Assurant's Vehicle Insurance Expertise at a GlanceBy Jan Hogewoning | Mon, 05/11/2020 - 08:00
Q: What role does the automotive industry play within Assurant’s portfolio?
A: We have five business lines, of which automotive is the largest at about 45 percent of our sales. Our programs are focused mostly on domestic light vehicles, although we do offer several programs for commercial vehicles. Our two main programs are extended warranty and insurance. The former allows a car owner to receive between one and three years extra in protection for their car, which can apply to both a new and a used car. In the insurance area, we have a variety of options for cars. We offer standardized car insurance, insurance for personal accidents and options for specific components of the car. This can include rims or keys, as well as things that are in the car, such as mobile devices.
Q: What are the main partners do you work with?
A: Our model is B2B. We do not work directly with final customers. We have partnerships with the major OEMs, including Nissan, Volkswagen, GM, Toyota, Audi, Suzuki, Kia, Mazda and Mercedes-Benz. Our programs cover all their models, including hybrids. Clients like Nissan, for example, will put “Nissan warranty” on our insurance product. It is a white label product. Major carmakers have their own associations of distributors, whom we visit to provide training on how our programs work and how they can best be sold. Distributors benefit from our programs because customers will return their cars to their location, instead of a random auto shop around the corner. This provides extra revenue for distributors and also ensures that the final consumer is getting services that are specialized to the brand they own. This makes for a high-quality offering for both parties.
Q: How do your training activities contribute to the penetration of your products?
A: Warranty sales are always met with a certain amount of resistance from the customer. In this respect, there is a need to change the Mexican mindset. Warranties and insurance protect what is most important in people’s lives. People spend a lot of money on their car. For a few thousand pesos more, they can ensure their car will remain in good condition after a few years and can avoid having to pay more for repairs. Getting that message across is the primary task of a sales agent. We provide them with tools and information, advise on how to pitch the products and suggest how to promote certain deals.
Q: How has the sales downturn impacted your business?
A: The industry has seen a drop in sales since 2016. There are different factors at play. First, there are always periods when people buy a lot of cars, followed by a period in which sales drop. The second factor is uncertainty regarding the impact of the new government. Currently, people do not want to saddle themselves with debt. USMCA’s ratification would help inspire confidence with respect to investment and export possibilities. There are still many smaller automotive companies that are seeing a lot of growth but the biggest carmakers have seen a drop in sales. Distributors are now seeing that the money is not in sales, but in aftersales. Fortunately, this is an area perfectly suited to our products. We provide distributors with the opportunity and tools to make money and increase their margins. This is a win-win situation, also for major carmakers. One of our biggest assets is that we have access to a lot of data, through our global presence and our long history. We know everything about cars and are very good at calculating the risks for each model.
Q: What are your expectations for the next few years?
A: The automotive industry will continue seeing rapid change, with new areas, such as electric cars, e-commerce and insurtech, gaining ground. Latin America still has immense growth potential and generally there is a lot of appetite to invest here. Mexico, in particular, remains a very interesting market. One of our traditions at Assurant is to support small businesses with innovative ideas but we also are willing to make major investments. This was demonstrated by our acquisition of The Warranty Group, which significantly increased our market presence.