Car Insurance

My longtime passion for riding a motorcycle took a twenty year hiatus until taking up residency in Oaxaca. I ignored the foreshadowing and warnings. While my story pales compared to the epic journey of Ché Guevara popularized in the film Motorcycle Diaries, there is a tale to be told, with observations and advice for those with such suicidal ideations.

For Oaxacans, it’s part economic necessity and part climactic permissiveness, with street logjams and a parking crisis factored in, as well as, dare I opine, a somewhat different attitude towards life and living amongst those at and below a certain socio-economic level…fatalistic. What’s striking is the paucity of helmeted riders, and prevalence of entire families (the record number of family members seen on one bike is currently five) who take to negotiating the jammed streets on a single motorbike often mechanically unfit, each member including young children bare-headed and unsafely dressed (no gloves, leathers, jeans, etc.). A helmet law and mandatory education might help. Educators must remember to teach that the helmet is to be worn on the head, not simply slung over an arm. Additionally, owners of deliver services such as and by example, Chuchos Tortas y Mas, should watch their couriers leaving the premises to ensure helmets are worn and not carried.

For my part, I’ve been accused of having yet another mid-life crisis at 55, having recently purchased a 150 cc. Honda “Bros”, off road moto for use on the streets, complementing our car and pick-up. Perhaps each above-noted reason applies to me, despite leading a middle class existence.

I sold my Suzuki 550 in the mid 1980s when my wife became pregnant. But now, in quasi-retirement, family grown, life insurance policies kept current, I was only minimally fazed when Canadian Consul Frances May warned that she’s lost three friends to motorcycle accidents. And compadre Pancho was in three accidents within about 2 years. He once took me on a trip with some of his motorcycle buddies through the mountains to the town of Sola de Vega. It was the first time in 15 years that I’d been on a bike. I forgot a cardinal rule: never brake while negotiating a turn on gravel. I recall regaining consciousness, covered in blood, with severe knee pain, in the back room of some pharmacy, to teary-eyed Pancho, shaking me with hands on my shoulders while screaming “¡compadre, compadre!”

But by adopting and adhering to a number of simple riding guidelines, some of which are admittedly difficult to follow, I’ll hopefully stay out of the hospital and my 19-year-old daughter will never “benefit” from my being over-insured. My less-impetuous and more level-headed wife surprisingly enough enjoys riding with me despite serious reservations.

For those unattached and in their 20s and 30s, I’ll indicate which of the following rules I’ve set for myself you’ll likely want to break and how to minimize the adverse implications of so doing:

1) Don’t ride at night unless absolutely necessary. Alcohol-related and other driving deaths increase when road conditions are less than perfect. Lighting and highway markings are often absent. 2) If you know that it’s likely the weather will become inclement (i.e. during the rainy season) consider another means of transportation, or at minimum dress appropriately and check your tires. 3) Try to follow the rules of the road to the extent you can discern them, and when in doubt fall back on the highway traffic laws with which you grew up. 4) Try to resist the temptation to weave, as difficult as it will be. Once you’re in your fifties you’ve likely lost much of your neck range-of-motion, so if you must weave, rely on your peripheral vision and mirrors. 5) Always use full-face helmets, appropriate footwear and leathers, gloves and jacket at minimum. It’s better to be hot and uncomfortable than require jaw surgery and extensive skin grafting. Leather provides that first layer of defence and it gives…cotton, wool and polyester each will simply rip, along with your skin. 6) Never permit an unhelmeted passenger to ride with you. 7) If you’re a tourist and have an opportunity to rent a motorcycle, unless it’ll be used strictly for cross-country, or you have a great deal of experience driving in third world congested cities and are certain of the condition of the bike, resist the temptation. As my father often said, “don’t be an idiot.” It’s not worth the risk. When buying, make it a new cycle, and keep it in top condition. 9) Don’t buy a small scooter or anything under 125 - 150 cc. You may need power to extricate yourself from danger caused by other drivers. The most popular bike in Oaxaca is the Honda 125, used by a plethora of businesses. If you can afford a Japanese make, or better, go for it. Many Oaxacan friends have cautioned against, for example, the Chinese models. My off-road Honda 150 was carefully selected, even though it’s smaller than those that I’d been accustomed to riding in my former life. It’s an off-road model given the numerous topes and state of disrepair of the streets. Motor size is 150 because it’s the smallest engine I feel comfortable gets my wife and I up the steep hill to our home, is light and has sufficient power for defensive maneuvers. It’s small enough so that it helps me resist the temptation to do highway touring. 10) Think twice before opting for a larger bike that you may use on the carreteras. There’s nothing like open highway touring, but the danger increases exponentially the higher the speed of vehicles. By contrast, while living in Toronto I always felt safer riding on the highways than in cities…more control, drivers more vigilant and experienced, and easier to avoid potential dangers. By contrast, in Oaxaca the highways aren’t as good, many motorists drive under the influence, and vehicle mechanical condition is generally questionable, leading to less control by drivers. If you are set on touring, make it at least a 550 cc. model, the minimum power with which I felt comfortable and safe on the open roads with a passenger.

Apart from organized cycling groups that meet periodically for generally weekend off-road challenges, there is at least one traditional motorcycle club in Oaxaca, Los Caballeros Templarios. These riders are the exception to most of what I’ve indicated. The individuals, at least when touring outside of the city, follow virtually all of the rules I’ve set out. The group is comprised of mainly shopkeepers, tradesmen, restauranteurs, and professionals such as doctors and accountants, average age being 40 something. Their bikes are kept in excellent condition, they dress appropriately, complete with leathers embossed with club and rider name and logo, and they host and attend national conferences as well as enjoy frequent local get-togethers and regional excursions of one to several days. The camaraderie is strong, warm and welcoming. And thus with my little Honda 150, I continue to resist invitations to fulfill the initiation requirement and join…until the purchase of a larger bike, and with that a divorce.

ON A MONDAY afternoon in June 1999, Richard Quigley was riding his Harley near Capitola, California, when a local police officer pulled him over for violating the state’s helmet law. There ensued a half-hour debate with the officer and his supervisor about whether Quigley’s headgear–a trucker’s cap emblazoned with “United States Freedom Fighter” into which he had inserted a rigid plastic disc-qualified as a “safety helmet.” Quigley, a 61-year-old with a ponytail and a ZZ Top-style beard who directs Bikers of Lesser Tolerance of California and once ran for Congress on the Libertarian ticket, later called the encounter “interesting, informative and fun!”

Richard Quigley’s idea of fun, whether riding a motorcycle without a helmet or arguing with the police about it, may not be the same as yours or mine. But his enthusiasm for fighting California’s helmet law, a battle in which he has been engaged for seven years “on the streets and in the courts,” helps explain a public policy puzzle: While almost every state requires adults to wear seat belts, most do not require them to wear motorcycle helmets, even though riding a motorcycle is much more dangerous than driving a car. The story behind this anomaly is both inspiring and discouraging–inspiring because it shows that a highly motivated minority can make a successful stand for freedom, discouraging because it shows that politics is more important than principle in determining why certain laws aimed at protecting people from their own risky behavior become widely accepted while others remain controversial.

In 2003 there were 5.4 million registered motorcycles in the U.S., compared to about 136 million registered cars. Despite their relatively small numbers, motorcyclists have been far more effective than drivers at resisting traffic safety paternalism. After some initial grumbling, most motorists got used to buckling up and are now unlikely to put up much resistance as states move toward primary enforcement, allowing police to pull people over for not wearing seat belts (as opposed to issuing citations after stopping them for other reasons). By contrast, going back to the 1971 founding of the American Brotherhood Against Totalitarian Enactments (ABATE) by the staff of Easyriders magazine, motorcyclists have been willing to invest the time, effort, and money required to fight helmet laws. Call it the Quigley Factor.

“Motorcyclists Believe in Freedom”

“Motorcyclists believe in freedom, and we attack anything that is attacking our freedom,” explains Robert Fletcher, coordinator of the Texas ABATE Confederation. “Helmet laws go against the grain of everything this country stands for,” says New York Myke, ABATE of California’s state director and owner of San Diego Harley Davidson. Just as abortion rights groups insist they do not favor abortion, motorcyclist groups are at pains to make it clear they do not oppose helmets. Jeff Hennie, vice president for government relations at the D.C.-based Motorcycle Riders Foundation, says, “What we’re advocating is freedom of choice…. It should be the decision of the rider whether to put on extra safety equipment.” He describes the attitude of helmet law opponents this way: “Let me decide what is right for me, instead of the government jamming regulations down my throat.”

During the last few decades motorcycle activists have been remarkably successful in bringing that message to state legislators and members of Congress. In 1976, responding mainly to state resentment of federal mandates, Congress repealed legislation enacted in 1967 that had made federal highway funds contingent on adoption of helmet laws. At that point every state but California had passed a helmet law (although the Illinois law had been overturned by the state Supreme Court). Freed of the federal requirement, 27 states repealed their helmet laws or limited their coverage to minors (usually meaning riders under 18) during the next few years. Some of those states reinstated helmet requirements for adults in the 1980s and early ’90s, including a few that acted after Congress again started tying highway funds to helmet laws in 1991. In 1995, largely in response to lobbying by the Motorcycle Riders Foundation, Congress again eliminated the helmet law mandate, and since then half a dozen states have repealed helmet requirements for adults (one of which, Louisiana, restored universal coverage last year).

As of July 2005, 30 states still allowed adult motorcyclists the freedom to decide for themselves what, if anything, to wear on their heads. But the insurance industry, safety groups, and the National Highway Traffic Safety Administration (NHTSA) continue to push universal helmet laws, which are periodically introduced by legislators even in states, such as Illinois and Minnesota, that have long allowed adults to ride without a helmet. Meanwhile, helmet law opponents are lobbying for repeal in California, West Virginia, and elsewhere.

MBA Holdings, Inc. (OTCBB:MBAH) has signed an agency agreement with Carr’s Insurance Agency enlisting Carr’s as the Hawaiian agent authorized to sell the products of MBA and its subsidiary, the National Motorcycle Dealers Association (NMDA). Carr’s is the leading provider of insurance products to motorcycle dealerships in the state of Hawaii. As a leading insurance agency with a strong background in the business of motorcycle dealerships and rental operations, Carr’s is the ideal partner to spearhead the NMDA’s plans for growth in Hawaii.

Carr’s Insurance Agency has the exclusive responsibility to develop the NMDA’s Hawaiian membership and grow revenues through the sale of NMDA services. Additionally, Carr’s will market and sell MBA Insurance products. Carr’s will derive a commission from all sales of NMDA/MBA products and services in Hawaii.

There are currently dozens of independent motorcycle rental operators in Hawaii that serve an established market demand for bike and other sports vehicle rentals among vacationing travelers. The unique nature of the Hawaiian rental market is its relative maturity compared to other locales, yet there remains no unifying structure that organizes the Hawaiian motorcycle and sports vehicle rental market into a cohesive whole. The intent of the NMDA and Carr’s is to recruit the hundreds of rental bikes in operation in Hawaii to the Wildside Motorcycle Rentals program.

Due to the competitively priced insurance deals already in place for Wildside, there is already a reasonable expectation that the majority of the motorcycle rental market in Hawaii will be ready to migrate to the superior price structures and profit margins offered by the NMDA and Wildside. Discussions by Carr’s to recruit these clients are already underway with the intention of delivering a considerable portion of the existing Hawaiian motorcycle rental market in first quarter 2005.

The participation of well established partner agents like Carr’s is further validation of the beneficial economic incentives to be delivered by the NMDA’s business model. With NMDA membership growth generating greater economies of scale and driving down wholesale costs on insurance products, quality partners such as Carr’s look to ensure superior cost advantages for their clientele while maintaining their competitive edge in the Hawaiian marketplace. Under the terms of the agreement, Carr’s priority will be to sell NMDA endorsed products where those products made available to Carr’s remain competitively priced.

MBA’s previous press release on its partnering acquisition of Blue Sky Motorcycle Rentals discussed the strategic value of a two-tier business model to progressively capture and then grow market share of the motorcycle rental sector. Within this disorganized, yet growing market sector that is yet to fully mature there is a ripe opportunity to unify and organize a wide range of independent rental operators through a cohesive vision and business structure. This strategic goal should begin to show results in the first quarter of 2005 as rental operations switch to NMDA and Wildside to garner immediate savings on rental insurance costs at premiums decisively less expensive than rates offered by the competition. The partnership with Carr’s is one more concrete step towards growing the NMDA and establishing a market leading profile for MBA and the NMDA in the motorcycle rental sector.

My saddlebags were packed, and my bike was fueled and ready to go. It was a beautiful morning, and the forecast called for an above-average warm and sunny, November, Florida day. I was in a great mood because I finally was getting to make the 510-mile ride from Jacksonville, Fla. to Key West on my new 2003 cruiser–a motorcycle made for the sole purpose of riding in comfort over long distances. I had dreamed of riding across the 7-mile stretch of bridge near Key West since the day I got my first Harley-Davidson.

I’m a member of a motorcycle group, with mostly seasoned riders. We do parades and charity work. I’ve ridden various types of motorcycles for 19 years and am a motorcycle-safety instructor for the base where I’m assigned. My group makes this ride annually, but this year would mark my first time–Navy commitments never had allowed me to go before.

The plan called for everyone to rendezvous at a pancake house near Saint Augustine before sunrise, get a good breakfast, and head south. A friend and I were the first to arrive. As others began to trickle in, I noticed a new rider–one who wasn’t a regular member of our unit. I later found out he was interested in joining our group, and other members had invited him to come on this trip so he could get acquainted with everyone.

By the time we had eaten and were ready to saddle up, 14 beautiful Electra Glide Ultra Classics were sitting in the parking lot. As we were gearing up and getting into position to start the ride, I noticed that our guest wasn’t wearing a helmet. It’s legal in Florida to ride without a helmet, as long as you carry the required medical insurance, and no one challenged him about it.

I also saw three members leave the parking lot ahead of us. They had said they were tired of waiting. I later found out the main reason they had left early was that they weren’t comfortable riding so far with a large group. I was tempted to strike out behind them and ride solo or in a smaller group but decided to stick with the main formation and the friend I had ridden with to the pancake house.

The sun was coming up as we merged onto Interstate 95 and headed south. We got into the formation we would ride in for the rest of the day. We were lined up in a single lane, with the bikes staggered left to right from the lead rider to the last man. We remained in the same position, except after stopping for gas or to pay a toll, at which time some members would move forward or backward a spot or two.

I initially lined up as the fourth man in the group but sometimes alternated to the third spot in our formation of 11 riders. The new guy ended up as the second rider. As the trip progressed, I noticed he would set his motorcycle on cruise control every 20 or 30 minutes and take his hands off the handlebars. He then would light up a cigarette or wave his arms and roll his shoulders, as if he was experiencing stiffness in his upper body. He usually waited until traffic wasn’t congested, and it was as safe as possible to do what he was doing, but I decided to keep him on my radar for the rest of the trip–just in case. After going a hundred miles, we left the interstate and got on a turnpike, where the traffic became more congested and the tollbooths grew more numerous.

I noticed our fair-skinned guest was starting to get a sunburn. During a gas stop just after midday, I saw him pull a bandana from his saddlebags and drape it over his head and sunburned neck. He then put a hat over the bandana to hold it on. As we left the gas station, I was in the third spot, directly behind him, and soon realized he was becoming much more animated on his motorcycle. With increased regularity, he would put his bike in cruise control and take his hands off the handlebars, despite the congested traffic. At times, he even would turn and wave at cars with both hands as we passed them.

I didn’t want to break off with our group in this heavy traffic and possibly cause an accident, so I eased up on the throttle a little to open the distance from our guest. I also decided I would try talking to him at our next stop about the risks he was taking.

It was about 1:15 p.m. when I saw him again take his hands off the handlebars, turn sideways, and start waving at a car beside us. While I was focusing on him and the car he was interacting with, traffic ahead of us narrowed from two lanes to one as the turnpike ended. He stopped waving at the car just in time to turn around and see nothing but brake lights ahead of him. He overreacted and jumped hard on both his front and rear brakes, which caused him to skid sideways, with the front of his bike facing to the left side of the road.

I didn’t feel it would be safe for me to stop abruptly in the heavy traffic, so I tried to go around the rear of his motorcycle. As soon as I dedicated myself to this action, he let up on his brakes, causing his bike to go into a violent wobble. It started sliding directly toward me. I reacted by turning harder to the right, but, by this time, I was riding the yellow line marking the shoulder of the road and was within a few feet of the guardrail.

Reading the Google hit piece that appeared in Barron’s recently got me thinking about the whole pay-per-click model. Pay-per-click (PPC) has been around for more a decade, and while Google has made some positive changes to it, it’s showing its age.

If you think of the Internet advertising process as a series of actions, it would go like this: Impression -> Click -> Action. Back in the old days the metric was CPM (cost per thousand), and advertisers paid per impression (getting the ad on the screen). CPM favored the publisher over the advertiser, as the publisher’s responsibility ended at the first part of the process. DoubleClick, an early ad serving company, came up with their DART system to match the right advertiser with the right screen in order to maximize the return on CPM.

PPC moved the metric forward in the process, measuring success (and payment) based not on how many times the ad was served, but how many times it was actually clicked. When most people think of PPC they think of Adsense, Google’s contextual advertising engine. But PPC is employed in banner advertising, on big ad farms like Doubleclick and other companies, and in some affiliate programs, though the number seems to be waning.

The latest incarnation of search engine based PPC (thanks to Google), works like this: you select keywords that you think people will use to search for stuff related to what you sell. For example, if you sell pretzel dough you might want to advertise under pretzels or making pretzels or something along those lines. Selecting keywords is way beyond the scope of this article, but there are plenty of companies out there that make a living helping you pick keywords. Anyway, you then bid on those keywords and your ad is shown on the page with the search results.

With Adsense Google moved the context from the search engine results page to your web site content. It reads your site and decides what keywords to use to display advertising on your site, just as it would with a Google search.

For affiliate programs it’s a little different, but the concept is the same. You choose the ads (or pay someone a piece of the action to choose the ads for you), and they get displayed on your pages. Rather than selecting the keywords explicitly, you are selecting the ads based on what you (or your agent) thinks people who have chosen to read your content may have an interest in seeing.

When someone clicks on the ad, you get paid. It’s that simple.

For Adsense, appearing first on the list makes all the difference. A study suggests that being the #1 choice increases your chance of being clicked by up to 40%, because a lot of people don’t look past the first entry (I always check the first few). The difference in bids between the first position and second position could be staggering. For example, 1900 people searched Google for the word tax yesterday. The top spot in Adsense would have cost you $25.12. Positions 2 and 3 drop to $6.96, and 4 and 5 would have cost you $4.24.

My experience with Adsense tells me that in this case the first position would probably pay Google close to $10.

As the publisher, this is a home run. Every time the person clicks I get a $5 bill. God, what a country!

As the advertiser, $10 to get the person in the door seems like a lot of money to me. If I’m selling a high margin item (like maybe tax software or one of those quickie tax loans), it seems like it may be okay.

But I still have to get them to buy. It is my experience that a realistic conversion rate is 1.5 - 3% of those who click on an ad. That means that 97 - 98.5% of the people who click on the ad do not buy. Let’s use 2% as an example (which is probably a bit high). That means that for all the ten dollar bills flying into the publisher’s pocket, only about 2 people out of every hundred will buy anything. So for every $1000 I spend I get 20 sales. That means that every sale costs me $50. Your results will vary, of course, depending on how targeted your keywords are and your industry and offer. Get the conversion up to 5%, for example, and you will be down to $20 per sale, which is a little better. I am designing a what-if tool to help with this, and I’ll post here when it’s ready.

One of the reasons for low conversion is probably click fraud. If an unscrupulous person wants to make money in PPC, all he needs to do is find a bunch of people (or computers) to click on the ads on his website continually, and he’ll reap the rewards.

Barron’s believes that the smart money is getting out of PPC. They cite FTD as an example:

Flower giant FTD Group (FTD) recently complained about the high price of search advertising. ”During the Christmas season, certain online search engine costs increased significantly over the prior year, and as such we made the decision not to pursue the resulting high-cost order volume,” said Michael Soenen, chief executive officer.

First off, let me just say that as an advertising exec I pitched FTD, and they didn’t strike me as the brightest bulbs in the chandelier. That being said, it’s easy to see why FTD wants out. Being #1 or #2 in the keyword Flowers yesterday (don’t forget that it was Valentine’s Day) would have cost between $6.25 and $10.00. There were 100,000 searches yesterday on that keyword, and 11,500 on Flowers Delivered, which would have cost between $5.03 and $6.72.

Some simple arithmetic shows me that FTD nets about $6.20 per transaction across its network. So the transaction is either a wash or a loss. FTD is the number 1 ad on Google, so I guess they decided to eat that first transaction, counting on continuity to save them. According to Barron’s this isn’t going to work either:

One industry executive noted that the lifetime value of a customer acquired through Google for his/her business had approached zero. Oops. So much for that theory.

So the answer seems to be that the big guys are getting out. Using the flowers example, though, the top 5 ads are FTD, ProFlowers, Hallmark, 1-800-Flowers and Teleflora. So I guess it’s going to happen over time.

So where is the future? According to the inventor of pay-per-click himself, Bill Gross (formerly of GoTo.com), the future is in pay-per-action, which moves the metric down to the final part of the Internet advertising transaction, where we think it belongs. There’s a terrific article on Seochat.com that has more information on this.

Pay-per-action is simple..both parties have a stake in the outcome of the click, whether that is a sale, a lead, or even an instant telephone call (more on that in part 2). We think this is going to be the next big thing, and it’s already happening.