In Augusts issue of Motor Trader, AutoProtect was asked to comment on the rise in GAP sales in 2017.
Mike Macaulay, Corporate Business Development Manager, has provided this response below:
A recent survey from Dealerweb found that sales of GAP Insurance sold in dealerships were over 6% lower in 2016 than they were in the prior year. How is business looking in 2017? Can you identify any trends and new developments in the market?
Our experience is entirely the opposite of that reported by Dealerweb; sales of GAP products have risen markedly.
Our observation on the rise in sales is that the drivers of the growth are twofold:
- Consumers have been more cautious over the last years in light of the political/economic backdrop and this typically sees customers more disposed to protection products.
- More dealers have come to terms with the regulatory changes centred around GAP and have established complaint processes and appropriate pricing strategies that have instilled a level of both competence and confidence.
Are you seeing more competition from online providers of GAP Insurance? Are dealers themselves doing more online with GAP?
Yes, there is more online activity and largely we see this as a good thing because it is helping to position GAP as a mainstream protection product.
The move to promote and process GAP digitally has increased markedly. In part, this could be seen as a move to counter competition, but overall it is more an outcome of the wider move to online and as part of the delivery of a compliant process.
The digital mix now includes the promotion through social media, email campaigns and dealer websites. While process support includes the provision of Prescribed Information documents electronically as part of the sales process and post-sale information provided digitally.
Has the introduction of the FCA changes on GAP had any beneficial impact on dealer’s relationship with consumers? Have cancellation rates dropped as a result?
There can be absolutely no doubt about the importance of trust in the sales and retention. Dealers who have embraced the importance of transparency have benefitted and the impact achieved by the ‘early adopters’ has had a positive impact on the wider dealer network and to a very large extent overcome concerns.
Dealers have benefitted from training, support tools in the showroom and digitally, and the four-day cooling off period, to shift the process from a sales push approach to a customer purchase pull model, delivered in a consistent and compliant manner
The impact of the changes has created a marked reduction in cancellations – it seems very evident that the four-day rule had an impact given that the consumer had time to consider the purchase in more detail before making a decision.
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