Five challenges facing motorbike insurance

Last month, RSA pulled out of underwriting motorcycle insurance as it struggled to control costs and grab market share from a dwindling marketplace. RSA joined QBE, Advantage and Equity who have all pulled out or scaled back in motorcycle insurance.

So what’s in store for the sector in 2012? Here’s our list of the five biggest challenges facing insurers and brokers.

1. Falling customer volumes: This is possibly the biggest concern for brokers and insurers. The economic downturn and high petrol prices have led to less motorcyclists using their bikes and that has led to a fall in volumes.
2. Rate rises: Insurers and brokers had reported rate rises in the first six months of 2011, but in the second half of the year those rises tailed off. Despite RSA’s exit, there is plenty of capacity in the market.
3. Bodily injury: Although not as bad as private motor, there are still worrying levels of bodily injury claims. It means insurers will need to be on top of their game in clamping down on fraud
4. The Office of Fair Trading probe and referral fee ban: The OFT is looking very carefully at clamping down on ancillary products, such as personal accident and legal expenses. That could lead to a reduction in ancillary income for brokers. Also, the referral fee ban is set to arrive in 2012, killing off another revenue stream.
5. New technology: Brokers will have to decide how much they want to invest in new technology, such as mobile applications. There is growing evidence that more and more customers are using their mobiles or tablets to buy insurance. Moneysupermarket has launched its own app and Confused are understood to be in the development phase. However, there are concerns that technology providers such as Apple will make acquisition costs too expensive by taking a cut from customers buying via apps.