We Have Seen the Future of Gap Insurance and It Is Not “As Phoenix Night Star Said, Garlic Bread”
Peter Kay the star of Phoenix nights is not only well-known for his comic antics and charitable work but also for coining the phrase “I have seen the future and it is garlic bread.”
I cannot compete with Peter’s impeccable comic timing but I can try to glimpse into the future of my industry. So what is the future of gap insurance and what can we expect from our gap insurance policies in the future.
The Financial Conduct Authority has made no secret of wanting to take steps to make sure that consumers and policy holders get a faint deal. My interpretation of fair is not only price but also policy performance.
So how can gap insurance providers and insurance underwriters make sure that this happens. After all for a policy to be genuinely fair it has to work for everyone. That means that the insurance has to have terms and conditions that are easy to understand. That the policy must do exactly what both the insurance underwriters and policy holders expect it to do when and if a claim is made.
So what can we as gap insurance providers do to make sure that this happens while not leaving the policy open to abuse. We think that an important and prudent step is to remove any grey areas. Remove any question of doubt. Eliminate any potential area where both the policy and the insurance provider can be left exposed.
We have for some time be working towards this with policy which are now much more customer focused. The biggest stumbling block we found and a constant question for debate has always been which level of cover is best and in fact how much cover is enough without being over insured.
Standard practise means that to cover any vehicle the gap insurance provider must use historical rates of depreciation to predict potential levels. While this “crystal ball ” gazing can be accurate we can never lose sight of the fact that any potential deprecation and subsequent cover is based on a prediction and not a guarantee.
So what if? Global analysts and economist who study the world and global markets can and do make mistakes. So if such highly trained and qualified analysts can make mistakes how can you and I be expected to make accurate choices. Choices which can ultimately make a massive difference to any claim settlement. Choices which could adversely lower any future payment.
We genuinely believe that the real future of gap insurance is a policy where by these choices are simply taken away. A gap insurance policy where by the consumer commits to cover and then the policy simply performance to which ever style of gap insurance is most beneficial on the day of loss.
Combining this hybrid policy with a completely open-ended claim limit will mean that no policy holder can ever be held to ransom by a limit which is no longer fit for purpose.
A policy which will mean that both gap insurance providers and policy holders alike are able protect themselves safe in the knowledge that their policy will have the flexibility to be able to perform no matter what.