Finaccord presentation car dealers and manufacturers as distribution channels_vienna_october 2013

Car dealers and manufacturers as distribution channels

© Finaccord Ltd., 2013 Web: www.finaccord.com. E-mail: [email protected] 1

Bancassurance Models

Around the World Car dealers and manufacturers as

distribution channels Presentation at the 5th Annual Insurance Distribution

Strategies Forum

Vienna, October 17th – 18th 2013

http://www.finaccord.com/

mailto:[email protected]



Agenda

How important is the automotive channel for motor

insurance?

How large are the markets for creditor and GAP

insurance and extended warranties in comparison?

Should you distribute through manufacturer brands or

dealers?

What is the outlook for distributing insurance through

the automotive channel?





Questions for you

Q1) Is the automotive trade in decline as a channel for

distributing motor insurance in your market? [Yes / no]

Q2) If yes, which other channels have gained share? [Select

all that apply]

online aggregators

cashback websites

automotive associations

direct sales by insurers

banks

other channels (e.g. retailers)





Automotive financial services research, 2013

25 European countries

1,350 dealers interviewed across Europe

30 to 40 manufacturer brands covering 99% of new car

registrations per country

Market size estimates

Distribution analysis





EUR 7.55 billion of motor insurance GWP

originally sold through the automotive channel

Personal motor insurance premiums originally sold through manufacturer

brands and car dealerships (new plus in-force business), Europe, 2012

Source: Finaccord Automotive Financial Services Model

Automotive trade,

EUR 7.55 billion,

7.5%

Other channels,

EUR 93.42 billion,

92.5%





This channel accounts for 20% or more

of premiums in some countries

Personal motor insurance premiums originally sold through manufacturer brands

and car dealerships (new plus in-force business), selected countries, 2012


23.0%

20.1%

10.2%

5.6%

2.6%

2.1%

0.0%

0% 5% 10% 15% 20% 25%

Russia

Norway

Germany

Italy

UK

France

Ireland




© Finaccord Ltd., 2013 Web: www.finaccord.com. E-mail: [email protected]

0%

20%

40%

60%

80%

100%

Average (excl. Italy) Italy

Liability onlyNon-liability only

ComprehensiveNon-liability only

Comprehensive

7

Dealers nearly always offer

comprehensive motor insurance

Maximum level of motor insurance coverage

sold by dealers in Europe, 2013

Source: Finaccord Automotive Financial Services Survey





Creditor insurance, GAP insurance and

extended warranty terms and definitions

Creditor insurance: pays the balance or instalments of a loan or lease in

case of death, disability or unemployment

Restschuldversicherung oder Ratenschutzversicherung

assurance décès, incapcité, invalidité, perte d'emploi

GAP insurance: covers the difference between an insurance payout in

case of complete loss and the outstanding balance on a loan or lease or

price of a new car

GAP-Deckung

garantie perte financière

Extended warranty: covers the cost of repair in case of mechanical failure

after the factory warranty has expired

erweiterte Garantie

extension de garantie





Creditor, GAP and extended warranties together are

worth three quarters of the motor insurance market

Value of four products sold through the automotive trade, in GWP

and similar revenues (new and in-force business), 2012


0

2

4

6

8

10

Motor insurance Others

GAP

Creditor

Extended warranties

EUR billion





New business for these four products can exceed 2% of

the value of all cars sold by dealers to private customers

GWP and similar revenues (new business only) for motor, creditor, GAP insurance and extended

warranties as % of value of new and used cars sold by dealers to private customers, 2012


2.3%

2.0%

1.9%

1.7%

1.4%

0.9%

0.2%

0.0% 0.5% 1.0% 1.5% 2.0% 2.5%

Sweden

Germany

Italy

Spain

UK

France

Ireland





But there are major country differences again

Negligible creditor insurance in Finland and Romania, and no new

business in Ireland and the UK in 2013

No GAP insurance in six countries and negligible GAP insurance in

another six

Manufacturer brands provide extended warranties internally or

through captives half of the time, restricting the market for external

providers





The largest market also uses

external underwriters the most

Operating models used by car manufacturer brands for extended

warranties, selected countries and European average (unweighted), 2013


0% 20% 40% 60% 80% 100%

Germany

Average

France

Denmark

External underwriter Internal / captive Other





Should you sell motor insurance via

dealers or manufacturer brands?

Product sources used by car dealers for motor insurance,

selected countries and European average (unweighted), 2013


0% 20% 40% 60% 80% 100%

Belgium

Germany

Italy

Average

Russia

Manufacturer / importer Dealer (non-tied) Both





Should you sell extended warranties

via dealers or manufacturer brands?

Product sources used by car dealers for extended warranties,

selected countries and European average (unweighted), 2013


0% 20% 40% 60% 80% 100%

Turkey

Germany

Average

France

Norway

Manufacturer / importer Dealer (non-tied) Both





Distribution through independent finance houses

A number of finance houses also distribute motor and GAP

insurance plus extended warranties, as well as creditor

insurance

Germany: BDK and Santander Consumer Bank both have

partners for GAP and motor insurance plus extended warranties

France: Cetelem, CGI, Financo, GE Money Bank and Viaxel all

have partners for GAP insurance and extended warranties

Hungary: Erste Bank with Union for motor insurance

Portugal: BBVA with MAPFRE for motor insurance

Russia: Rusfinance Bank with Société Générale Strakhovanie

for GAP insurance

UK: Black Horse with Car Care Plan for extended warranties





What is the outlook for distributing

insurance through the automotive trade?

RESULTS OF Q1) AND Q2) DISPLAYED HERE





The competition from online aggregators

Percentage of consumers taking out or renewing motor insurance through online

aggregators, average of France, Germany, Italy, Spain and the UK, 2012 (unweighted)

6.9%

22.4%

0%

10%

20%

30%

40%

50%

Renewals New buyers and switchers

Source: Finaccord Aggregation Metrics





Additional products in Europe

Driver or passenger accident insurance

Legal protection insurance

Minor damage insurance

Tyre insurance

Vehicle contents

Vehicle running costs insurance

Window insurance (in addition to windscreens)





Additional products in North America

Wheel and tyre insurance

Multiple levels of extended warranty

major items only, e.g. powertrain

minor items only, e.g. brake pads, headlamps, belts and hoses

Excess wear and tear cover for lease contracts





Questions for you

Q3) Which type of product do you think has potential for

growth? [Select all that apply]

Cover packaged with motor insurance policies

Cover packaged with finance and leasing

Separate niche insurance products





Any questions?

Sources and related Finaccord publications:

Consumer Automotive Financial Services in Europe Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece,

Hungary, Ireland, Italy, Luxembourg, the Netherlands, Norway, Poland, Portugal,

Romania, Russia, Slovakia, Spain, Sweden, Switzerland, Turkey, Ukraine and the UK

Consumer Automotive Financial Services in Major Global Markets Argentina, Australia, Brazil, Canada, China, India, Indonesia, Japan, Mexico, South

Africa; South Korea, Taiwan and Thailand and the US

Fleet Insurance and Assistance in Europe

Road Assistance in Europe



Business

Finaccord presentation car dealers and manufacturers as distribution channels_vienna_october 2013