Assurant: Consolidating Market Leadership Via Extended Warranties
Q: How has the pandemic influenced Assurant’s operations and how are you adapting to the new circumstances?
A: The pandemic unquestionably affected the industry and our operations. The automotive industry was practically halted due to lockdowns and dealerships across the country suspending sales. However, we managed the crisis well by remaining in close communications with our business partners. Despite the impact in 2Q20, we are all now on the path to recovery.
The automotive industry in Mexico expects a contraction of around 28 percent, according to AMDA’s figures. In October 2020, we started to see growth compared to September 2020 and the worst months of the pandemic. November expectations were for similar growth and by the end of the year, domestic sales were expected to be around 945,000 vehicles, which would represent a 28 percent drop. This is the greatest contraction the industry has seen. At Assurant, our solid financial structure allows us to brave this bump while getting ready for the upcoming recovery.
From a global perspective, Assurant’s automotive business has seen a rebound in sales over the course of the year, from the lows seen in the March/April timeframe, albeit we are still down slightly year-to-date. October 2020 overall was flat globally year-over-year with 2019 however we have seen that varies regionally given where areas are in their pandemic response.
Q: How has Assurant’s close relationship with brands and dealerships strengthened amid these unprecedented times?
A: We see ourselves as business partners to our customers. We work alongside dealerships to create extended warranty programs that provide the protections that most matter to our customers. By being business partners and facing the pandemic together, our teamwork results in different offers, term extensions, and special prices that provide mutual flexibility. For instance, our extended warranty programs have terms and conditions that must be met, one of which is that all maintenance services are provided at the dealership. As most dealerships are open only for maintenance services, it can be difficult to receive service on time. By being flexible on these conditions, we also contribute to people staying at home and reducing contagion. We have worked with our business partners to create flexible terms for the end customers. Assurant has been sensitive to the situation and our closeness with our partners has played a central role in supporting the end customer.
Q: How has Assurant embraced innovation to brave the pandemic?
A: We are a company that is constantly innovating and looking for new ways to deliver state-of-the-art products. This includes acquisitions and other strategies. Innovation for us is not a result of the pandemic; it has always been a priority for Assurant. That being said, this year, we have focused on improving the customer journey, from the moment they purchase a vehicle to the moment when an incident happens that leads to a claim. All the elements surrounding the customer journey are critical for us. We have been working on new ways to facilitate information to our customers. For instance, we have worked on an app where customers can track their claims throughout the entire process.
We increase the value of our extended warranties by also creating telematics solutions and other applications to make the customer journey as smooth as possible. A warranty protects the vehicle but the customer experience throughout the process is what makes the difference. To achieve this, we need to work closely with our business partners as the dealership also influences the customer’s journey.
Q: How does training contribute to this experience?
A: Training is essential, and the keyword here is consistency. Dealerships have a high turnover rate in staff and salespeople. At Assurant, we have a field team that connects with more than 1,500 dealerships from 18 brands in 32 states on a regular basis. They train different areas of the dealerships to improve their processes while providing them with the necessary tools to improve the customer journey. After three months, the dealership staff has probably changed, so consistency is key. Assurant and the dealership are interested in selling the extended warranty as it is a product that is useful for the end customer. The appropriate training plays a fundamental role in explaining the benefits of extended warranty programs
Q: How has training evolved amid social-distancing measures?
A: From March 13, 2020, Assurant embraced home office, which extends to the field team and dealerships. Our training efforts were not interrupted a single day. The channel was just transformed so that we could deliver virtual training modules. It is not the same, of course, but digital platforms allowed us to adapt quickly. At the global level, Assurant has 14,000 employees distributed across 21 countries and we remain highly productive while working from home.
Q: What are the newest solutions Assurant is offering to add value to its customers?
A: We are working on solutions that help our customers manage all our services in a single location, including warranties, vehicles, maintenance services, and related claims. This project will be launched soon and will undoubtedly add value to our extended warranty programs.
Q: How is Assurant taking advantage of a renovated lineup from most brands?
A: We have been working with different brands on their most recent launches. When it comes to hybrid vehicles, for instance, we are working closely with them to assure an optimal experience. Our business relationships are long-lasting, with most around 15 to 20 years, which ensures mutual trust. Even before a new model is launched, we are already working on our programs with the brands. Our warranty programs are not the same for every partner. Each one is uniquely designed for a specific brand and model. Thus, when a new model arrives, we have a specific program for that vehicle from the very beginning. We are business partners and we grow together.
Q: What are Assurant’s plans for 2021?
A: Our priority is to strengthen our leadership position in the market. This means growing our current business while strengthening our relationships with our partners by adding more value to the products we have with them. In addition, we are focusing on creating new relationships with other brands, which will bring us to 20 brands in the country.
As for new opportunities, we see an interesting opportunity in certified used (CPO) vehicles. This market niche was growing before the pandemic, following the industry’s sales cycle. As we are in the downward part of the cycle, used-vehicle sales are increasing, especially following the economic impact the pandemic has had on the country. The fact that a used vehicle has an extended warranty provides enormous value to the customer. We are working on multibrand CPO (certified pre-owned) programs, which will help dealerships to a great extent. And continue to learn insights and find ways we integrate into our offerings and operations as we look ahead to trends around electric vehicles, autonomous cars.
Assurant, Inc. (NYSE: AIZ) is a leading global provider of lifestyle and housing solutions that support, protect and connect major consumer purchases. A Fortune 500 company with a presence in 21 countries, Assurant offers mobile device solutions; extended service contracts; vehicle protection services; pre-funded funeral insurance; renters insurance; lender-placed insurance products; and other specialty products.