Of their own free wheel
The fast-growing world of cycling offers exciting potential for insurers, suggests Roger St Pierre
The fast-growing world of cycling offers exciting potential for insurers, suggests Roger St Pierre
Many years ago, a distinguished French journalist famously wrote: “If horse racing is the sport of kings, then cycling is surely the king of sports.” The current global two-wheeler boom – with bicycles now outselling cars in many countries, especially in the developed world – has been ascribed to many factors. The financial pressures of the global recession and the quest for a healthier lifestyle have led to a massive increase in cycle commuting, spurred by better-designed road systems with safer cycle lanes; various tax-free and grant-aided bike purchase schemes, and the now wide availability of fleets for hire by the hour, day or week, where bicycles are provided by the authorities and private operators in cities around the world – from Paris and London to Washington DC, Denver, Mexico City, Rio de Janiero, Brisbane, Mumbai, Beijing, Hong Kong and Tel Aviv. Globally, there are around 400 such ‘bike sharing’ schemes in operation, with a combined fleet of around 236,000.
At the other end of the spectrum from the commute or the simple ride down to the shops, cycling has gone determinedly upmarket as a health and leisure pursuit: “It is being enthusiastically cited as ‘the new golf’,” says Carlton Reid of The Bike Biz trade magazine. Dust-gathering bags of Titleist clubs are being confined to the bowels of urban garages while Colnago, Pinarello, Cervélo and other 22-geared bikes – today costing as much as €15,000 apiece at the top of the range – now stand proudly alongside the gleaming Porsche or Ferrari, right by those electronically opening garage doors, with tyres pumped to 120 lbs a square inch and ready to ride.
Bicycle usage is expanding in the holiday arena too. Highly popular professionally organised cycle touring holiday packages are now challenging cruising as the travel industry’s most vibrant growth area, with German cycle tourists leading the way, and the Dutch, Americans and Canadians close behind. Major tour operators are competing with specialist cycle touring companies while numerous three, four and even five-star hotels are now offering dedicated cycling packages.
So, what does all this mean for travel insurers? Do the travel insurance policies currently on the market meet the needs of those wishing to peddle their way around their holiday destination? Or is there room for improvement when it comes to underwriting bicycle-related cover? And what should underwriters bear in mind when considering cover limits for cyclists?
A bicycle made for two
On one Spring week alone this year, a claimed 50,000 cyclists invaded the Mediterranean sunshine island of Mallorca – today the unofficial spiritual capital of the sport and pastime. Many were there to train for the rapidly approaching racing season, but most were simply enjoying a highly active alternative to lazing on some beach. For them it was Lycra Nirvana.
“A decade ago, most of our guests would have looked down on anyone arriving here by bike, but now they are joining them,” says Malcolm Wyse, marketing director of Read’s, the island’s most exclusive luxury country house hotel, which today hosts cycling holidays packaged by the travel division of Trek, the renowned American bike maker, and also maintains its own fleet of top-end Giant bikes for guest usage. “We are now keen cyclists ourselves and often join the visitors on their rides,” adds Malcolm.
In the UK, the so-called ‘Olympic Legacy’ effect has nowhere been more powerful than in the world of two wheels. The success of Britain’s Olympic cycling teams has moved the previously Cinderella sport into the headlines, while the humble bicycle’s new status is reflected by its current usage as a prop in so many television and press advertising campaigns. The payback of all this is shown in the fact that combined membership of British Cycling and the CTC (the former Cyclists Touring Club) is rapidly approaching 200,000, with a massive year-on-year growth.
professionally organised cycle touring holiday packages are now challenging cruising as the travel industry's most vibrant growth area
The bicycle boom is not confined to British roads, however. While car usage is exploding across China, India and most of Asia, transport authorities throughout the developing world report an equally massive increase in bicycle traffic. Across the planet, cyclists now clock up an astonishing 22 billion miles a year. Cycle commuting and leisure riding are booming, even in countries where a ‘Can’t you afford a car?’ stigma has previously been attached to cycling.
Sportive events – races in all but name – attract huge entries, the keynote event being the Étape du Tour, which follows the route of one of the Tour de France’s toughest mountain stages and has its field limited to 30,000 participants. Another monster event is South Africa’s 109-km Cape Argus mass ride. Now London’s ebullient mayor Boris Johnson plans to upstage both those with what promises to be the world’s largest mass participation ride – a sort of London Marathon on wheels.
According to Richard Peace of website Bike Radar: “In 1950, worldwide bike production stood at around 11 million and motor car production at around eight million. Since then, bike sales have gained a huge margin with more than 130 million now produced annually compared to roughly 15 million cars. Even if you deduct the 25 million electric bike sales from the annual totals that’s still a clear 2:1 ratio in favour of bicycles. Germany at present buys more bikes than any other EU country, at around four million a year, followed by the UK, at 3.5 million and growing.”
The German experience is interesting. In an extensive report commissioned by the Federal Government’s Transportation Research Board, Tobias Kuhnimhof of the University of Karlsruhe (the city where Karl Drais invented the hobbyhorse – forerunner of the bicycle) and his researcher colleagues reported: “The natural domain of the bike as a means of transport is within a three to five kilometre radius around the home or holiday base.”
In the US, the motor vehicle market has shrunk dramatically in recent years. In 1999, some 10 million cars were sold there annually, a figure that now stands at an estimated seven million. In contrast, cycle sales hover at around 20 million, a figure that, according to the National Bicycle Dealers Association, generates a $6-billion industry. The expanding global popularity of cycling, though, has resulted in a number of problems.
On your bike
With top of the range bicycles now costing upwards of €15,000 a piece, theft has become a major problem, raising key insurance issues. In the UK, a bike is stolen every minute (that means 480,000 a year), with fewer than five per cent ever being returned to their owners. In Copenhagen, there are 20,000 bike thefts annually and for the US, the figure is a whopping 250,000. Globally, 1.5 million bikes are recorded as stolen each year, with a further three million thefts being thought to go unrecorded – which explains why many insurers now insist on tagging and registration with organisations like the Houston-based International Bike Registry. Another solution is the greatly increased provision of secure bike parking depots springing up in major cities.
A rash of law firms offering ‘no result, no fee’ services in personal injury cases also impacts on insurers. So here’s an issue for travel insurance providers: just what are the risk levels associated with riding a bike? Well, not as high as you might think. While falling off now and again might seem to be practically de rigeur, simple grazes and cuts, not death or serious injury, are usually the result, with damage to clothing and the bike usually worrying the victims more than injury to their person (a recent Belgian SHAPES study concluded the overall cost of cycling accidents to be €0.12 per km covered).
There are, as we know, lies, damn lies, and statistics and cycling accident figures can be made to seem alarming, but cycling lobby groups contend that this is quite unjustifiable. For starters, the data is usually based on accident-per-km records where, in reality, time at risk rather than distance travelled is more pertinent. In the US, cycling accounts for just one per cent of all journeys, but also one per cent of all road deaths – but that’s on a distance covered basis.
38,000 cyclists were reported as injured in the US during 2011 - down from 61,000 in 1995
In the UK, on a per-km basis, cyclists are eight times more likely to sustain serious injury or be killed than occupants of motor vehicles, but then it takes up to six or seven times longer to cover that kilometre on an open road, so it can be argued that cycling is the safer form of transportation and prevailing insurance rates would appear to confirm this notion.
According to America’s National Highway Traffic Safety Administration (NHTSA)’s Traffic Safety Facts report, 38,000 cyclists were reported as injured in the US during 2011 – down from 61,000 in 1995. In the same period, cycling fatalities fell from 830 to 677, with the total cost of cyclist injury and death now running at just over $4 billion a year, according to the National Safety Council. Here’s a fact: According to ROSPA – the Royal Organisation for the Prevention of Accidents – a child cycling to school is statistically safer than his classmate being ferried there aboard mum’s SUV.
Even expert riders can fall foul of bad drivers though. Last year, both Tour de France winner Sir Bradley Wiggins and his coach, Shane Sutton, were knocked off their bikes and required hospital treatment. An intensive study conducted on behalf of Direct Line Car Insurance used revolutionary eye-tracking technology to monitor actual driver behaviour, which shockingly revealed that the nationwide study group failed to notice a massive 22 per cent – around one in five – of the cyclists they encountered, despite the two-wheelers being within clear view of the driver’s windscreens. Motorists using sat-nav devices were found to be five-per-cent less likely than others to see cyclists. Says Direct Line’s Vicky Bristow: “For the first time, we know exactly where people focus their eyes when driving and the results are frightening. Today’s roads are busy and congested and as a result millions of cyclists are going unseen. Blaming motorists seems like an easy option, but this issue can only be really addressed if both motorists and cyclists accept responsibility.”
Cyclists can, it has to be acknowledged, themselves cause injury to others. A study for the Institute for Road Safety Research in the Netherlands showed that while 47 per cent of cycling accidents involved nobody but the rider, collisions with animals and obstacles accounted for 12 per cent, and crashes with other road users made up 40 per cent; the remaining one per cent being through other causes. It should be noted that less than 10 per cent of cycling accidents are ever reported to the authorities.
As insurers already active in this sphere are aware, cycling injuries are not all caused by crashing. Knee pains, including those from osteoarthritis are common, as are muscle cramp, strained muscles, sprains and numb hands after prolonged periods gripping the handlebars.
Furthermore, in most countries – Belgium being one notable exception – there is no legal requirement to license a pedal cycle, let alone to have insurance for riding it: “It’s an age-old complaint that cyclists in most countries do not have to licence their machines or pay any road tax, but this is not true for most of them as the vast majority of cyclists also have a motor car, and also pay income and council tax, so they already contribute,” observes Carlton Reid, of trade magazine Bike Biz.
Insurance options
There is a wide variety of cover options available for people wishing cycle when on holiday. Travel insurers generally cover cycling on even their basic policies, but usually only where cycling is not the main reason for the holiday; while some limit cycling cover to a certain number of days – such as the AXA policy offered through tour operator Thomson in the UK, which only covers cycling for two days. At the same time, many travel insurance policies exclude more extreme cycling such as BMX riding or mountain biking; and in a similar vein, some – such as the international travel insurance policies from Columbus Direct in the UK – specifically exclude ‘cycle touring’, where travellers would be expected to be riding a bike pretty much every day, but include incidental cycling. Standard travel insurance policies also differ with regards to whether – and to what extent – they cover bikes under the personal possessions part of the policy and whether – and to what extent – they offer personal liability cover related to bicycle use.
Thus, anyone heading off on holiday with the specific intention of cycling for the majority of their trip are increasingly seeking out more specialist cover that provides medical and personal liability cover for more than just ‘incidental’ bicycle use. This is offered as an add-on by many insurers, while a significant number of mainstream insurers, such as the UK’s InsureandGo and Essential Travel, also specifically market ‘cycle touring’ travel insurance. Other, specialist insurers dedicated to insuring cyclists are also gaining popularity, and offer higher cover limits for bicycle repair and replacement, personal liability, theft and accidental damage to bicycles while abroad; as well as occasionally offering such specialist services as bicycle repatriation alongside ‘human’ repatriation.
Whether looking at the cover offered by high-street travel insurers or specialist ‘cycling tour’ travel insurers, cover varies quite widely in terms of cover limits and the fine print related to actions or circumstances that may invalidate cover. If you return to your home country as part of a round-the-world cycle tour – for example – under some policies, your cover ceases to be valid. Furthermore, some policies, such as that provided by Citybond Suretravel, require cyclists to have pre-booked accommodation for a minimum of two consecutive nights.
Citybond works with the UK’s CTC, whose touring officer, Andy Hawes, comments: “Our membership get inclusive third-party insurance, apart from the US and Canada, as well as free UK only legal advice and we offer competitive comprehensive travel insurance policies but, due to rocketing costs, repatriation coverage is becoming prohibitively expensive to for us to provide.”
Specialist insurers are also offering cover for such things as legal advice, ride and event organiser – and activity provider – insurance. In Australia, for example, the well-established Cyclecover Gold policy bundles cycling, home and contents cover together: “We believe this is the most cost-effective way of insuring bicycles whilst providing the best cover in the market,” a Cyclecover spokeswoman told ITIJ, adding: “Being a full accidental loss or damage policy, Cyclecover Gold also provides superior cover on the policyholder’s building and/or contents. Bicycles are covered anywhere in Australia and New Zealand anytime of the year and for up to 100 consecutive days worldwide. There is no need to list bicycles on the policy as they are automatically covered up to the sum insured with no limit per bike or on the number of bikes covered. The policy’s full replacement cycle cover includes theft, accidental damage and crash damage, even whilst racing, and AUS$20 billion of liability cover is also included.” If you want to add travel cover, though, for such eventualities as medical expenses or travel delay, that comes as an additional policy in conjunction with QBE Insurance.
Today's roads are busy and congested and as a result millions of cyclists are going unseen
Despite there being a multitude of cover options available to cyclists in many different countries, it would seem that there is still plenty of opportunity to tap into this market. Companies like Snowcard in the UK, which also offers cover for cycle tours as well as winter sports, have recognised this booming industry and have stepped in to provide the cover cyclists are seeking. “It’s a travel insurance market ripe for the picking, especially in the developing world,” believes Tour of China organiser Alan Rushton.
This is a vast and fast-growing business opportunity for those travel insurance providers who are willing to include cycling and the kit that goes with it among the things they cover. And there are potentially lucrative add-on cover options too, such personal injury, medical, repatriation, and third-party liability.
Fortunately – for cyclists as well as the industry – insurers elsewhere are waking up to cycling’s new-market potential: “The cycling world is rapidly expanding its frontiers and that spells a wealth of opportunities of new business for entrepreneurial insurers,” concludes 41-year-old City underwriter Jason Thomas, himself a 22-miles-per-day cycle commuter.