Majority of sellers not providing GAP insurance coverage following FCA probe

The overwhelming majority (90%) of UK dealerships aren’t providing GAP insurance coverage following an investigation into the product by the FCA (Monetary Conduct Authority).

Clever Motoring, the automotive product add-on specialist, stated its personal analysis estimates that just one in 10 sellers are at the moment providing GAP.

The FCA reviewed GAP in 2024 to ensure the product was representing honest worth for purchasers.

Traditionally GAP insurance coverage, also referred to as return-to-invoice (RTI) insurance coverage, had been a excessive margin add-on product for motor retailers on the level of sale.

The FCA famous again in Might 2024 that GAP merchandise at the moment are being bought at ‘materially decrease ranges of fee being paid out to these promoting GAP, enhancing worth for purchasers’, including that clients would additionally obtain higher outcomes.

Duncan McClure Fisher, Clever Motoring chief govt, stated many retailers nonetheless seem like hesitant to promote GAP.

He stated: “With automobile values normalising after COVID, and electrical automobile residuals declining, declare payouts are repeatedly exceeding £20,000 to £30,000, demonstrating the essential safety GAP Insurance coverage cowl gives.

“Many retailers seem hesitant to promote the product, with solely round one in ten promoting it to clients.

“This can be because of elevated web charges and capped retail premiums, however versatile options can be found to make sure sellers can supply honest worth merchandise that shield shoppers, foster invaluable buyer loyalty and supply an all-important income enhance.”

McClure Fisher stated FCA scrutiny has pushed optimistic adjustments and caused enhanced transparency and worth for shoppers.

In flip, Clever Motoring is reporting growing demand and client urge for food from its retail companions for GAP insurance coverage by means of its direct-to-consumer automobile possession answer, MotorEasy.

McClure Fisher continued: “Through the investigation, whereas GAP Insurance coverage gross sales had been paused, the motor retail business demonstrated its spectacular means to adapt and thrive.”

Some sellers provided various value-added propositions reminiscent of beauty, tyre and battery insurance coverage or insured breakdown restoration.

He added: “This unbelievable agility demonstrates that GAP might be successfully reintroduced by retailers to rebuild income.

“Cautious pricing, efficient compliance measures, and environment friendly integration into the gross sales course of, implies that they’ll confidently and efficiently supply a GAP programme.”