It is about the bike
Lance Armstrong may have tried to convince the world it’s not about the bike, but his credibility has gone down the tubes, and anyone who has recently repaired or replaced a bike will tell you – it is very much about the bike.
Bicycle insurance is becoming ever more popular as the cost of bikes skyrocket, and the popularity of road cycling and mountain biking continue to take hold. Bicycle insurance products have also evolved to keep up with the requirements of these fast- paced adrenalin chasers. “The most expensive bike on our books is R180 000,” says Cyclesure MD, Fred Hennings, putting things into perspective for RISKSA. Chris Willemse Cycles Willowbridge branch manager, Marnitz Aucamp, affirms these figures, noting that in the last week, the store has sold custom built bicycles for R112 000 and R94 000. While the most expensive bike sold recently was R140 000, Aucamp notes that the average cost of bikes sold is about R70 000. " Cycling has become a very popular sport, and it is very popular among financially savvy people – you can see this in the way people negotiate on price – and for this reason most people will insure their bikes," Aucamp adds. Sean Botha, MD of Policy Provider, with its cycle specific insurance product iCycle, tells RISKSA that the most expensive bike it covers is about R150 000. Indeed, these are not prices reserved for professional cyclists, but rather the average businessman, as this is the sport that is seen to be overtaking golf in popularity among business people. The first bicycle specific insurance product on the market in South Africa was from Cyclesure, which opened doors in 1998. Backed by Hollard, Hennings notes that in the last three years the company has seen a tremendous increase in uptake of the product. Sales consultants in stores will often recommend that clients who spend more than R15 000 or R20 000 on bikes make sure that they have insurance. Bicycles can be added on to household insurance policies, which Aucamp
Blaze of glory
Getting bikes from around the country to Cape Town in time for the Argus cycle race is known to be quite a task, but for some cyclists headed to the race this year, it turned out to be a disaster. Henning explains that a truck loaded with bikes specifically to be transported to Cape Town for the Argus caught fire on route. The entire cargo was destroyed. Cyclesure insured six of the bikes on that truck, and Henning notes that all six cyclists were able to replace their bikes before the Argus and were able to ride in the race. Unfortunately, not all of the owners of burned bikes were that lucky. In another transit to Argus story, Henning explains that four cyclists were travelling to the race together, and the trailer opened on the road at high speed and all four bikes went tumbling out onto the road. Two of those bikes were insured with Cyclesure, and those riders were able to replace their bikes and ride the Argus. Henning notes that during the Argus, Cyclesure has agreements with nearby dealers to be on standby 24 hours a day for potential claims. The same goes for other big races nationally, including the 94.7 challenge in Johannesburg, and the Amashova in KwaZulu- Natal. Cyclesure also has agreements with cycle dealers internationally and can arrange for repairs or replacements overseas as well, if need be. notes is worthwhile because the majority of insurance related quotes received by this cycling store are to replace stolen bikes. “In the past, having bikes insured under household policies was not an ideal way to do things, but I think the insurance industry has become a lot more clued up on cycling, and they have stepped up to the plate. I have been very impressed,” says Aucamp. Most insurers, including the likes of Santam, Mutual & Federal, Momentum, Discovery, Auto & General and so on, will cover bicycles, but this would have to be alongside a home and contents policy for example. Previously, damage sustained in events or in transit were not covered, however this is fast changing as insurance providers understand that without this they will not have a competitive product. Direct insurers in the space include Outsurance and Telesure’s MiWay. It is worthwhile to advise clients to adequately appraise the bike, particularly if it has been modified and upgraded because often insurers will limit the value of the bike to no more than R70 000. Aucamp notes that if issues arise during the claims process, they are most often with direct insurers. “Generally we find that if a broker is handling the insurance, they fight the fight for the client, and will take it to the Ombud if need be.” Brokers will also know that cycle specific insurance offers wider cover than general household insurance. If claims from cycling occur more often, this can also negatively impact the client’s ratio, and have a bad influence on the overall household premium. While complaints against insurers seem to prevail no matter what asset is being covered, Aucamp also notes that a lot of the time, the problem is that cyclists try to make unethical requests and take advantage of insurers either by underinsuring or asking for inflated quotes. “This is frustrating as a retailer, because it is simply unethical,” states Aucamp.
While general short- term insurers continue to improve their offerings in this space, avid cyclists, and brokers canvassed by RISKSA, agree that cycle- specific insurance particularly for custom bikes is worthwhile. It is an arena where insurers and brokers have little room for error, because this is a tech- savvy and well- educated market, with active online communities making recommendations, and posting warnings about brands and products. Cyclesure is the well established brand on the market, and will cover for events, in training, theft or damage in transit while at home or if staying away from home at a guest house for example. The company also provides liability
cover, in the event of a cyclist causing an accident, as well as special accident and death or disability cover. Cyclesure also provides trauma cover for cases of violent theft or hijacking of bikes. There is also the Cyclesure ER24 SweatSafe emergency medical protection benefit, which allows for emergency evacuation, and medical expenses coverage. The company also provides event liability cover for race organisers. Cyclesure is looking at ways to enhance its products, and prides itself on its 24 hour claims turnaround once paperwork has been received. “Our service is what differentiates us, we are all cyclists, so we understand how important it is to get back on the bike and not interrupt training,” says Henning. All Cyclesure staff go on mechanics courses, so that they know exactly how to underwrite properly because they understand how the bikes work, exactly what components are important and what they cost. This is also useful in the claims department. A newcomer to the market is i- Cycle Insurance, a product from UMA Policy Provider, which is underwritten by Genric Insurance. Operational for two years now, Policy Provider MD Sean Botha, says that the growth over this period, albeit off a small base, has been phenomenal. He reiterates that iCycle truly understands cycling, and builds this into policies, for example, where sets and pairs may not be understood in regular domestic insurance, leaving the client with two different rims, because they are only willing to replace the one that is damaged. Botha notes that iCycle is also building in a number of product enhancements such as a no claims cashback bonus, and excess buyback, and, at this stage will cover bikes stolen with no signs of forcible entry. The company is also in discussions to align the product with a medical aid wellness programme, which could deliver mutual benefits.
Henning says that there was a spike in violent cycling related crimes about six years ago. However, in the last 18 months, these seem to be increasing again. The expensive bikes are usually taken out of the country, to Mozambique or Zimbabwe, for example, because using them in South Africa would likely attract attention, and no reputable cycle dealer would buy a stolen bike. Despite the increasing cost of bikes, it is interesting to note that there is not much of an increase in use of tracking devices on bicycles, largely because the cost of recovery, and deploying helicopters and so on to recover the bikes es would outweigh the cost of the bike. The issue ssue of where to put a tracker on the bike, as well as the fact that if it is easily e viewed, and could uld be easily removed, also mean that this is not a very viable option.
Tips for brokers
Riccardo Stermin, accounts executive at Phoenix Phoen Risk Solutions, which promotes insurance for cyclists through Pedalcycle Insurance, says that it is worthwhile going with a cycle specific insurance product, because they understand the market. “Make sure your clients know about the restrictions, so that they will know where they stand when it comes to claims. It is worth reminding them to make sure transport is extra secure, and never leave the unattended bikes unchained, that way there are no surprises at claims stage,” he concludes. As with most things, keep proof of purchase and get the bike appraised.