A study carried out in Dublin, Ireland has revealed that in the Years 2006 and 2007 the UK motorbike insurance market responded positively to competitive markets. It found that premiums dropped in both years due to market pressures. A slow but continual growth in the number of motorcycle owners has prompted a growth in the insurance industry as well.
They found that more insurers were seeing the potential for expanding into motorcycle insurance, while others expanded the offers available, creating a wide range of options for customers. This expansion of the market led to falling premiums across the two years. Although the drop in the price of premiums was small, at 1.0%, it has made a significant impact on the market.
There are now more options out there for those in need of motorbike insurance. Large insurance companies are creating new divisions catering for motorcycle users, while internet companies are entering the market as well. Large, well established companies remain unfazed by the competition as they retain their stronghold on the motorbike insurance market.
Despite the wide range of offers out there, motorcycle owners were more likely to favour companies which specialised in motorbike insurance, rather than the larger companies which have expanded into the bike insurance market. Despite the fact that the larger companies can sometimes offer cheaper rates, those specialist companies with specific knowledge of the market can offer more appropriate policies.
An in depth knowledge of the needs of motorbike owners gives the specialist companies a real edge in the insurance market. They are able to offer policies catering to the very specific needs of their customers and their experience and reputation reassures their customers. An extensive understanding of the risks and benefits of being a motorbike driver means that they can tailor make cheaper policies for low risk customers.
Specialist insurers also had a more successful marketing approach, achieving high profile awareness among bike riders through well thought out advertising and sponsorship at popular biking events. The market has traditionally been dominated by a few specialist companies, which is still the case. Even with increased pressure from large insurance brokers, just 3 companies, Carole Nash, Bennetts and Devitt, have the majority of the market.
Of these three Carole Nash is the major player, taking the largest share of the market. Bennetts sells around 200,000 policies each year, making it the second largest motorcycle insurance broker in the UK. Devitt focuses on selling policies through dealerships and third parties rather than major advertising drives, a key factor which has always been the most popular way of targeting customers in the motorbike insurance field.
The Suzuki GSXR 1000 was shown to be the most popular model in the research, with greener bikes expected to grow in popularity over the coming years. While insurance premiums have been falling, they are predicted to rise slightly in 2008 as competitive pressure drops off. The three major insurance brokers have retained their stronghold on the market despite market growth and can therefore increase premiums again, as they have seen there is little threat from the expanding market. However, towards the end of 2008, experts are predicting another drop in prices, reflecting patterns in previous years.
Carys Robshaw
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