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F&I Products

Showing the Pulse

November 2008, F&I and Showroom - Feature

by Gregory Arroyo - Also by this author

It was a year ago when Jon Brown knew his dealer group’s approach to credit life and disability had to change. The former F&I director for Auffenberg Dealer Group’s Ford store in St. Louis believed in the products and knew scrapping them wasn’t the solution. His answer would come to him while watching a commercial with Aflac’s famous duck.

“It occurred to me that life insurance is life insurance. If the customer doesn’t want it, you’re not going to talk him into it,” said Brown in August. “So I sell disability and I present it like Aflac. Everyone’s familiar with that, so I tell them, ‘I know this says disability, but it’s more like Aflac for your car.’ Then I give them the pitch.”

Brown, who now serves as general sales manager for the store, would first pitch his cheapest policy, Protective’s 14-day policy with a six-month cap. Before changing roles, his acceptance rate averaged between 25 and 29 percent, and even hit a high of 32 percent in August. By the end of September, Brown said four out of the nine F&I managers at his dealership were running over 25 percent penetration on credit life and health, one even reaching as high as 29 percent.

“Penetration went through the roof,” said Brown. “Our 29 percent guy had around 70 touches, so this isn’t a flash in the pan.”

Like Brown, many dealerships are reconsidering their approach to the category that put the “I” in F&I. Some dealers even wonder if credit insurance products have lost their place in the industry. Insiders say state regulations have hampered the growth of the category. Others say it’s the demographics of an area that limits its reach, which Auffenberg’s Brown doesn’t agree with.

“Pick the worst market to sell these types of products and that would be the market I’m in,” he said. “Eighty percent of the workforce in my area is in the military, and those guys have great life insurance and paid sick time. So I don’t really buy into that. I think it really comes down to the presentation.”

Consumer Market Big, Interest Low

What’s clear is the lack of consumer interest in products like life insurance isn’t regulated to automotive retail. In a 2007 survey conducted by the Life and Health Insurance Foundation for Education (LIFE), one in five Americans said they’d prefer to have a root canal than investigate their life insurance needs.

That sentiment exists at a time when buying most types of life insurance has either remained stable or dropped over the last decade, according to LIFE’s 2008 survey. Yet, only one out every 10 Americans said they have not purchased coverage because they believe it’s too expensive.

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