LEADING aftermarket insurer, AWN Insurance, has reinvented the way its customer-protection products are offered through car dealerships.

By evolving the relationship that sees dealers become referrers rather than sales agents and by funding insurance products in a way that amounts to a subscription model, AWN can now, once more, offer car buyers access to the peace-of-mind that came from insurance policies when purchasing a car through car dealerships.

Many Australians in recent years have missed out on the opportunity to secure the protection offered by aftermarket products when dealers stopped selling them in the wake of ASIC’s changes to sales regulations. The changes were to prevent sales abuses that the regulator determined were occurring at the time.

Damian Chadwick

However, they introduced such hard-to-navigate speed bumps into the sales and funding process that, as an unfortunate by-product, the regulations put in place by ASIC forced many dealers and some insurers to withdraw from offering products altogether rather than face the struggle to address the strict new rules.

The ASIC regulations, especially the Deferred Sales Model (DSM), rather than allowing car buyers to protect themselves, in fact effectively precluded many car buyers from the sort of protection they needed from the sudden financial distress car owners can experience when things go wrong.

AWN Insurance has now developed a business model that recruits buyers of its insurance products via car dealerships – and rewards dealers for doing so – while at the same time strictly complying with the rules put in place by the regulator.

Firstly, its insurance products are no longer sold by the dealers. Instead, the dealer obtains the customer’s consent to provide their basic contact details to AWN Insurance, and the insurance company creates a unique quote.

If the buyer agrees to take on the AWN Insurance products, the dealer receives a referral fee of an amount commensurate with the product purchase price.

To address another roadblock, AWN Insurance is also offering car buyers the opportunity to pay for the premium for its insurance products via an interest-free, 36-month subscription.

Under previous pre-DSM arrangements, buyers would incorporate their aftermarket protection premiums into their vehicle finance package, paying them off alongside the vehicle payments.

Under the DSM rules, the finance deal was often finalised before the dealer was even permitted to discuss the add-on products. As a result, many buyers were unable to finance the products and hesitated at making the cash payment. Consequently, sales were lost, and customers were left unprotected.

So, instead of packing their insurance payment into the car loan as in the past, AWN Insurance is offering an interest-free subscription to help car buyers fund their coverage.

The managing director of AWN Insurance, Damian Chadwick, told GoAutoNews Premium: “Under the new arrangements, AWN has created a new platform which has the capability to offer insurance and warranty quotes to customers. This technology empowers customers to take control of their purchase.

“The transition from dealers selling to referring is more appropriate. This removes the conduct risk from the dealer and ensures compliance and transparency via AWN’s smart contract.

“The customer receives a unique offer that’s been tailored based on their car’s criteria. They will receive a digital quote email directly from AWN. They will be given access to all the necessary documentation to make an informed decision, including policy wording, Financial Services Guides (FSG), Target Market Determination (TMD), reviews, videos, and more.

“We also have a direct customer line for those who would like to speak with someone and ask any questions before making a decision. This is a customer-centric model.

“At any time, the customer can unsubscribe from the service, and their data will be redacted from our system. The quote is active for 15 days, and if the customer chooses to purchase, it’s as simple as clicking the ‘Purchase Now’ icon, and they will be guided through our payment gateway. The customer can select to pay in full or take advantage of up to 36 months interest-free subscription payments.

“This is about giving customers choice, we are not trying to sell anyone our products. Instead, we have utilised technology to enable customers to review, compare, and make informed decisions. Should they see value they can purchase our products.

Referring to the subscription model, Mr Chadwick said: “To my knowledge, we are the first to offer subscription payments on multi-year policies. We believe this was the true intention of the DSM.”

“This model does not work without the subscription. I feel AWN products are the best on the market; however, if the people who need them the most can’t afford them, you’re back to square one. We needed to create a payment plan, and after months of work, my team delivered.”

“Our plan is interest-free, so there is no uptick in the cost. Whether you pay it up front or you pay in installments, it’s exactly the same amount. And if you choose to cancel at any time, you can”.

“The intention is that all the products that we supply to the industry through AWN Insurance will have access to the new plan. Current inclusions are selected warranty and roadside assistance products; the first insurance product is going to be our Asset Protection Insurance (API).”

Mr Chadwick said that the changes made by AWN Insurance were driven by “concerns that people who wanted the protection no longer had access to it, and didn’t have the funds or the means to be able to obtain it”.

“While we understand the DSM was about protecting customers, a lack of innovation from insurers and finance providers created a knock-on effect of leaving some customers who wanted that protection in a situation where it was unobtainable. An unacceptable outcome that needed to be addressed.”

“Suddenly, everybody was too scared to touch insurance and adopted inferior products due to the ease of sale and the ability to finance them. But through tenacity, innovation, and thinking outside the square, we have levelled the playing field for those customers seeking the protection that only insurance products can offer.”

“My team has done a fantastic job finding a solution where others only saw an obstacle. We are putting much-needed revenue back into dealerships with a customer-centric program void of conduct risk. This is a great outcome for our industry” he said.

Read more:
AWN Insurance: What’s in it for dealers?