the new regulations and felt it couldn’t carry on with the Beat-that-quote offering.

That’s the culmination of endless criticism of comparison sites and eventual knuckle-rapping from the regulator.

Comparison sites under scrutiny

Consumer group Which? slated price comparison sites in 2009 for the way they hid differences in excesses and other variations, making their comparisons meaningless. There was an attempt to bring in decent standards for comparison sites with the launch of the Comparison Consortium (Coco) code of conduct, but too many refused to join up to the tougher standards required.

The likes of Moneysupermarket.com only started showing different excesses on motor policies in 2010 after pressure from the Association of British Insurers, which developed its own code for price comparison sites. But it took belated regulation to make them start to behave in a way that comes close to helping insurance buyers.

Part of the problem with comparison sites can be seen in this line from Comparethemarket.com: “To save you time we have assumed a small amount of information that apply to most riders. Please click to check these Assumptions.” Well, you know what they say about assumptions.

Regulator gets tough

After looking into price comparison sites the regulator, the FSA, which had officially been in charge of overseeing these sites since 2005, came out with some scathing criticism in June 2010 and tough new rules in October 2011. It wanted to stop the sites misleading customers and, using regulation jargon, not “treating customers fairly”.

It argued that they weren’t just “introducing” customers to insurers, as they claimed (needing lower levels of regulation), but by rating products and recommending certain insurers they were giving advice, which required tougher standards.

The FSA said consumers could be “misled”. They might think they were receiving quotes when actually they were just getting indicative prices. Worse, they might be refused a claim because they had not been asked all the questions needed to give the material facts necessary for accurate underwriting.

The sites were open to financial crime and could confuse consumers about which firm they had to contact in the case of a complaint. Meeting those standards has proved too tough for some.

What about the biker brokers?

Brokers are better but by no means perfect. They have been regulated to a higher standard than price comparison sites for a while. They give advice on the most “appropriate” policy for you, as an individual.

That might not be the best policy with all the bells and whistles, as that policy might be beyond your price range, but it should be “appropriate” for you based on what the regulator describes as a “fair analysis”.

That doesn’t mean the broker seeks out quotes from every insurer in the market. Each has a panel of insurers that it feels gives it access to enough of the market to offer that “fair analysis”.

Sometimes brokers choose which insurers they want to work with. Other times insurers decide they will or will not work with a particular broker. Insurers also find they get different claims experience from different brokers, so they up the price of their policies through those brokers that attract a worse clientele.

But a good broker with an attractive bunch of bikers is worth throwing some cash at and insurers will lavish money on them to try to influence the broker to pass on more of its business.

Incentives offered to brokers

Insurers might offer brokers more commission per individual policy sold, a bonus commission based on the total volume of sales or a profit share on the business. They might pay for the broker to have training, print materials for the broker, even contribute towards the broker’s IT costs.

Some insurers offer brokers cheap or interest-free loans or offer to pay the broker for doing tiny tasks – they call this a work transfer payment but really the work is automated and is just another backhander to the broker to keep them sweet.

It’s legal but is it ethical?

In the investment market, the equivalent of brokers are known as independent financial advisers (IFAs). A recent Retail Distribution Review has led to the decision to phase out commission and other payments from financial services companies and move to IFAs charging a fee to the customer for their professional advice. There’s nothing like that in the pipeline for general insurance brokers but it’s an omen of what is to come.

In September 2012 Martin Wheatley, managing director of the FSA and chief executive officer designate of the new regulator from April 2013, the Financial Conduct Authority (FCA), warned that he wanted to see an end to mis-selling created by sales incentives. Firms see customers as someone to sell to instead of someone to serve, he said, and that had to change.

Robert Balls of Bikesure insists his staff are not told of the different commissions between insures and so cannot be influenced. But the suspicion remains – among commercial and personal insurance buyers – that brokers are influenced by all these incentives. They are there to make a profit themselves.

But brokers do sometimes give insurers a hard time over poor claims service or shabby documentation. And a broker might decide not to put business with an insurer if that might damage its reputation. Brokers can also use their influence to set the policy wordings and service standards and bring the insurers up to those standards. Specialist brokers, such as Bikesure, can also find insurers – or even set up new insurers or underwriting agencies – to carry risks that mainstream players avoid.

There is a question over whether a broker is going to find the “appropriate” rather than the best policy for you, especially if you insist on the cheapest price. If you want something special, ask your broker to try to find it – though the best policy is unlikely to be the cheapest.

The recommended policy might not have all the bells and whistles, as that might put it beyond your price range, but it should be “appropriate” for you based on what the regulator describes as a “fair analysis”. That is more than a price comparison site will do for you.

Links (new windows)

Latest insurance news

Tight-lipped crash culprit escapes justice

The Motor Insurers’ Bureau (MIB) took nearly a year to compensate Derek Szeto for his damaged bike after the uninsured car’s owner refused to name the driver. Szeto’s parked BMW 650GS was hit by a Dodge Caliber on 28 January 2013. The car was uninsured and the registered owner, Mammi Doti, of 2A Belfast Road, [&hellip

Uninsured driver checking app launched

The Motor Insurers’ Bureau (MIB) that pays out for uninsured driver claims has launched a free phone service – askMID – to help accident victims check vehicle insurance details at the roadside. The MIB runs the national database used by the police and others to check that vehicles are insured. This is called the Motor [&hellip

Travel policy ensures bike comes home

Travel insurance brand Holidaysafe has developed a biker-specific travel policy that will bring your bike home if you can’t ride it. The Holidaysafe Motorcycle policy will pay up to £1,000 for you to retrieve your bike yourself or pay for it to be brought home. This covers you if you are injured or ill, or [&hellip

£1.4m for filtering biker left in wheelchair

A London motorcyclist injured in 2008 whose initial injuries worsened has won £1.4m damages from the car driver who pulled out in front of her. The Complex Regional Pain Syndrome (CRPS) case was for £1.9m on a full liability basis, the UK’s highest awarded in such a case. The biker got £1.4m after agreeing contributory [&hellip

Bennetts’ sales up and bikers shop direct

Biker broker Bennetts has reported 10% growth in new customer sales and renewals but a 27% increase in direct sales not from price comparison sites. It claimed this was a result of product developments, such as covering 16 of the most common bike modifications as standard, including screen changes, braided hoses and tail tidies. The [&hellip

Markerstudy may bid to buy broker Ebike

Ebike may be sold to Gibraltar-based bike insurer Markerstudy for £123m. Ebike’s parent company the Brightside Group announced the move to the Stock Exchange this morning. It said: “The Board can confirm that it has received a preliminary approach which may or may not lead to an offer being made for the Company. The preliminary [&hellip

Met Police seize 308 uninsured vehicles

More than 1,000 metropolitan police officers working with the Motor Insurers’ Bureau (MIB) seized 308 uninsured vehicles as part of London-wide operation Cubo on Wednesday 5 June 2013. The MIB, which pays claims caused by uninsured drivers, had its officers with police in Newham, one of the country’s worst areas for uninsured motorists. The Zebra [&hellip

EU warns Google on false search results

The European Union’s competition commissioner, Joaquín Almunia, has warned Google it could still face formal charges for violating European competition law for promoting its own products in searches. The New York Times reports. According to UK insurance title Post Magazine “Google’s car insurance comparison service gained 75% visibility one day after launched, after the company [&hellip

Bennetts covers classic bikes from 1900

Broker Bennetts is offering cover for classic motorcycles going back to 1900 online. It previously only quoted for models dating back 50 years. And Bennetts has told The Zebra that it will waive any charges for customers who want to change to multi-bike policy to add a classic bike. Matthew Long, associate director for commercial [&hellip

Honda launches breakdown app with AA

Honda has launched a Honda Assistance smartphone app so motorcycle customers covered either by the manufacturer’s warranty or a Honda extended guarantee can request roadside assistance when they break down. It means there’s no need to search for the right phone number or try to pinpoint an exact location – the app does it all [&hellip

eBike rise prompts Brightside payout

Insurance broker Brightside, which owns the eBike brand, has reported that its total revenue for 2012 increased 13.4% to £91.2m (2011: £80.4 m) and pre-tax profit jumped 28.7% to £17.5m (2011: £13.6m). Bike policy numbers increased by 1% from 41,550 policies to 42,137. This compared with a 13% rise in car policies. Total motorbike policy [&hellip

Ambulance chasing CMCs face curbs

Ambulance chasers will find it harder to sign up customers after the Claims Management Regulator published a new code of conduct today. It includes bringing an end to all verbal contract arrangements between consumers and claims management  companies (CMCs) and enforcing written contracts before any fee can be taken. The regulator has banned inducement advertising [&hellip

New law stops insurers cutting claims

A new insurance law that will make it harder for insurers to refuse to pay claims comes into force today. The Consumer Insurance Act was demanded by the Law Commission and initially opposed by insurer body the Association of British Insurers. It puts the onus on insurers to ask bikers for information, not on bikers [&hellip

Groupama’s claims prove driver danger

Britain’s self-claimed biggest bike insurer, Groupama, claims its analysis of nearly 1,700 motorcycle insurance claims “has proved categorically that other road users are the main cause of motorcycle accidents”. Groupama claims that four out of five motorcycle accidents are caused by other road users. Of all the claims analysed, none was caused by loss of [&hellip

Comparethemarket.com slates brokers

A war of words has broken out between insurance brokers and price comparison sites, with Comparethemarket.com’s owner calling brokers “outdated and expensive”. But the same firm also owns biker broker Bennetts, which has defended itself claiming it serves bikers who want quality over price. The outburst from the BGL Group’s chief operating officer, Matthew Donaldson, [&hellip

Police speed awareness course problems

Chief police officers denied being to blame after the Chartered Insurance Institute (CII) warned that unsafe drivers avoid conviction because forces do not share speed awareness course data. The insurers’ professional body claims drivers can be caught speeding more than once in a three-year period yet  avoid having points added to their licence due to [&hellip

HID conversion kits invalidate insurance

Bikers who convert their halogen headlights using HID conversion kits will find themselves uninsured. HID conversions of standard headlamps are illegal according to the Department for Transport (DfT). A legal conversion requires the replacement of the whole headlight unit with an approved HID unit. Bike insurer Zenith has told The Zebra that it would not [&hellip

Groupama’s motorcycling MD to leave

Groupama’s motorcycling MD, Laurent Matras, has been eased out of his job as part of a reshuffle after the firm was taken over by Ageas. But the firm insists it remains committed to the biker market. The French biker boss will leave the business on 31 March 2013, Ageas said today, with his current responsibilities [&hellip

Brightside (eBike) to report record profits

Brightside, the insurance broker behind eBike, has told investors it expects to report a profit rise for 2012 and a 1% increase in eBike policies. The firm said: “The board expects to report significant growth in turnover and profit in line with market expectations.” It said total policy sales were up from 444,189 to 465,726, [&hellip

Brokers help fight insurers to pay claims

Research from the British Insurance Brokers’ Association (BIBA) has found nine out of 10 insurance brokers believe that insurers are becoming stricter on paying claims, mainly because of the economic climate and fraud. Nearly two thirds of brokers said they have had to fight harder to get claims paid and nearly three quarters of brokers [&hellip

Groupama offers classic bike insurance

Insurer Groupama is launching its Optima classic bike policy to provide an agreed value and the right to buy back salvaged bikes and insure them again in the event of a write-off. Kevin Kiernan, director of personal lines, said: “We spent a great deal of time talking to brokers, policyholders and enthusiast clubs about what [&hellip

Women’s motor insurance premiums rise

Women’s motor insurance premiums rise from today after the European Court of Justice ruled in March 2011 that by 21 December 2012 all insurance pricing had to be “gender-neutral”. The Association of British Insurers (ABI) has said the insurance industry will remain competitive for customers despite the changes. It issued a statement saying: “Insurance is [&hellip

Broker Carole Nash withdrawn from sale

Britain’s biggest biker broker, Carole Nash, has been withdrawn from sale by troubled French insurer Groupama. The broker was touted for sale after the French insurer ran into trouble investing in southern European government euro bonds. It put its profitable UK operation, which included three brokers as well as the motorcycle insurer, up for sale. [&hellip

Aviva names Wilson as new £5m boss

Aviva, the insurer formerly known as Norwich Union, has named Mark Wilson its new boss after the last one was forced by the City to quit over his high pay. Aviva has said Wilson will join the board on 1 December 2012 and become chief executive officer from 1 January 2013. Wilson will get a whopping [&hellip

Churchill drops speeding Martin Clunes

Nodding dog insurer Churchill has dropped Men Behaving Badly actor Martin Clunes from its TV ads after the star was banned from driving. Clunes rode a Triumph motorcycle in the ads with the nodding dog in the sidecar. I’m not sure if Clunes actually had a licence to ride motorcycles – I have asked his [&hellip

Regulator fines over low-value insurance

The Financial Services Authority (FSA) has fired a warning shot across the bows of all insurance sellers by imposing a £10.5m fine for forcing customers to buy cheap, rubbish insurance products. Tracey McDermott, the FSA’s director of enforcement and financial crime, said: “We have highlighted before our concerns about low-cost insurance that offers little or [&hellip

Groupama brand to die after Ageas buy

Insurer Ageas has completed its purchase of top-three motorcycle insurer Groupama, making Ageas the fifth largest UK non-life insurer and fourth largest private motor insurer in the UK, with an 11.7% market share. Groupama Insurances will operate as a separate wholly owned subsidiary. A new board will be formed with bodies from Groupama and Ageas. [&hellip

Insurance is like baked beans

Not all tins of baked beans are the same. They do not have the same ingredients (policy terms). Some contain more water than beans (more exclusions, higher excess payments). They are not all of the same quality (service standards). Not all are from trusted brands (unknown insurers). Some beans that have different labels will be [&hellip

Bennetts gets new boss to broaden out

Biker broker Bennetts has announced the appointment of Vince Chaney as its new director, signalling its intention to broaden its offering to bikers. Vince joined Bennetts’ parent company BGL Group in 2009 as associate director, ecommerce and marketing within Junction, the group’s partnerships division. BGL group director, intermediated businesses, David Downie said: “Vince’s commercial insight [&hellip

OFT forces insurance competition review

The Office of Fair Trading (OFT) has referred the UK’s private motor insurance market to the Competition Commission. The OFT provisionally decided to do so in May 2012 after a market study suggested competition had been prevented, restricted or distorted. The OFT reckoned that the insurers of drivers responsible for an accident – at-fault drivers [&hellip

Ageas buys Groupama, not Carole Nash

Euro crisis-hit French insurer Groupama is selling its UK general insurance business (GICL) to Ageas for £116m. The deal excludes Groupama’s UK broking operations, which includes Britain’s biggest biker broker Carole Nash, which is likely to be sold separately, possibly through a management buyout (MBO). A spokesman for Ageas told The Zebra: “Motorcycle insurance remains [&hellip

One girl’s experience buying bike insurance

Buying insurance is a total nightmare. But what if I told you that it was you and I who had insurers waking up in a cold sweat with images of motorbike-riding ghouls in their minds? My two-day quest to insure my first bike has got me thinking it’s not the insurers that are the nightmare. [&hellip