AS MANY Australian car dealers struggle with the convoluted sales process imposed on the sale of general insurance products from car dealerships, a NSW dealer group has developed a tool to assist car owners to extend the period of their warranty policies at the time they fall due.

A team at McCarroll’s Automotive Group has developed the software with iMotor; initially for dealerships within the group but it has proved to be so effective that it is being rolled out to dealerships all around Australia.

On October 5, the Australian Securities and Investments Commission (ASIC) brought in new legislation (Deferred Sales Model) which delays the finalisation of add-on insurance sales by car retailers by at least four days.

This means that even if a buyer says they want the add-on insurance protection on a Monday, dealers cannot finalise the insurance sale until the following Saturday (in fact five days).

The rules are intended to remove pressure from add-on insurance sales and to give buyers time to inform themselves whether the products suit their circumstances or not.

But the process is so convoluted and complex that many car dealers have given up on selling general insurance altogether.

This has had the unintended consequence of denying car owners protection from the financial stress they can suffer if their vehicle has an expensive mechanical failure.

The issue led Stan Udler, McCarroll’s GM of finance, and his associate Ellis Lum Mow to partner with AWN Insurance to design and develop a compliant offering that communicates to customers as their vehicle approaches the end of manufacturer warranty which is when the insurance product is most valuable to the customer.

It is now being marketed under the brand, Auto Auto Australia.

The CEO of AWN Insurance, Damian Chadwick, told GoAutoNews Premium that the impact of the Deferred Sale Model has been devastating to add-on insurance sales in several markets”.

“In 30 years of business, we have never seen an event change the landscape like this. Once staple insurance products have now become obsolete, the conventional sales process is now disjointed and many now question the place of insurance in F&I.

“However, we have accepted the paradigm shift and have embraced that adversity is the mother of all inventions. This will be evident in the coming months as we release enhanced systems and broaden our product offering,” said Mr Chadwick.

The software that Stan and Ellis have created is impressive and has yielded exceptional results during staged trials. With proof of concept established, I do not doubt that dealerships across Australia will embrace this technology.

Meanwhile, Mr Udler told GoAutoNews Premium: “Auto Auto is an automated marketing software that targets customers coming out of factory and statutory (used car) warranty and offers an online extension of coverage.

“Communication is triggered by the warranty expiry date and pre-fills the required fields to allow a customer to purchase with minimal friction.

Policies are sent in real time to the customer and notifications are sent to the dealer to update their DMS.

“The offering is compliant with the deferred sales model and administered by AWN insurance. The commission received goes to the dealer,” said Mr Udler..

The Auto Auto warranty insurance sales system can also be offered to the used car database where vehicles’ warranties have already expired. It enables the dealership to re-engage with customers within the service department and increases service retention.

“We have found this strategy to be popular with customers as a timely touch-point. Customers at this stage are considering upgrading or hanging onto their vehicle and have a decision to make.” he added.

“Automated, digital systems enable warranty products to be offered 100 per cent of the time to 100 per cent of customers.

“The results so far have been promising. The primary benefit from an automated system is it becomes a consistent income stream for the dealership with minimal management required.”

Mr Udler said that selling dealers continue to retain a key advantage.

“They know when the manufacturer warranty ends on the vehicles they sell. This provides the opportunity for automation and digital solutions that add value to both the customer and dealership.”

Mr Udler also said the Auto Auto system avoids time-consuming and inconsistent calls between the dealership and customers.

“Towards the end of the term, business managers might try to call their customers. Five or six calls may take place, they go backwards and forwards. Finally, they get to offer a quote to renew and there is more back and forth until the customer finally decides whether they want to extend or not.

“So Ellis and I thought there’s a much better way of doing it. We automated the entire process.

“It checks the car and the price via API with AWN, generates an automated eDM to the customer saying: Hi, John, your 2017 Mazda CX-3 is going to expire in the next 30 days. And the price of the warranty is ‘this’. And here’s the PDS and FSG. And here are the frequently asked questions and here is everything you want to know; everything up front.

“The difference with our software is: we send you a quote upfront, so we don’t have to call you, contact you, ask you stuff, then go back and check the price for your particular variant of vehicle.

“Our system pre qualifies if your vehicle is eligible, then it gives you a unique personal link”

“So all you need to do is update your current kilometres, put your credit card details in and you have bought it.”

Auto Auto has no monthly subscription costs and works off a success-based model “so all parties’ goals are aligned”.

Mr Udler and Mr Lum Mow, backed by Phil and Simon McCarroll, have been working on the project for three years and extensively tested the software within the McCaroll’s Automotive Group for the past two and a half years.

By John Mellor