SOVEREIGN Insurance Australia CEO Damian Chadwick says dealerships should adopt a quote-based business model when offering insurance products to customers rather than a sales-focused approach.

Speaking in a talk titled Quoting Insurance in the Modern Dealership at the recent Australian Automotive Dealer Association Convention and Expo in Sydney, Mr Chadwick said that the used car sales space should be treated more like new car sales, and that dealers should quote insurance products to customers rather than simply sell them.

“We need to start looking at the used car position as if it was new. So let’s think of them as not used cars, but ‘newsed’ cars, and fill that segment in the middle,” he said.

“Now, what we believe at Sovereign Insurance is that rather than being a situation where we’re just selling these products, that we should move to a position of quoting, and by quoting, we can put ourselves in a situation where more people have access to the product, more people have the time to be able to assess and have the ability to buy.”

Sovereign Insurance Australia CEO Damian Chadwick

“Let’s put customers in a situation whereby they are buying at their time, with the information that they need, rather than having a situation with something that can be quite forced at the dealership.”

Mr Chadwick stressed the importance of transparency for customers and ensuring they have sufficient information to make purchasing decisions. 

“This is really taking something out of the handbook in regards to what’s been happening with MVI (Motor Vehicle Insurance) for some time; being in a position to quote.”

“We’ve talked about what allows people to feel comfortable about buying used cars, it’s the transparency, it’s the trust, it’s the ability to know that at the end of the day they are getting a good deal, and that comes through being able to make sure they’ve got all that information in front of them, and they are driving that buying decision.” 

“There’s no better way to do that in regards to quoting, and that is why quoting is going to be such a big part of what we do moving forward.”

Mr Chadwick said that many dealers moved away from selling insurance products following the implementation of the Deferred Sales Model (by ASIC) but said that these products still needed to be part of car deals.

Damian Chadwick

“A lot of people have shifted away from insurance due to compliance when the  Deferred Sales Model was brought in. It got very scary. People were looking at this, saying, ‘Hey, you know, is the juice worth the squeeze?’ And people were taking other directions.”

“But as margin pressures continue to have pressure on dealerships, we need to go back to the things that we know fundamentally have worked historically very well, and products like GAP, CCI, tyre and rim, RTI were all staples in regards to selling cars. We need to go back to adding value and getting those products back into deals.”

“And by doing it this way, what we’re doing by way of our systems and quoting is we’re taking that pressure away from the actual salespeople, and it is the system that is driving and making sure that the appropriate product is offered at the appropriate time, and really make sure that we’re getting a consistent delivery.”

“So we don’t have to worry about compliance. The systems are driving and making sure that every customer is getting exactly what they need or what they see. It is compliance by design.”

Mr Chadwick also says that technology applications – utilised across a range of industries – can and should be used to optimise the customer experience, and that buyers are already used to interacting with these systems. 

“If we go back to looking at the new car position, habits that are already very much instilled in regards to that new car process need to be transferred to the used car process. And one of the easiest ways to do that is by using systems that make sure that we are getting a consistent offering to customers, and that everybody is seeing products that are appropriate, and making sure that we’ve got that great customer experience.”

“Customers are used to this, whether it be through Amazon or the buying cycle that happened through COVID; customers are now used to QR codes, URLs and SMS messaging coming through. 

“When we look at convenience, they can look at a quote at three o’clock in the morning. They can go online and have a look at some comparisons, and then they can come back and very simply by clicking on some links, going through looking at videos, PDSs (product disclosure statements), making sure that they’re informed. We can take that customer all the way from actually having to look and make an inquiry all the way through to being in a situation where they can go and purchase that, utilising us as a measure of record.”

“So we’re talking about an end-to-end transaction that can happen, completely guided by the customer outside of business hours, and ultimately we’ve got dealers who are using this system, walking in on a Monday morning and seeing all the transactions and the products that have actually been sold.”

Mr Chadwick said the auto industry can also adopt the subscription sales model from other industries, making it easier for customers affected by the cost of living crisis. 

“We know (the cost of living) is increasing rapidly and (is) ultimately having an impact on customers. We started looking at other industries and asking: How has that been handled? We’ve got situations where you can pay in four, you can pay in 12, and again, if we start looking at how traditional insurances are sold, the opportunity to be able to pay for those products in instalments over 12 months has been in place and been tried and tested in other industries for a number of years. 

“The whole concept now is to bring that experience to the customer and allow them to be in a situation where they can digest that product. And if they don’t have the ability to pay up front, we’re in a situation whereby subscription is really going to drive and help those customers make that buying decision. It’s not whether they want the product; it’s if they can actually afford the product.”

Mr Chadwick said digital solutions operating in the background can also create tangible results when it comes to securing revenue and increasing transaction rates.

He said the best way to sell a product is face to face, but if that’s not happening, dealers should think of using AI, quoting, webhooks or SMS as additional avenues to get the message in front of the customer.

“They can be branded offerings, they can be standard offerings, but ultimately we can guarantee you that every single customer is being offered the product.” 

“And from that point of view, we’re seeing transaction rates that are jumping as high as 32 per cent in addition to what the dealerships have actually been selling. Some of them have even gone as high as 40 if we’ve got a very smooth handover and transition.”

Mr Chadwick says that ultimately, customers are willing to buy a product provided they are given the ability to do so. 

“(Customers) just need the opportunity to be able to engage and buy. And if they don’t want to buy, that’s not a problem. But if they want to buy, but you don’t make the offer or you don’t present the conduit to allow that to happen, then we’re leaving revenue on the table.

“In the modern world, these are things that customers now not only are expecting, but realistically are the points of difference which makes that incremental growth that we’re all looking for,” he said.

By Jack MacKenzie