Let Dealers Do What They Do Best: Sell Cars

Here's an opposing opinion to Mac Gordon's October, 2004 Ward's Dealer Business column (“This One's a No-Brainer”) advocating changes in laws so dealerships can sell vehicle insurance:

As a fleet manager (for seven years) with a Ford dealer, and with a background in property and liability insurance (for over 23 years), I found the column interesting but thin on the realities of offering auto and truck insurance at dealerships.

I'm not surprised dealers are looking for new ways to increase margins in the F&I department, but this vehicle insurance approach doesn't recognize the realities of what the courts and various state regulations require of a licensed agent in offering “professional” services to their customers.

Dealer F&I personnel would have to meet their particular states initial licensing requirements and examinations. They would also have to comply with continuing education requirements (here in Michigan, it's 30 hours every 24 months).

Another critical aspect would be the ability of a dealership to purchase affordable professional liability insurance to cover their errors and omissions exposures. The courts require that insurance agents meet extremely high standards of care and to offer professional advice that has nothing to do with the sale of car or truck.

Take for example a typical family with one or two young drivers. The F&I manager would need to know about each licensed driver in family, and would need to have a driver's record researched and analyzed for violations and accidents, then submit that to the insurance company underwriter for approval.

This process can take hours (even days in some instances). The F&I manager would then have to document and explain in detail if any driver would need to be excluded due to a poor driving record, or disclose any surcharges needed to obtain approval for insurance. Any mistake along the line can result in a lawsuit.

Despite the concept of a win-win, I see conflict-conflict and lose-lose.

F&I people would be dragged into disputes arising from underwriting issues, and then into claims' problems. The concept of “bundled” or single point of sale for both vehicle sales and insurance is fraught with hidden dangers and potential lost customers due to insurance issues that have nothing to do with selling vehicles.

The customer satisfaction that is so critical for dealers is hard enough without having to be professional insurance experts.

Leave the insurance industry to what they do best, selling insurance, and let dealers do what they do best, selling cars and trucks.