Katie Small, board director at insurance broker R K Harrison on how to keep premiums down after accidents
Recently I’ve been thinking a lot about supercars and their high profile drivers. Working with high net worth individuals, they’re always on my radar but two things have brought them specially to mind recently.
Firstly, because all the newspapers were carrying stories about Rowan Atkinson crashing his McLaren F1 into a tree for days. It’s not often you see a picture of a car like that, gold engine exposed, wedged half way up a tree. At over £900,000, the insurance pay-out was enormous, and I can only assume Rowan’s premiums at his next renewal will be as well.
Secondly, we’re coming up to one of our two busier times of year with our footballer clients. Our footballer business tends to go a bit quieter during the transfer window, and then picks up around March when deals are in the bag and pay cheques are coming through. Our other busy time is September, when they return from their respective summer breaks, compare new toys and then head to the shops.
After all, they’re the big earners of our times. Last summer this LondonlovesBusiness.com article reported that top footballers have seen pay rises of 1500% over the past 50 years, compared to the 186% seen by the average UK citizen. According to this article, average Premier League wages are £22,353 a week before bonuses, which mounts up to £1.16m per year.
When a footballer comes into money, their thoughts seem to go straight to the supercar showroom. One player recently brought a £200,000 Ferrari when he negotiated a new contract. Another 21-year-old got an Aston Martin. A noticeable trend at the moment is for Mercedes (probably because they currently offer discounts for VIPs), but Audi Q7s and Range Rovers are always popular too. These aren’t long or even medium-term investments either – footballers change cars frequently, maybe on average every 18 months.
Any vehicle worth more than £50,000 needs specialist insurance, which is expensive for younger, less experienced drivers. Those in the public eye should also be aware that their media image can make a difference.
For an older, experienced driver with a relatively sedate persona (like Rowan Atkinson), we’d expect their insurance to be priced in the same way as non-celebrities. For the under 25s, with less experience behind the wheel, it can make a difference. Those who feature in the media misbehaving, whether its accurately reported or not, may be perceived as a worse risk by underwriters, which could increase their premium. When we work with footballers and other sportspeople we usually go on the rule that coverage in the back pages of the newspaper is fine, but anything in the front half might be problematic.
The other thing that worries insurers is that footballers are likely to be friends with other footballers. I don’t think that many footballers car pool (why would you share a ride when you’ve got your own Ferrari on the driveway) but underwriters get concerned about the possibility that a number of footballers might be injured in the same crash. The personal injury pay-out for one Premier League footballer is big enough; for several it would be enormous.
The occasional smash aside, we don’t see many claims from high profile supercar drivers (and if we do, as Rowan Atkinson’s coverage shows – you’ve probably read about them elsewhere).
However, if we do there are lots of ways we can try to keep premiums down after an accident. The most important point is to ask your broker to conduct a full market exercise to make sure you are getting the most competitive deal, without sacrificing any policy benefits. If your premium is still too high, you can look at increasing your excess to see if that will bring it down.
Otherwise you’d be looking at beefing up the usual risk management measures you’d put in place around high performance cars, which I’ve written about before. This might be limiting the mileage, the named drivers, bundling it together with household and other cars on a portfolio and garaging it over night.
However, when you look at your insurance, particularly for high value items like cars, it’s important to evaluate it on value not the just the cost of the premium.
What might seem high is probably a reflection of better coverage and service, and a good broker will be able to advise you on which is the best value option for you.
Katie Small, Head of Private Wealth for R K Harrison Insurance Services