Selling autos and auto insurance together is a commonsense idea, but pilot projects that were announced over the past few years have remained just that - pilot projects.
'It's true that some projects have not turned out very well, and there has been some customer dissatisfaction. That's why we're not even going to go there just now,' said Fred Browning, Chrysler Insurance Co. president. He said Chry-sler Insurance is studying how to market auto insurance at the retail level, but the company is not ready to roll out a program.
Several trends are converging that could get the concept off the ground for Chrysler Insurance and other U.S. companies:
Hyperbusy consumers: More than ever, customers want convenience. Responding to that, automakers want to be a one-stop shop for all things auto-related, including insurance. Ditto insurers, for all things insurance-related, including autos.
'If you can save people time, that's the one thing they don't have any more of,' said David Paul, vice president for business development at BMW Financial Services NA Inc.
Multiple lines: Under partnership agreements, 'preferred' insurers offer other lines to car buyers, such as homeowners insurance and policies for other car brands. That improves the insurance company's profitability. And a discount for buying multiple policies gives customers a reason to switch insurance companies.
By itself, marketing auto insurance through car dealerships was too narrow an offering. Car buyers who already had auto insurance were reluctant to switch; car buyers who didn't were poor risks. And margins based on auto insurance alone were too thin for dealers to justify getting a license to sell insurance.
Technology: The Internet and telephone call centers have made it easier for customers to call at odd hours, and/or jump back and forth between an auto lender and an insurance company.
'To be successful, you need to be a high-tech, low-overhead company with an efficient delivery system, and I think that's the way of the future,' Browning said.
Hypercompetition: Insur-ance and autos are two mature industries, with overcapacity problems. Automakers, auto lenders, car dealers and insurance companies are all fighting for market share.
No opportunity for profit or customer satisfaction can be overlooked. A partnership between auto lenders and insurers offers both.
'Margins in personal auto insurance were much better two or three years ago,' Browning said. 'Everybody wants to have a bigger piece of the pie, and in order to do that, they're slicing premiums.'