Friday 12 September 2014 – Lloyd’s is providing specialist insurance to the FIA Formula E Championship, an exciting new all-electric motor racing sport that kicks-off in Beijing this weekend. (source: Lloyd’s of London)
Lloyd’s insures Formula E
The FIA Formula E Championship, the sport’s organiser, is insured at Lloyd’s, as are many of the ten teams taking part, according to Tim Nagle Managing Director at Ellis Clowes, a specialist motorsport broker.
Ellis Clowes has worked with a number of Lloyd’s underwriters to place a range of Formula E risks with Lloyd’s syndicates, including with WhiteOak Underwriting Agency, which leads the physical damage insurance. Lloyd’s is a lead market for motor sport and already provides cover for Formula One and other major motorsport championships, explains Nagle.
“The Lloyd’s market is well suited to insuring Formula E. It has both the expertise and capacity required by the sport, and we are pleased to have been able to guide Formula E in its first season, ” he says.
Formula E represents a significant new championship in global motor sport, and as such it required the assistance of expert insurance partners, according to Nagle.
“As a brand new category in motorsport, Formula E was looking for a helping hand. We were able to draw on our experience of insuring motor sports, although there are some unusual aspects of Formula E that have required a lot of interaction with our most trusted insurance partners at Lloyd’s, ” he says.
The biggest risks for a big motor sport like Formula E are event cancellation and the risk of spectator injury, according to Nagle. For the teams, however, the main concerns are the risk of damage to property and equipment, during every day operations, when in transit and at the race track.
Organisers and teams purchase a wide range of coverages from Lloyd’s syndicates, including general liability, on track physical damage, all risks cover for own equipment in storage and transit, as well as personal accident for the teams and drivers. Organisers, hosts and sponsors may also buy event cancellation insurance, explains Nagle.
Formula E poses some new challenges for underwriters, according to Nagle and James Fleming, Leading class underwriter at WhiteOak. The fact that many elements of the sport are a first means that there is little past experience for underwriters to use when assessing the risks, they say.
Formula E also breaks new ground when it comes to insurance, according to Fleming. For example, there are very few insurers in a position to take on many of these risks posed by Formula E, in particular certain risks of physical damage when the cars are racing, he explains.
“The sport uses new technology and new cars, and some venues that are brand new to motor sport – all together for the first time according to Nagle. So there’s no off-the-shelf insurance product available. We have had to start from the beginning, ” he says.
Cutting edge technology
Formula E breaks new ground in terms of technology, in particular the focus on racing fully-electric cars. In the first season, teams use identical cars, but from next season they will design and build their own.
“An all-electric championship is an engineering challenge and so understanding how everything works tests the ability of teams and underwriters, ” explains Nagle.
Limited battery life means that teams are also required to change cars mid-race, which requires a significant level of risk and safety management, explains Fleming. Changing cars also means that underwriters are insuring four cars per race – each team has two cars and drivers, he says.
A close working relationship between broker, underwriter and Formula E was key to getting the insurance right and overcoming some of the challenges of this new motor sport, according to Nagle.
“We take a collaborative approach and encourage insurers and clients to work closely. Our clients trust us and consider us part of the family, and this has afforded us a huge amount of information that we can use to educate and assist underwriters, ” he says.