Point-of-sale Insurance Grows

The insurance product side of the finance & insurance manager's portfolio is experiencing an upturn that is bound to continue in 2004 and beyond.

Vehicle insurance for insured or uninsured buyers has become a major player in the F&I picture. Boston-based Liberty Mutual Group, positioning as an F&I resource, has become an aggressive pursuer of auto makers to add to its list of BMW and Subaru customers.

Meanwhile, Ford Credit is expanding its vehicle insurance program offered through dealerships. (See accompanying story.)

“Liberty is actively seeking other auto maker connections for vehicle insurance,” says Melanie Foley, vice president of partnership marketing. “BMW and Subaru F&I managers have been trained in recommending our program and linking to our Liberty-licensed agents during their sales process. It is a concept we would like to grow across the nation.”

Not the least of the advantages offered to vehicle owners insuring at or through dealerships can be premium savings, an incentive which might encourage insured F&I customers to switch policies.

Subaru of America's management risk manager, Mary Harrington, says its new vehicle insurance program has been well received and communicated to owners through direct mail, email and special brochures.

Roadside assistance is included with the Liberty coverage, plus a discount of up to 10% on premiums, depending on the state, and guaranteed use of OEM replacement parts for repairs.

“Subaru dealers are encouraged to help their F&I managers become licensed insurance agents so they can directly sell the vehicle policies,” Harrington says. “But it's a process that requires a course and an exam, and at present most dealers refer their customers to Liberty agents for acquiring their policies.”

Vehicle insurers are known to be approaching dealer groups and auto makers to initiate programs like those involving Liberty Mutual, Subaru, BMW and Ford.

Uninsured buyers at dealerships are the target of the fast-growing InsureExpress service of ExpressLink, of Encino, CA. It expedites instant protection on a 24-7 basis.

“The ratio of uninsured vehicle buyers is increasing all across the U.S.,” says InsureExpress COO David Diem. “Our ability to arrange coverage for dealers immediately saves the sale and is a tool F&I managers find they cannot be without.”

GAP insurance has mushroomed in the past few years. It covers balances on totaled or stolen vehicles between insurance payoffs and amounts still owed on loans or leases.

One of the major providers of GAP coverage, Allstate Corp., expects growth in the area to continue to 50% of vehicle loans by 2005, from 20%-30% now. GAP reached less than 5% of loan buyers in 2001.