Arthur Daley, Frank Butcher, Roy and Barry Evans. All of them are just the sort of second-hand car dealers that have led to the general criticism of an individual's trustworthiness being expressed as “would you buy a second-hand car from this person?”.
Groupama has announced that it will make that unnecessary for its 500,000 motor customers in the event that they write off their cars. The insurer will provide a replacement hire car and, through a contract with second-hand car specialist One Stop Car Shop, offer the insured a choice of replacement cars instead of a cash settlement.
But Groupama's actions are more than just a jolt forward for the insurer itself. The move will set a precedent for the rest of the UK motor insurance market. Something like half a million car drivers write off their vehicles every year (470,000 are reported to the Motor Insurance Anti-Fraud Register and many fleet insurers do not report their figures). These are half a million people who are often left feeling far from satisfied with the insurance industry.
“When your car is damaged you can lay your hands on an alternative because the repairers provide that service, but when you write off your car you don't get that benefit and then you have the lottery of replacing it by searching for a suitable second-hand car,” says Groupama marketing manager Jamie Marchant.
Steve Crowe, Groupama's claims services and support manager, paints an even bleaker picture. “It's concerned me for years that we seem to abandon people who write off their cars,” he says.
And ask anyone who has received a cash settlement for the written-off car and you will get the same complaints – the sum was not enough, was lower than the value on which the insurance premium was based and meant the insured having to spend hours of time, effort and expense in finding a replacement.
Under the deal, which has been piloted with about 40 Groupama write-offs so far, the insurer will notify One Stop of the cash settlement it feels is reasonable for the written off vehicle and One Stop will then attempt to source from its contacts in the second-hand vehicle market, similar vehicles within that price range. One Stop will then offer the customer a choice of vehicles, inspect the chosen car and, providing One Stop finds nothing major wrong with it or that its history is questionable, buy the car for the customer. Before handing it over, One Stop will give the car a once-over at its own facilities and then deliver it to the customer's door with the three-month breakdown warranty.
From the customer's point of view, this is customer service stepping up a gear. The traditional insurer approach would be to offer a cash sum, which the customer will often feel is not enough to replace the vehicle they have lost. It will also mean giving up time and effort to find a replacement, spending money to have it checked and often having no idea whether it has a clean history or is three old write-offs pasted together with a thin strip of glue.
The customer knows it is getting a fair deal from the insurer. “If One Stop thinks we are not offering a fair price for the car and it can't find a replacement at that value it will come to us and say so because it has to offer a car for that price,” says Crowe. “And it gives the car a three month breakdown warranty, it does all the history checks so it knows it is clean and then pre-service it, checking the tyres and taking out any bodywork dents.”
And it doesn't stop there. One Stop can also offer Groupama's write-off customers the chance to spend a little extra on the replacement and upgrade to newer or different model. Customers can either pay One Stop the additional cash or can take out finance for the extra sum from Capital Bank, the finance specialist arm of the Royal Bank of Scotland.
“Most people like to take the opportunity to upgrade,” says One Stop managing director Hugo Mackenzie Smith. Simon Tennyson marketing director points out that the service is a great help even to those not wishing to upgrade. “We live in a society where time is at a premium, people simply don't want to traipse around the country looking for used cars, especially when they have been thrown into the situation due to an accident. We offer a quality independent service that does the legwork for them.”
Mackenzie Smith says most cars were about eight or nine-years old but his firm replaced an E-reg during the trial. “At that age almost any knock is a write-off,” he says. But Mackenzie Smith knows how much the customer appreciated the service provided. “If you say ‘this is the value and we'll send you a cheque' they say ‘hang on!' But if you say ‘here are the sorts of car you can have, which would you most like?', they are much happier.”
And it's no bad deal for Groupama either. Groupama still pays the same amount it would have paid as a cash settlement, but because One Stop buys at trade prices and not retail it can afford to service the vehicles, provide the warranty, deliver them and still make a profit. “They pay a price between retail and trade. We're in the trade so we can make money out of it,” says Mackenzie Smith.
Full scheme ahead
One Stop works out of its Bournemouth HQ but is soon opening a store in Chiswick in west London and is taking a lease in the City. It plans to open up other stores nation-wide in a rolling programme and is establishing a call centre just to handle the Groupama cases.
“People like to know that we do exist and that we're not one of these internet start up firms that could just disappear,” says Mackenzie Smith.
The firm will not yet handle every Groupama write-off and insists it will make sure it has the capacity in place before it accepts any further volumes of work so that it never lets its service standards get too stretched. “We're rolling it out slowly at a pace that One Stop can cope with,” says Groupama's Crowe.
Slow the roll out maybe but Groupama still has a significant head start on the rest of the industry , which has roundly refused to consider such a scheme in the past. As customers start to talk abojut the new service they have received so demand for replacement cars will grow. Other insurers will have no choice but to develop similar schemes, by which time, Groupama will be in the fast lane.