MotorTrader GAP Feature

The August issue of Motor Trader includes a Special Focus on GAP Insurance and Mike Macaulay, Head of Corporate Sales at AutoProtect was asked to comment.

1. Are you seeing a growing trend for consumers to opt for a combination of traditional GAP and Return to Invoice products to protect their assets?

The rise in finance penetration, currently at over 80% for private new car buyers does lend itself towards a GAP product. We think that it is important that consumers have a choice between Finance GAP, Return to Invoice (RTI) or a combined product. In this way, the customer can choose the option that is most appropriate to their needs.

We are seeing a trend towards the Combined GAP product. Looking ahead, we expect this to become established as the most popular option for customers as it will pay out the higher of the RTI or Finance GAP amount so is a good choice however the customer purchases the vehicle, but clearly the trend towards PCP/PCH products does increase the value of Finance GAP cover to customers.

PCP and PCH finance have enabled many customers to opt for a higher value vehicle than they may previously have anticipated. It seems they are happy to embrace this affordability, with many choosing to mitigate any write-off risks by budgeting for a GAP product. The trend in new car coverage is starting to feed through into the used market as used car PCPs increase in popularity.

2. Are you seeing more competition from online brokers providing GAP cover?

No, not really. Dealers have moved to develop their point of sale processes and pricing to become more customer centric. The cooling off period has also helped to increase transparency and create greater confidence in the value of the dealer offer.

3. Are you doing more or less GAP business now following the introduction of the new FCA rules in September last year?

Sales have clearly grown overall. There have been some variations between dealera, but the clear evidence is that those who, having embraced the change required under the new regulatory requirements, have seen sales grow encouragingly. It is the value of a clear process aligned to a higher level of management and control.

It would be a bit strong to say that a military style ‘command and control’ process works because that would be too authoritarian. However, create a customer-led command control process and fair pricing and the impact on sales and CSI can be impressive.

4. Have the FCA rules helped build trust with customers since they were introduced?

There is no research that we can point to that might highlight consumer awareness of the changes in GAP regulation. Anecdotally we can point to three important developments post regulation:

  • Dealers who have embraced regulation positively have seen growth.
  • Dealers are more aware of GAP regulation and the importance of delivering good customer outcomes, notably the Approved Persons within a dealership/group. This has driven positive change.
  • A subtle shift towards online promotion of GAP products; certainly we have seen more dealers using our on-line explanatory videos to raise customer awareness of the products pre-purchase.

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