Introduction

The UK motorcycle insurance market experienced significant competitive pressures in both 2005 and 2006. This report examines the reasons behind this competitive situation, as well as providing information on GWP, premium rates, and vehicle number growth. It also provides a GWP forecast up to and including 2011, making it essential for those with an interest in the motorcycle insurance.

Scope

• Detailed competitor analysis, comparing the relative performance of all the major and emerging market players
• Discussion of the highly concentrated distribution channels
• Market forecast based on industry interviews and Datamonitor analysis

Highlights

The motorcycle insurance market was worth 187 million in 2005, representing an increase of 2.5 per cent compared to a value of 183 million in 2004. This growth marks an improvement on 2004's poor performance, when GWP decreased by 6.2 per cent.

In 2005 some mid-sized players were pricing for growth in an attempt to catch up with market leaders Norwich Union and Equity Red Star. 2006 saw the big players turn the tables on the market, as they sought to regain market share and assert their dominance.

Due to the need for specialist sector knowledge, and the proliferation of a more diverse set of risks, brokers play a more significant role than direct distributors. Among specialist motorcycle intermediaries, Carole Nash and Bennetts are the two biggest names.

Reasons to Purchase

• Gain insight into market conditions through analysis of key trends and issues effecting current and future market performance
• Compare competitor performances and strategies using current and historical data
• Plan ahead with Datamonitor GWP forecasts based on industry interviews and in-house analysis

• Chapter 1 Introduction
  • What is this report about?
  • Who is the target reader?
  • How to use this report
• Chapter 2 Market Context
  • Introduction
  • Competitive pressure in the motorcycle market kept growth low in 2005 and 2006
  • Competitive pressures kept premium rates flat in 2005, but a small increase in the number of vehicles helped secure modest GWP growth
  • High levels of competition continued in 2006, further subduing GWP growth
  • The two main drivers of GWP growth, premium rates and vehicle numbers, pulled in different directions in 2005
  • Motorcycle premium rates were mainly flat in 2005, and declined further in 2006
  • The motorcycle parc is growing steadily, maintaining overall market growth
  • The motorcycle parc is getting older, as the number of new registrations falls
  • Powerbikes dominate the motorcycle parc, with the smallest vehicles being second most popular
  • The Honda CBR 1000 RR was the most popular bike in 2006
• Chapter 3 Claims
  • Introduction
  • Motorcycle claims inflation is driven by personal injury costs, repair costs, and motorcycle theft rates
  • Personal injury claims costs are the primary driver of claims inflation, while repair costs and theft rates play secondary roles
  • Fraud plays a role, although it is not considered to be a driver of claims inflation
  • Both the number and rate of motorcycle casualties have fallen since 2001, with beneficial consequences for personal injury costs
  • Stricter pass rates in motorcycle tests contribute to safer riding standards
  • It is not the number of personal injury claims but their cost that is a problem for insurers
  • The number of motor personal injury claims increased by 7.5 per cent in 2004/5, but overall numbers have not changed significantly in the last five years
  • Motorcycle theft numbers grew between 2001 and 2003, but frequency of theft decreased as vehicle numbers rose
  • New bikes of less than 125cc are most at risk from theft
  • Insurers have adopted a number of strategies to combat claims inflation
  • There are a number of initiatives focused on reducing private motor claims costs, and a few are for motorcycle insurance specifically
  • Rehabilitation is increasingly seen as an important strategy in controlling costs
  • Rapid treatment care could save on bodily injury claims costs
  • Insurers set up repair networks to combat garage costs
  • Tracker debuts a motorcycle product but most insurers see little impact, due to high costs to the public
• Chapter 4 Competitive Dynamics
  • Introduction
  • New entrants to the motorcycle market are scarce but existing players looking to write more business in this sector have kept competition levels high
  • New entrants to the motorcycle market have been rare in recent years
  • Competition levels were high in 2005 due to mid-sized players looking to increase their exposure to motorcycle insurance
  • In 2006, the biggest players were the main source of competition
  • Some insurers targeted market share in 2005, while others suffered due to increased competition
  • Some players grew their motorcycle books in 2005
  • Five players saw their motorcycle books come under attack in 2005
  • Specialist brokers remain the main distribution channel in motorcycle insurance and have a strong influence over the market, while other distribution channels play secondary roles
  • The direct channel has made little headway in the motorcycle market
  • Motorcycle manufacturers and dealers form an important part of the distribution picture
  • However, brokers remain secure in their dominance of the motorcycle insurance market
  • The amount spent on motorcycle advertising fell in 2005, as some manufacturers reduced their advertising budgets significantly
  • Brokers dominated advertising spend in 2005, with motorcycle manufacturers spending less than in 2004
  • Devitt and Bennetts spent by far the largest amounts on advertising in 2005
• Chapter 5 The Future Decoded
  • Introduction
  • Motorcycle GWP is expected to display short-term stagnation, followed by steady increases
  • The motorcycle market is forecast to reach a value of 230 million in 2011
  • Premium rate decreases kept GWP growth subdued in 2006
  • GWP growth is forecast to rebound in the second half of 2007 as competitive pressures ease
  • Future GWP growth will increasingly rely on premium rate increases
  • The industry fears that an EU Directive will have a negative effect on the growth of the motorcycle market
• Chapter 6 Appendix
  • Supplementary data
  • Definitions
  • Research methodology
  • Primary research
  • Secondary research
  • Competitor data
  • GWP versus GEP reporting
  • Future readings
  • Relevant links
  • Datamonitor's custom research capabilities
  • SPP writing team
• List of Tables
  • Table 1: Motorcycle, private and total motor insurance GWP, 2001-6e
  • Table 2: Licensed motorcycles by taxation class as a proportion of total vehicle stock, 2001-5
  • Table 3: New registrations of motorcycles and all vehicles, 2001-5
  • Table 4: Motorcycle parc by engine size, 2001-5
  • Table 5: Top 10 new motorcycle registrations by brand, year to date, October 2006
  • Table 6: Motorcycle parc, motorcycle casualties and casualty rate, 2001-5
  • Table 7: Road accident casualties in the UK, 1995-2005
  • Table 8: Number of motorcycle tests and pass rate, 1995/6-2004/5
  • Table 9: Number of motor personal injury claims, 2001/2-2004/5
  • Table 10: Average cost of a motor personal injury claim, 2000-4
  • Table 11: Motorcycle premium income by competitor, 2001-5
  • Table 12: Top motorcycle insurance brokers by GWP and policy numbers, 2005
  • Table 13: Top 10 motorcycle insurance advertisers, 2004-5
  • Table 14: Top 10 motorcycle insurance advertisers by medium, 2005
  • Table 15: Motorcycle GWP forecast, 2001-11f
  • Table 16: UK motorcycle competitors by market share, 2001-5
  • Table 17: Top 10 motorcycle insurance advertisers, 2004
• List of Figures
  • Figure 1: Motorcycle GWP growth rebounded in 2005 from the fall seen in 2004
  • Figure 2: Growth in the motorcycle parc slowed in 2005
  • Figure 3: After a sharp contraction in 2004, new registrations leveled off in 2005
  • Figure 4: The motorcycle parc remains split between power bikes and small bikes
  • Figure 5: The motorcycle casualty rate is falling as a proportion of the motorcycle parc
  • Figure 6: The proportion of candidates passing their motorcycle test has fallen over the last decade
  • Figure 7: The number of motor personal injury claims increased in 2004/5, however there has been little change overall between 2001/2 and 2004/5
  • Figure 8: Equity Red Star remains the largest player recovering some market share in 2005
  • Figure 9: Manufacturers have a wide range of insurance offerings
  • Figure 10: Devitt and Bennetts spent far more on advertising than the rest of the market in 2005
  • Figure 11: Key to the relative importance of forecast variables
  • Figure 12: Assumptions for motorcycle GWP forecast
  • Figure 13: Growth in GWP is forecast to be steady after 2007
  • Figure 14: Datamonitor's core consulting capabilities