Could cycling be the big winner of the pandemic? As Brits are steered away from public transport, a new opportunity for insurtechs, brokers and insurers has opened up if decisions about insurance could just be made for e-scooters, cycles and e-bikes 

Large areas of London could soon be made car free as the Covid-19 pandemic lockdown is eased.

In May, Mayor Sadiq Khan revealed his strategy for a green Covid-19 recovery. London will therefore need to be repurposed to accommodate this in a new car-free initiative between London Bridge and Shoreditch, Euston and Waterloo and Old Street and Holborn.

The UK has also seen air pollution drop by 60% in some parts over the past two months and Khan wants to keep it that way. He said that he plans to create more space for social distancing to assist people returning to work in the city. The work is expected to be completed within six weeks.

Cycling insurance searches have even seen an uptick of 63% over lockdown and eight in ten people are said to be reducing their reliance on cars, according to specialist insurer CyclePlan. 

It said it puts this down to a growing concern about cycling risks.

It comes after the British public were advised to avoid public transport by the UK government.

Although this move to fast-track micro-mobility in the capital could see the UK on par with some other European cities, it comes with a range of insurance concerns and some brand-new opportunities for the industry.

Big winners

Oxbow Partners said that cycling is one of the “big winners” of the pandemic.

Tobi Taupitz, chief executive and co-founder at cycle insurance specialist Laka, told Insurance Times that he believes that cycling and e-bikes will trump e-scooters as e-bikes will allow riders to expand their radius from 5 to 15 miles, meaning e-scooters will only be useful for short distances.

Germany bought 1.4m e-bikes last year, which typically cost between £1,500 and £2,000 in the UK.

Taupitz said that insurance for these vehicles is necessary to cover the policyholder, to cover liability should a pedestrian be hit and to insure the vehicle against theft and damage.

Most bike claims received by the insurtech are for damage (84.02%) and not theft (15.98%), but 90% of the claims that Laka settles are in kind, meaning that a new bike is sent instead of compensation.

A recent Insurance Times poll showed that 86% of the insurance industry believe that e-scooters should be insured, while only 14% said they should not. 

However, Taupitz advised against home insurance to cover bikes, because some policyholders may incur a high excess and some home insurers tend to increase the premiums after a claim.

He urged customers to pay close attention to policy wordings so that they are aware of what coverage they have.

A recent YouGov poll revealed that more than half (58%) of the British public supports cycle lanes being introduced on all main roads in urban areas as part of increased government funding for walking and cycling infrastructure.

Oliver Baxter, head of brand and product at By Miles, believes that post-Covid-19 there is going to be a massive shift in solo methods of transport – especially to mitigate the risk of spreading the virus.

Balance of probabilities

Meanwhile Anthony Baker, president of the Forum of Insurance Lawyers (FOIL), told Insurance Times: “Although encouraging cycling must be a commendable and desirable strategic policy to pursue, both now with commuters being told to avoid public transport if possible and also for general public health benefits, FOIL does not consider that reversing the civil burden of proof in favour of cyclists will achieve that aim and that this should not be enacted for a number of reasons.

“Under the common law in the UK, then it is for the claimant to prove, on the balance of probabilities, that their loss and damage was caused by the negligent acts or omissions of a third party and reversing the burden of proof would undermine centuries old jurisprudence.”

But Baker said that this in itself is not a reason for keeping the status quo.

Duty of care

Baker added that in the case of vulnerable road users such as cyclists, then the courts already accept that car drivers owe a far higher duty of care to ensure their safety by taking greater care when passing or travelling near to cyclists due to the destructive nature of a motor vehicle as compared to a bicycle.

“It is highly unlikely that a change in legal burden of proof would have any real impact on incentivising the vast majority of the general public who may consider cycling to take this up,” he said.

”Individuals will be encouraged to use bikes if there are more cycle lanes on UK roads and motor vehicle free zones in city centres and not because they will be risk assessing the success or otherwise of future accidents and claims against motorists.”

He recommended better driver and rider education of cyclists and motorists should also be encouraged such as bikes undertaking heavy good vehicle licences to increase road safety.

Paul Williams, chief executive at Ripe Insurance, told Insurance Times that, although there is a shift towards micro-mobility, insurance isn’t currently mandatory for cyclists or e-scooters.

“So time will tell the impact that this has on the industry as a whole,” he said.

Not enough time

With the use of e-scooters expanding, this is an opportunity for brokers and insurers that are quick to act.

Findings from GlobalData’s report, ‘Thematic Research: Sharing Economy in Insurance’, highlight that insurance options are currently limited for micro-mobility solutions.

Liability is not clearly understood, but the implementation of clearer regulation would encourage more insurers to enter this market, as challenges stem when accidents are reported.

Jazmin Chong, insurance analyst at GlobalData, added: “Due to the rapid launch of e-scooter trials, and fears of overcrowding on public transport in the midst of the Covid-19 pandemic, the popularity of e-scooters could soar.

“However, the UK Government might not have the appropriate time to pass the much-needed regulation insurers require to cover these vehicles. This would leave a market opportunity for UK insurers that can deliver pay-as-you-go insurance services and overcome legal barriers in a time of crisis.”

Williams agreed that a key issue was time.

“It seems the UK government is committed to transforming the way we travel around towns and cities, through pedestrianising certain areas and fast-tracking the e-scooter trial,” he said. ”However, it could take years for both regulation and infrastructure to catch up.”

He cited how far behind the UK was in developing safe cycling routes, warning that more users on the road could see more accidents, especially as some riders may not be experienced enough yet.

“We would advocate compulsory helmets for e-scooters, for instance, but we don’t yet know whether this will be introduced,” Williams said.

”It could therefore be challenging to create a product that covers the various forms of micro-mobility and allows us to price the risks correctly, given that so many are currently untested.”

Ripe has always been responsive to shifting trends in consumer behaviour Willams added and hinted the development of an e-scooter product.

Wider policy issues

But Baker said this issue also leads to other wider policy questions in respect of where any potential change in road traffic liability and switching the burden of proof could lead to. Could this be extended to pedestrians, children on scooters, electric wheelchair users, for example?

“There is a current government consultation that includes micro-mobility and e-scooters and this has highlighted the anomalous position of bicyclists in the current regime – they are not regulated, licensed, or subject to RTA law (Road Traffic Act 1998) requiring compulsory insurance, whereas all mechanically propelled vehicles are.

”A presumption of liability would add to the unique treatment of cyclists as road users.

“Another unintended consequence of a change in the law could be higher motor insurance premiums, which neither the public nor the government would want.

”Courts already rightly view injured cyclists with sympathy and where they have suffered injury due to negligent driving then full and appropriate compensation is awarded and this will not change.”

Read more…Confusion remains on insuring e-scooters as government fast-tracks trials ahead of coronavirus lockdown exit

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