In this episode, host Emma Hancock and David Holland, senior vice president of insurance, P&C, at Ally Financial, discuss how weather-related events and changing inventory values are impacting dealerships, emphasizing the need for regular insurance policy reviews and the emergence of new insurance products and monitoring technologies to mitigate risks.
Ally All Ears Podcast | Protecting your dealership and inventory against weather-related events
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Emma Hancock: Hi everyone. Welcome back to the All Ears podcast. I’m Emma Hancock, host and strategist at Automotive News. This podcast is sponsored by Ally Financial and produced by the Automotive News Content Studio. In each episode, we explore topics that are important to leaders in automotive retailing. Our guests include experts in their field from Ally, plus dealers from around the country. And we cover tips and explore insights that can help dealerships successfully navigate the transformational changes taking place in our industry. Today, we’re catching up with David Holland, senior vice president of insurance, P&C, at Ally Financial to discuss the impact of weather-related events on dealerships. If there's one thing we've learned from COVID, disruptions to the supply chain must be prevented, especially given how much more valuable dealer inventory has become. Whether it's hurricanes, floods or the ever increasing reality of theft, dealers are going the extra mile to protect their investments. Hi David. Thank you so much for taking the time.
David Holland: Hi Emma. Nice to meet you.
Hancock: Great to have you here. So, David, the value of dealer inventory has increased dramatically for a variety of reasons, mostly due to the impact of COVID on supply chains. Are you seeing dealers doing anything new to protect their facilities against extreme weather events?
Holland: As you mentioned, the values have gone up significantly and that's partly because the level of inventory on dealers’ lots has gone up, but also the value of vehicles has gone up astronomically in the last few years. It's not like there's any new perils. We're still facing hurricanes and hail, and in some places, you've got earthquakes and wildfires. But what's probably changed in the last couple of years is the number of vehicles on the lot, and the price of them is changing dealers’ appetite to take risks. So, deductibles and their aggregates and even the limits on my policies are all changing significantly. And it's something that dealers need to be aware of; as you've got more stuff to insure, you need to make sure your policy still fits what you're trying to achieve.
Hancock: How often might dealers review their policies to determine the coverage levels that suit their current needs?
Holland: So at least annually, it's really important that once a year you sit down with your insurance company or your agent and make sure you review that it's still fit for purpose. And that's especially pertinent in the current environment. when you've got changing levels of inventory and changing values of vehicles and the weather patterns are starting to change. I would say any time that something material happens with your dealership, you also ought to be reviewing that policy. So, if you've started to add electric charging stations or if you've added a new data point, then you're going to want to make sure that your policy is updated so that it's covering these new items.
Hancock: David, when we look at trends and policies, are you seeing different trends and policies that you weren't seeing, say, three to five years ago?
Holland: Probably the biggest thing is the changing value of vehicles, the increasing amount of vehicles and then similarly, from an inflation standpoint, the price of buildings. A lot of policies have limits on how much they'll pay to rebuild your building. If your policies are capping out at $1 million and it's going to cost $2.5 million to replace your building, you're going to want to make sure you updated that policy. The other big trend that we've seen is the emergence of cyber. Probably three or four years ago, you were struggling to find a $1 million limit on your cyber policy. Now, most of the manufacturers are starting to require a $5 million limit. And so that's gone from a small add on to your policy to a big component of your average policy.
Hancock: David, are you seeing industry trends related to new insurance products being developed to help protect dealers against threats such as floods, fires or theft?
Holland: The two most important ones are still going to be your large perils so the hurricanes, where the best thing you can have in place is a good mitigation strategy to be able to move those vehicles to higher ground or get them under cover. For hail, there's been hail nets for a number of years, but we're starting to see a lot of advances in radar and then individual sort of capture stations within dealerships to alert people when hail is coming. It's still in its infancy and it's not as accurate as you'd like it to be, but if you can move even 10% of your vehicles, that's going to help save you in terms of claims. And then probably the big thing around flood and fire is the increase or the lower cost of these monitoring technologies. There was a big increase in the market maybe three or four years ago in a lot of new monitoring technologies to tell you if you've got a flood or an increase in water pressure. The big change in the last couple of years is the price of them has come down dramatically. And that really helps an insurer give you a better rate because they're able to better understand when you're going to have a fire and help you mitigate.
Hancock: David, thank you so much. You've given us some great information. That is it for this episode of the All Ears podcast. I hope everyone found this helpful. I certainly did. On behalf of Ally Financial and the Automotive News Content Studio, thanks for listening and bye for now.
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