November 2008 - Feature
Showing the Pulse
By Gregory Arroyo
As for disability, more than 100 million Americans don’t have disability income insurance, according to the Council of Disability Insurance. Even worse, A.G. Edwards Inc.’s National Investment Survey revealed that 72 percent of Americans don’t have enough savings to meet even short-term emergencies. The problem is Americans are saving at the lowest rate since the Great Depression, according to the Commerce Department.
“People in our country have not been good about saving … they’re overextending themselves with credit,” said Ed Kizer, president of Central States Health & Life Co. of Omaha (CSO). “The truth of the matter is it’s this time in particular when the fundamental need for the product is as good as it’s every been. Some dealers believe that, others choose not to see it.”
Blue Collar Product
One dealership that’s chosen to believe in the product is Sewell Ford of Odessa, Texas, which offers CSO’s life and health insurance. “I went to NADA (National Automotive Dealership Association) a few years back and they talked about how life and disability was a product that was fading away,” said Chris Garrett, finance director for the dealership. “The product is still relevant, and dealerships need to focus on what’s valuable to the customer. And let’s not forget what got us here.”
Sewell Ford’s penetration rates are staggering, with a 38 percent acceptance rate on life insurance. One F&I manager even has a 68 percent penetration rate on life and 57 percent on disability.
“In West Texas, where it’s a blue-collar oil town, there are still people with not enough life insurance,” said Garrett, whose dealership employs Reahard and Associates for training. “And workman’s compensation doesn’t kick in for 90 days. By that time the bank is looking for your car.”
Being in an oil town, Garrett’s success isn’t surprising. In fact, most statistics point to higher penetration rates coming out of towns with a high concentration of blue-collar workers.
“It really depends on the dealership and its geographical placement,” said Richard S. Kahlbaugh, president and CEO of Fortegra Financial, formerly known as Life of the South. “Some areas it does well in, others it’s not a viable product. It really depends on the dealership, their history and the territory.”
Kahlbaugh said dealerships in southern states do OK with the product, as do dealerships as far west as Mississippi and Texas. The product does do well in the Midwest, and the Northeast is fairly flat. The worst place to sell the product is California, he said.
“This product does very well for those people in middle America,” said Kahlbaugh. “Often times, this social economic group can’t find a $50,000, five-year term policy that’s priced affordably. And that’s the market we target — the underinsured.”