Making insurance profitable for you
Dealers who have partnered with an exclusive insurance provider are able to ensure their customers are covered and even make a little revenue as a reward.
Full-service dealerships are able to market themselves as one-stop shops – a life-long boating partner. But as in any healthy relationship, your customers need to know you will be there in both good times and bad.
In order to guarantee this, many dealers are forming partnerships with an exclusive insurance provider they know will be there for their customers after any unfortunate happening.
Dealers accomplish this goal by first doing their homework on the options. The most crucial criterion is that the insurance provider is knowledgeable of the nuances in the different models you sell.
Insurance companies that either provide solely for the marine industry or have representatives devoted to it are often a reliable choice. Such companies not only have the products designed to cover all kinds of vessels, but also operate on the dealer’s schedule so that a sale is not held-up due to the boat’s coverage not being finalized.
Companies like Global Marine Insurance have staff on hand during the hours most dealers are open, including on weekends, enabling you to close before the prospect leaves the dealership.
“Dealers don’t want to call someone about insurance on a Friday and hear they can’t finalize anything until Monday because that will leave the deal in jeopardy,” Matt Anderson, president of Global Marine, says.
It is also important for a marine insurance company to know your region by providing face-to-face interaction to learn more about a dealership and its customers.
When Norman-Spencer expanded their AquaPac insurance program nationally from what was once specific to the West Coast, it brought on sales representatives to develop one-on-one relationships in all regions.
“We quickly learned that those relationships with the dealers are what they like,” says Paul Sexton, vice president of consumer boat insurance. “We want to be no different than their manufacturing reps.”
Dealer principals rightfully want to understand whom it is they are doing business with and build confidence in them as a provider in their region, according to Anderson. “The end of the day, you are going to do business with a like-mind of how you operate,” he says.
After the vetting process, dealers endorsing an insurance company with 100-percent confidence can be of great value to a dealership’s image. Besides providing quality in-house services, customers are also able to feel safe with an insurance provider you recommended.
“With storage, service, finance and now insurance, that is more hooks you have into the customer for the next boat-buying opportunity,” Anderson says.
Jeffrey Berndt, vice president of sales at the National Boat Owners Association, says by advising customers to choose a reliable option dealers are further demonstrating their value as a boating resource.
“The ones who understand that presenting good insurance options and rates to customers make for a better customer service experience; it is impressive and helps improve retention.”
Many insurance providers offer revenue opportunities for dealers through leads, commissions and sponsorships. Moneymaking opportunities are a plus; however, it cannot come at the expense of the customer, Anderson says.
“There are far more repercussions for dealers who refer customers to an inadequate insurance provider for a $25 lead fee,” he says.
Having said that, many marine insurance companies offer both. Norman-Spencer’s insurance program is endorsed by the Marine Retailers Association of the Americas and offers compensatory plans to all dealerships.
Although certain regulations tweak the program from state to state, Sexton says the program does work nationally. Both the National Boat Owners Association and Global Marine also work with dealers to create customized compensation programs, as well.
Whether it is through referrals or commissions, Sexton believes not enough dealers are taking advantage of these revenue opportunities. Part of the reason for this is a $30 referral payment, for example, is dwarfed by service contracts and the commissions made on the boat sale.
“They are asking what is this deal right now going to give me, they are not looking at it long term,” Sexton says.
Although the amount of money may not compare to year-end revenue in other operations, it is another contributor to the total.
“If you can add a piece of revenue in [insurance] when you are already selling, storing, servicing and financing the boat, each piece adds up to enhance your overall revenue picture,” Anderson says.
Berndt says the best dealers create a top-down culture to endorse this thought process. Management and ownership should have a direct hand in the implementation of the program, as well as appoint one person to ensure it is involved in the selling process.
“It is more than just asking a customer whether or not they are interested in a quote – make it a necessary part of the selling process,” Berndt says.
Sexton agrees, which is why Norman-Spencer works hand-in-hand with general management to build that culture of marketing it to customers much like they would a service contract, endorsing the program whenever a sale is imminent.
Sexton advises sales staff to introduce and endorse their insurance program and present literature at the end of a sale outlining the program. Further information is then presented at the F&I desk.
Anderson says such benefits like adequate coverage need to be expressed to convince customers why this is a better option than putting their boat under homeowner’s coverage, for example. If the customer reaches out to Global Marine, insurance agents detail what they would be offered under their current homeowner plan and compare it to the liability protection that his company is offering.
“We are able to pick through exactly what the client wants, how they use the boat and match up the coverage accurately,” Anderson says.
This revenue-making opportunity takes little effort and may be enticing to many; however, it is also important dealers do their homework upfront to make sure they are in compliance with their state’s insurance code.
Matt Belter of Belter Insurance, which works with many dealers on commercial insurance but does not offer consumer insurance, warns even referral programs may be considered soliciting – an issue in some states if done so without a license.
Furthermore, Belter says dealers need to have a written hold harmless agreement with the insurance agency that makes the agency responsible to defend the dealership on any claim, demand or loss. Also, if licensed to sell property and casualty insurance, dealers should demand a copy of the errors and omissions policy of the agency and make sure they are named on it.
And lastly, Belter recommends all dealers meet with an attorney versed in their state’s insurance laws to review licensing and planned activities before they start referring a provider or sell a policy.
Belter says dealership insurance programs do not offer coverage for property and casualty errors or omissions claims.
Coverage in a post-Sandy world
Boat buyers should and will be more cognizant of what coverage they have after many found out the hard way post-Hurricane Sandy, a natural disaster that will be remembered as the largest single recreational and marine loss incidence in history.
After a storm that resulted in more than $60 billion in property damage, Anderson says more boat owners will have a firm understanding of what coverage they do have and what they have covered, specifically if they have coverage related to named storms.
“Customers should ask themselves those questions, and if they are unsure, they should see what the marketplace has to offer, especially for those on the coast,” he says.
Unfortunately, as more owners learn the importance of solid coverage, the rate they have to pay for it may go up once the storm’s ramifications are quantified, according to Berndt.
Anderson also expects rate hikes, as well as new products in the marketplace, especially on the East Coast, as a result.
And customers will have more interest in those forms of coverage, which only increases the importance of having the right insurance partner. Pre-Sandy, dealers who endorsed sound insurance may now be benefitting from a full service department for repairs, while those who aligned itself with a sub-standard insurer most likely lost a customer.