Classics in decline?

Chris Nelson: The broad topic we are here to discuss today is the dilemma faced by the classic car sector which is basically an ageing enthusiasts base and how to get more young people involved in the movement.

Peter James: We have all been involved for around 25 years or so, which is actually quite frightening in the way the time has gone, and certainly in that time we have seen the movement age. It's to do with the perception of cars. Your average 17-year-old now gets a car as of right. He doesn't have to wait for it which my generation did, and it goes and it doesn't break down. So you don't form a love-hate relationship with it and you don't really aspire to a fast type car, because most cars that 17-year-olds get will do 100mph. So there is no aspirational side. They don't look at a car as I did and think: "I would like a Lotus Elan Turbo." That is part of the problem; they don't view the motor car in the same way.

Andrew Holt: Do you think there is a problem that if you get more young people involved, the insurance premiums on such cars and the claims will rocket, because younger people and especially younger men, have a terrible record in terms of how they look after cars.

James: We do insure from age 17 upwards on classic vehicles. We find that the sort of person who would have a classic vehicle is generally one who would look after it. What has been impressed upon me is the importance of proper profiling. You can write the book where there is only a small percentage. That is really bad news. So long as the underwriting is done correctly, and provided some of the more sophisticated rating measures are taken into account, and by that I mean lifestyle profiling, there shouldn't be a problem.

Holt: How much lifestyle profiling do you need to do?

James: Much is being done at the moment and that is generally true of all young drivers. It is being helped because it is much more difficult now to pass the test. And you have the punitive sanctions if you are caught speeding within a few months of passing your test. So the improvement of young drivers is already happening.

Holt: Do you not see any negatives in terms of bringing young people on board and in terms of the claims and premiums starting to increase the moment young people get involved?

James: No I think that you will always have an element of youth who will look to drive an old car, soup it up and play around with it, but providing that the proper controls are sorted out then there won't be any difficulty.

Nelson: I suppose it is possible to say that if someone is maintaining a car they will take better care of it.

James: Classic car insurance started because of the demands from the clients and this was in respect of three things - first, the standard motor policy without agreed value cover at best led to a disputed settlement and at worst led to a very poor settlement, so there was dissatisfaction with the standard motor policy. A classic motor policy is basically an ordinary motor policy with an agreed value on it. Second, as a result of the introduction of the MoT in the late 60s, people suddenly realised if they were going to keep an older car and get it through its MoT then it was worth maintaining it. And third, the amount of money that people had for leisure pursuits increased drastically through the 70s and 80s, so we changed at the beginning of the 70s from being a very small niche movement to by the end of the 70s and into the 80s the very substantial movement that it is today. But now the mileage is way down on the cars, so the parts industry is struggling a bit.

Bill Sunderland: Nearly 30% of our (Triumph) membership used to be female, but for a lot of the cars that has definitely dropped off.

Holt: What do you think is behind that? Why do you think so many women are dropping off, because there are more and more women driving.

Sunderland: Yes more women are driving. The Spitfire, when it was still in production, was seen very much as a ladies' car; Spitfire for a lady, TR6 for a man.

Simon Hope: Also for women there is a safety aspect. They don't want to worry about breaking down.

Holt: How do insurers value classic cars?

James: A lot of the mainstream insurance companies confuse condition with value and they think that if the condition of an old car is consistent with age, that means it has no value. That is one of the problems with the insurance companies. It is because their in-house engineers are generally of a lower quality than, for example, ours. They are used to dealing with bog standard cars, that's what they are paid to do. They simply don't know what they are dealing with unless there is an agreed value. And even if there is an agreed value there will occasionally be attempts made to overturn it. Because they don't understand what they are valuing.

Nelson: Does the agreed value fluctuate according to what the current market is for that car, as opposed to simply the condition of the car itself?

James: To an extent. It has been relatively stable recently. For example, we have a claim going through at the moment that will be settled in the region of £130,000. The insurance company has got itself in a wedge because it is convinced that the car is only worth £20,000. It will probably have to pay punitive damages. It sent in an engineer used to dealing with third party Ford Cortinas to value a 1932 20/25 Rolls-Royce of which there were only six built with that particular coachwork. Two days before it crashed it won best of show at Essen, and they reckon it is worth £20,000!

Hope: The classic car world has become very money orientated. Everyone tends to think of it in terms of value. You can't put a car in a bank vault with works of art. It is there to drive and enjoy.

Nelson: So long as there are the cars there will be the insurers, but do you see the specialists surviving if their market is going to fall?

James: The specialists will survive by being the best at what they do.

We have seen a massive number of supposed specialist insurers and brokers come and go. There will be a place for us provided that we remember who we are and what we are and provide product and continue to have brand.

If we fall from those standards then we will go the way of the flesh, it is a fact of life. There is a depressingly long list of companies that have felt they were immortal and have very quickly found they were not.

We have to maintain our standards and if we don't spend the money in promoting ourselves then we will fail.

Holt: What is the key factor in a broker being effective in this market?

James: It is being part of the market and having the expertise, knowledge and understanding to know what's involved. Knowledge is king.

Graham Searle: It is also from our perspective, having an understanding of the policyholders; it is their love. If they want to insure their cars they want to be treated like we would treat them as a member. You can't treat them as just another customer.

James: If we move to a telesales basis or a call centre type basis - and there must be elements of that in what we do - then we will lose.

People regard their cars as much as they regard their wives so you need to treat them well.

Sunderland: From the Triumph Sports 6 point of view, we definitely want younger people, and we have taken steps to encourage that. We have the youngest board that we have ever had. We have a creche at our biggest weekend and we have coaches to take wives off to do other things while their husbands are busy with the cars. We have to do this or the club could collapse much quicker than the guy who runs the club from his back bedroom. For ourselves, Jaguar and MG, we have a great responsibility to get it right. It is in our interests. We had about 45 people down at our headquarters from Yorkshire the other day, and they had a fantastic time. They were living for the day. There were older people and some younger ones.

Nelson: What would you advise someone coming into the classic car market to buy that was affordable and cheap to insure?

Searle: A Series 1 XJ6. For £3,000 you could buy a nice car and the insurance will probably be under £100. If you are 18 or 19 it might be £300-£400. It would be tax exempt and might do only 20mpg, but it's easy to maintain.

James: A practical classic like a Herald, or an A35.

Martyn Moore: A Herald or an MG Midget. Old style Minis or Beetles.

You can get the rubber bumper MG Midgets for about £1,000, maybe a 1974 one for around £1,200.

James: What would it cost to insure?

Sunderland: A Spitfire worth £2,500 would cost about £100 to insure if you were over 25.

Moore: Capris as well.

Hope: Austin A35.

Moore: One thing you might like to consider as an insurance company is the concept of a father and son policy. And to get the young interested in classics cars, what about working with the Institute of Advanced Motorists.

Young drivers could reach a standard to win them special discounts from insurance companies participating in the scheme.

THE PANEL

Peter James Footman James & Co

Graham Searle General manager of the Jaguar Enthusiasts Club

Bill Sunderland President of the Triumph 6 Sports Club, club

Andrew Holt features editor, Insurance Times

Chris Nelson Cicero PR & chair Simon Hope Director of H&H Classic Auctions

Martyn Moore editor, Classic Cars