General Motors Acceptance Corp., 85 years old this year, is aggressively returning to a vehicle insurance product sold by GM dealers in the early 1920s.
Regarded by some dealers as a “natural” addition to the F&I menu, and to others as a low-profit nuisance, vehicle insurance is an initiative gathering momentum for a 47-state rollout within the next year.
GMAC Insurance steps up the organizing pace and potential customer base by offering the vehicle policies to all GM dealership employees.
“There are about 400,000 GM dealership employees in the U.S.,” says Mitch White, a marketing manager at GMAC Insurance. “They and our own employees and retired employees form a natural launch base for an insurance policy with a GM brand.”
He adds: “Reception has been better than we expected. Potentially, it's a new kind of F&I product, because GM owners already are insured with another company, unlike credit insurance or GAP (general auto protection). But we are looking at ways where dealers could be involved and premiums could be added to our owners' loan or lease payments.”
GMAC Insurance is unique in that GM's subsidiary acts as the insurer. Other auto makers offering vehicle insurance coverage in recent years, notably Ford Credit and BMW, use large auto insurance firms and their agents to sell policies, with dealerships acting as promotion points.
GMAC tried a revival of the vehicle insurance program in the early 1980s, but gave it up because of low profits. GM dealers, who recall that venture, say another hurdle came from insurance agents fearing the competition.
Currently, F&I staffers are not permitted to write up vehicle insurance policies directly because they are not licensed by their respective states. That could change.
State licenses to sell property and casualty insurance (which covers vehicles) are issued after an extensive exam preceded by a required preparatory course.
Auto maker loan subsidiaries could pursue a legislative change allowing F&I managers to write vehicle polices. Virginia is the first state to consider an amendment to so license F&I managers.
GMAC, Ford Credit and BMW Financial Services, which advocate vehicle-insurance packages related to their brands, also regard the concept as a customer loyalty move.
GMAC's White says owners whose vehicles need body work because of accidents can be assured that “if they go to our dealers the repairs will be strictly OEM parts.” Ford Credit has offered a $100 discount for claims work done at Ford dealer body shops.
“We realized all our owners and employees are already insured,” says Roger Colson, GMAC vice president of customer marketing. “But canceling a policy midterm is relatively easy and entitles the motorist to a full refund for the period not covered.”
The states in which GMAC Insurance is not available are Hawaii, Massachusetts and New Jersey, where regulations are regarded as too cumbersome.
In European Union countries, dealers can sell vehicle insurance policies whenever a new or used vehicle is purchased. The one-stop shopping appeal of that system is what GMAC Insurance is pursuing — again.