Older Riders Not Driving Up Bike Rates

"Its nothing today to get a Harley Davidson that weighs over 700 pounds," said Mr. McCafferty, a motorcycle enthusiast who said that his first bike weighed 230 pounds. "If you put a guy over 40, whos not in very good shape, on 700 pounds, thats a lot of weight to manage."

"Whats not being reported is the huge increase in the number of motorcycle operators out there," he said. When you put it in perspective and consider how many more people are driving, the accident rate went up 2 percent, he said.

Overall, insurance rates for motorcycles have changed very little, he said. Noting that "there have been aggressive rate increases by a couple of the largest motorcycle insurers," he attributed the hikes to the need to catch up after years of rate cuts in a soft market.

The biggest concerns in the industry are fraud and theft, which are driving comprehensive claim values "out the roof right now," he said.

Mr. McCafferty knows first-hand just how quickly thieves can strike. Last year while attending a large motorcycle event, he said he witnessed a theft from his hotel room. A van pulled beside a "brand new Harley Davidson, blocking the view of a restaurant across the street," where he speculated that the bikes owner most likely was trying to keep a watchful eye during dinner.

Suddenly, "four guys jumped out with two crowbars," which they positioned between the bikes wheels and used to pick up the bike. The motorcycle was then easily lifted into the back of the van. "I was just in a two-story hotel, but by the time I ran down and across the street they were gone," he said.

Giving one common example of fraud, he said that a dented gas tank costs about $100 to fix. But "most dealers will say they only replace them. So a $200 claim turns into a $700 claim," he said.

"What youll see is the dealer putting a new gas tank on the bike and then fixing that gas tank and reselling it. Weve seen that happen in a couple of states," he said.

Most consumers purchase state minimum limits, typically $25,000-$50,000, he said, adding that senior operators usually need higher limits.

American Modern Homes exclusions are similar to those on a standard auto product, he said.

Drivers are required to have a motorcycle license from their state, some of which require a motorcycle safety foundation course. Although the course is voluntary in some states, taking the course can lead to a 5-to-25 percent premium discount, he said.

Audrey Hanken, vice president of marketing for Markel American Insurance Company in Pewaukee, Wis., said her company has had some minor rate increases this year.

"We believe that our product in every state should be priced for profitability," she said. Rates are reviewed annually "so we dont have a need to take any large increases at any one point in time."

Ms. Hanken said older operators are still a good risk, "particularly older operators on touring bikes."

Markel, she said, reviews the age of the operator, the type of bike and the age of the bike. "Its been our experience that newer bikestend to deserve a little higher rate than bikes that are older," she said, explaining that even an experienced operator "is not necessarily experienced on that particular bike."

Ms. Hanken agreed that theft of custom bikes is definitely a problem. As a result, Markel only insures bikes valued at up to $35,000. "There are a lot of bikes out there that are [valued] significantly higher than that and I think you run into fraud in some of those cases," she said.

Sport bikes typically get higher rates, even though some models are geared to older riders–35 and up, she said. "Unfortunately our experience does not show any difference. If someone is buying a sport bike, it appears that they truly are buying it for speed."

Markels liability limits are up to $250,000 per person and $500,000 per accident, she said. Exclusions are "nothing out of the norm." The company has a standard exclusion for racing, she said.

Like many who write motorcycle coverage, Ms. Hanken, a former motorcycle operator, has experience with the topic. "Youll find very clearly throughout our organization that there are a lot of riders. It absolutely becomes beneficial to our customers on the customer service and claims side," she said. "Our staff knows exactly what the customer is talking about when theyre looking to insure or theyve had a loss."

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, September 10, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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