market talk


PLUS!


The Editor probes the potential for the broker market in Warranty and GAP covers


n the face of it, the provision of this kind of protection would appear to be ideal for brokers wanting to add to their revenue streams, and to cross- sell, while adding value. So why is it that most brokers ignore this opportunity?


Fill that gap! O


“Despite all the changes in recent times, the broker market is still very traditional,” says Simon Tennyson.


Could that perhaps be a hangover from the days of polarisation when life products and general business were separated?


“More likely, the real difficulty for brokers is justifying the likely acquisition cost of additional product sales against potential income, given that only a limited number of add-on products can be sold in addition to the core offer, and that these are very price sensitive.


“Brokers (generally) have no real experience in selling separate higher cost products as a secondary sale, and this is where Motorway Direct Group specialise. “We have developed real expertise in white label solutions for brokers and other affinity groups, particularly in the sale of warranty and GAP covers. Unlike other providers, high conversion levels are obtained by using uniquely scripted outbound offers - not just email offers or renewal inserts. High commission levels can therefore be generated for


30 insurancepeople JUNE 2010


partners driven by volume sales. “In addition Motorway Direct has a subsidiary trading as Business and Domestic Insurance Services. This part of the group specialises in other added value product offers, many of which are already utilised by some of the UK’s largest brokers.” Mr Tennyson believes general insurance brokers’ reluctance to cross sector boundaries is one of the reasons why they tend not to get involved in critical illness and permanent health, which are often regarded as being outside their remit, even though their customers are unaware of these boundaries.


Then there is the question of access to market. “Brokers missed the boat on certain covers, such as PPI, because these were always sold (or mis- sold!) at the point of loan. And there’s a general feeling that warranty and the other covers lie solely in the hands of the motor trade at the point of sale of the vehicle.”


I asked about GAP cover. What on earth is that? Surely the very name spells mischief to the consumer? Even if it were changed to say, ‘Total loss top- up’ cover, that immediately raises a question in the consumer’s mind. Hang on a minute, Mr Broker. You sold me a motor insurance policy which you told me was the best value in the market, but now you’re telling me


The Editor’s meeting with group managing director Simon Tennyson of Sheffield-based Motorway Direct Group proved a very good opportunity to clarify the potential that might exist for the broker market in the field of Warranty and GAP covers


there’s a gap, and I need to buy another policy!


“The issue here, of course, is not that there is a specific gap in the standard insurance cover as such - it’s all about vehicle depreciation,” explains Mr Tennyson. “Brokers need to educate their customers on this point, but then they are ideally placed to do so. The minute a car comes off the forecourt, its value


Simon Tennyson


plummets. A fact of life unfortunately, but one which brokers can explain if only they can grab customers’ attention. Many are proving themselves adept at that, but others must act now if they are not to be left behind.”


Motorway Direct plc


A UK company specialising in Warranty and GAP covers and providing solutions with bespoke products and packages for a range of distribution channels - including insurance brokers and intermediaries.


Affiliated brands include AA Warranty and Car Protect.


Launched in 1996, there is over 20 years’ experience of pioneering development of Mechanical Breakdown and Warranty products.


Motorway Direct has complete delegated authority to include Warranty and MOT covers in any chosen distribution channel, and similar, virtual control of GAP, Tyre and Key Insurance covers.


Back To Invoice GAP Insurance provides up to £15,000 financial protection for three years for vehicles less than 7 years old at inception in the event of total vehicle loss through theft or accidental damage insured by a motor insurance policy issued by an authorised UK motor insurer covering accidental damage, fire and theft.


Claims are handled in house by the Group. Contact: Paul M Hanna, Commercial Manager


Telephone: 0114 263 7770 Fax:0845 4747409 Website: www.motorwaydirect.co.uk


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