Today, nearly half of U.S. vehicle buyers purchase guaranteed asset protection, making it an F&I office product staple. But it's had its ups and downs since arriving on the national market about 25 years ago.
2017 has been a particularly turbulent year for GAP products. Natural disasters and other factors have driven average claims into the $4,200-to-$4,500 range — losses that are nearly historic, said Martin Jenns, president of F&I services provider Service Group Insurance & Financial Services, of Texas.
At the same time, customers are more aware of GAP than ever, Matt Woods, Service Group's director of field operations, added. "Market penetration at our stores hovers around 50 percent, and sometimes as high as 70 percent," up from perhaps 20 to 30 percent in the early 2000s, he said.
Service Group's penetration numbers are only slightly ahead of national trends, according to Dave Robertson, president of the Association of Finance & Insurance Professionals, which puts GAP's national market penetration rates at 40 to 50 percent.
The growing losses in GAP are cause for pause, but 2017 isn't the first time GAP has gone through tumultuous times.