Classic car insurance is one of the most stable lines of coverage in the industry when it comes to rates. But since the recession, it’s also expanded rapidly—to the point where “it’s almost like shooting fish in a barrel,” says Jim Kruse, program director at Condon Skelly Collector Car Insurance.
Not interested in this niche? You might want to re-consider.
Pricing Trends
With the exception of geographical nuances and liability line items, which might experience some single-digit increases, classic car insurance pricing will continue to be “relatively stable—it has actually been relatively stable for years,” says McKeel Hagerty, president and CEO of Hagerty.
But some insureds are still feeling ripple effects from Superstorm Sandy. “As a flooding event, as much as it’s shaken up the regular auto market, it’s certainly going to shake up the classic car market too,” says Hagerty, who notes in particular misconceptions about whether classic cars should be considered an auto or property risk.
“Despite what people think—‘well, fender benders happen to a classic car’—Superstorm Sandy reminds us that it’s often when these cars are sitting in the garage when they’re at their greatest risk,” Hagerty explains.
Kruse (pictured above left in a 1938 Dreyer Spring car during the Antique Automobile Club of America meet in Auburn, Ind. this spring) says N.J.-based Condon Skelly has noticed some pullback from other companies when it comes to writing coastal business. “But that has not affected us at all,” he says. “If anything, people are finally waking up to the fact that they live coastal and they’re going to have to be more careful.”
That means opportunity is expanding—and not just in hurricane-prone areas. “It’s a really hot market,” says David Spencer, senior vice president at ACE Private Risk Services. “Ever since the financial meltdown in late 2008, the market has grown incredibly. It’s hot enough that it’s becoming part of an overall investment diversification strategy as well as a passion.”
On the Horizon
What will that entail? Spencer says to keep an eye on emerging classes like sub-collectibles, noting as example one large collector who focuses on “last run” models. “He had a huge collection of some later models—the last or second-to-last cars off the assembly line,” Spencer explains. “When you amass 20 or 30 of the last Pontiac Bonneville and the last Chevy Laguna, that’s not your typical grandfather’s collection anymore.”
Spencer also notes opportunity for selling to clients with large collections, citing the recent sinkhole disaster at Kentucky’s National Corvette Museum. In those cases, agents “face not just the insurance on each individual car, but the totality of the collection,” he explains. “Is it in a building that’s properly protected from a fire, burglary and theft standpoint? Making sure the building structure and the security around it are safe—and offering advice on how to improve that—is also part of the process.”
Meanwhile, the definition of “classic car” is rapidly expanding. While insurers of the past tended to think of collector cars as older street rods, antiques and other models from the 1970s, 1960s and pre-WWII era, “more people are looking at newer cars from a collector standpoint,” Kruse says.
Now, newer classic cars are taking on a new life of their own. “1989 is a 25-year old car now,” Hagerty points out. “Everybody’s sort of struggling to reconcile, what do you do with these later-model cars that have not typically been thought of as classic cars? Because the clients think of them that way. We deal with tens of thousands of independent agents, and the biggest challenge is that they tend to think if it’s not a Model T Ford, it’s not a classic.”
Shifting that business model will be an ongoing struggle for agents who sell classic car insurance—but one with plenty of benefits if they do it right. “That’s opportunity to save somebody money and get better coverage on that car that’s beloved by the client, but not necessarily seen in a parade on the 4th of July,” Hagerty says.
For tips on how to compete in the classic car market, visit IAmagazine.com daily and check out next week’s issue of Markets Pulse.
Jacquelyn Connelly is IA senior editor.
