Easing the Replacement Burden

It is estimated that more than three million policyholders will total their vehicles in 2009 and be shoved into the car buying market. With approximately 50 million new and used car sales predicted nationwide, it is material that six percent of the buyers will come from the total loss segment. Given the current state of the automotive industry, dealers are chomping at the bit to serve these customers.

Until recently it was not simple -- or even necessarily a good idea -- for a claim division to assist with vehicle replacement for a variety of reasons. First, it has been difficult (if not impossible) to contract directly with dealers within your footprint that all agree to uniform customer service standards that are in line with your brand. Second, implementation of the program requires a great many resources to launch and truly make successful. Third, customer service leads and attorneys have expressed concerns about savvy customers using a vehicle replacement program's pricing to challenge their settlement amounts.

Each of these points has been addressed recently by a crop of new solution providers who can operate a nationwide vehicle replacement program for your company under your brand. These solutions leverage the scalability of the Internet, a dedicated project team and a sync-up with your total loss valuation partner to deliver a program capable of meeting the customer service standards of even the most brand-centric organizations.

Such programs contain the following key components:

• Low, upfront pricing that solves for the "pricing versus valuation parity." This means not only how good the final sales price is and how easily it was acquired, but also a minimization of the risk that any given customer will use the program to dispute his settlement amount. This is especially important for programs that display dealer set pricing for new cars -- for example, a certain dollar amount below invoice -- and the lowest advertised price for used cars, online as policyholders are shopping. This capability adds a tremendous amount of transparency to the process and builds trust that the program is not a sales gimmick. Even so, coordination is necessary with your valuation partner to sync up the pricing for new and used cars with the settlement amount.
  
• A consistently great dealership experience. Following a total loss, your policyholder's time is too precious to be consumed by unscrupulous and annoying sales practices by dealers. It is critical that the dealer network behind the program be certified to provide your customer with a no-hassle buying experience. This means that the dealers should be contractually obligated to meet service level agreements (SLAs), which, if breached, can be remedied swiftly. Such SLAs should include timely responsiveness to customer inquiries, acknowledging your customer's affiliation to your company at the dealership and honoring any customer's pre-arranged financing.
  
• Useful research tools. Only a small amount of total loss claimants replace the vehicle with the same year/make/model. Seventy percent of consumers go online to perform research, meaning that your program must include useful tools and content to help assist with easy selection. Such tools may include widgets to search for cars based on the down payment amount, which may come in the form of the settlement check. Other search criteria may include a desired monthly payment, safety ratings (this is important given the event that triggered their search), and similar cars to the one that was totaled. Other site features should include high-definition pictures, videos, reviews, and as much information as possible as to the condition, mileage, and existing warranty on used cars. Available options, incentives, and specific dealer offers for new cars -- free delivery, for example -- should be covered as well.
  
• A sophisticated support infrastructure. Even the most simplified car buying program has many moving parts. Incentives can expire; dealer inventories change; and dealers hire new sales managers who aren't aware of the specifics of the auto buying program. To ensure there is not a breakdown, the provider should have a call center available to assist your policyholders with any glitches in the process. Your policyholders should be one step away from a trained program representative capable of answering their questions and advocating on their behalf with dealers. Additionally, because your claim reps have a role to play in communicating the benefits of the program, you should be certain that your provider has a strong training program. It's also beneficial for providers to have the ability to create and send communications to policyholders on your behalf that allow them to access the program and then rate it after use. This will reduce your management burden and allow you to obtain very useful feedback.

The benefits of providing an auto buying program are plentiful. Programs offered by pioneers have proven to increase customer satisfaction and retention during what is oftentimes a thorny customer service experience. In addition, these programs are helping claim reps communicate a sense of urgency to the claimant in replacing their vehicles. The end result is a shortening of the claim lifecycle, which can financially impact your bottom line through a reduction in out-of-pocket costs, such as those related to rental car coverage. Also, offering the vehicle replacement service (with contextual links to apply for your auto insurance throughout the program web site) may lead third-party claimants to switch to your company, thereby creating new customers. In addition, because most providers earn their revenue through dealers via referral fees, you may be in a position to launch an auto buying program for your customers at little or no cost.

Uncovering ways to differentiate your company from the competition has become ever more important in the auto insurance industry. With consumer choice at an all-time high, successful insurers must clearly and concisely articulate what sets them apart from the competition to retain existing customers and acquire new ones. It's not often that a claim division can bring to your marketing department a marketable customer benefit to tout. An auto buying program provides you with the ability to do just that.