The popularity of motor sports has grown as it has become more acessible to a wider audience. Steve Smith looks at the risk assessment proceedure underwriters must adhere to.
Things have come a long way since 1885 when Karl Benz invented the first car powered by the internal combustion engine. Motor cars and Motor Sport is today more accessible than perhaps ever before; people work their way up from karting, like Lewis Hamilton, to people being bought a ‘track day’ as a birthday or Christmas present.
As a result, involvement in motor car sport is a common application disclosure and this article will cover the various types of motor car sport and the underwriting considerations of each area of motor sport. In those instances where a loading is suggested it is for life cover, a motor sport exclusion will usually be applied for critical illness or income protection cover.
Track days.
We now see more people making this type of disclosure and getting the chance to drive one of their dream cars. As they are under the instruction of an experienced driver throughout the day applications are usually accepted at standard rates.
Karting.
This is a common starting point for many people. Despite the small engine and wheels, many Karts are capable of going very fast due to their small frame and chassis. As a result, there is an increased risk of injury as the driver is not enclosed like they would be in a normal car. However, most are likely to be offered standard rates for life cover.
Formula 3, Formula Ford 2000, Formula Vee.
These classes of motor sport are widely recognised as the breeding ground for drivers aspiring to reach the highest levels. They allow people to increase their experience in different types and powers of cars. At these levels, most people are self funding their involvement, with some getting additional help from sponsorship. A loading around 1 to 2 per mille (£x extra per annum for every £1,000 of cover) for life cover is likely.
Touring Cars.
The British Touring Car Championship 2009 is made up of a mixture of factory teams and private individuals racing ‘production cars’ that would commonly be seen on the UK’s roads, such as the BMW 3 series, Vauxhall Vectra, Honda Civic etc, around circuits such as Brands Hatch and Silverstone. Typical loadings for life cover for people competing in this form of the sport will range from 2 to 6 per mille.
Rallying.
This is quite a high profile sport. This tends to be people driving for factory (manufacturer lead) teams, rather than private individuals. It involves racing on a number of different surfaces, ranging from tarmac to ice. However, driving through forests and along dirt tracks with only your co-driver to tell you what is around the next corner carries its own risk. A loading from 2 to 6 per mille may be applied for these cases.
Grand Touring (GT) Cars.
These are heavily modified versions of commercially available cars, such as the McLaren F1, Porsche’s 911 GT and Aston Martin’s DB9, that compete on closed tarmac circuits, often in endurance races, such as the Le Mans 24 hour race. Terms for life cover typically range from 2 to 5 per mille.
Formula One.
This is seen as being the pinnacle of motor car sport. Although safety is of paramount importance, and is a key part of the Federation Internationale de l’Automobile (FIA) regulations, many people will recall one tragic weekend at the San Marino Grand Prix in 1994 when two drivers, Roland Ratzenberger and three time world champion Ayrton Senna died.
From an underwriting point of view, as there are such a small number of teams, (only 10 competing in the 2009 championship) and each team only likely to have two main drivers, plus one or two test drivers, the risk of an accident causing death or serious injury is still relatively high. Applications from any of the drivers would be treated individually but a loading of between 6 per mille to 15 per mille is likely.
Assessing risk
An underwriter may require the following information:
- What type of events do they take part in? (eg circuit racing, rallying, drag racing etc)
- What specific type of vehicle do they use? (include make, model, engine size etc)
- What level do they take part in? (Formula Ford 1600 etc)
- How often have they participated in the last 12 months? (ie number of races)
- What is their expected involvement in the next 12 months? (ie number of races)
- Where do they compete or race? (names of circuits, countries etc)
- Are they sponsored?
- Do they compete as an amateur or professional (if an amateur, the current age and occupation may be an indicator of possible progression to professional status)
- By asking the right questions about the type of motor sport involved at the outset, underwriters can help ensure the correct price is charged for the risk, while still providing suitable cover for the client.
Steve Smith is an underwriting developer at Zurich
Sources:
RGA, Munich Re, Gen Re
www.btcc.net, www.wrc.com
