PRESS RELEASE
Asia’s car dealers open new opportunities for the distribution of insurance
PRESS RELEASE
Asia’s car dealers open new opportunities for the distribution of insurance
- Automobile manufacturers in Asia are more likely to provide insurance products than car dealerships
- There is an opportunity for both manufacturers and non-tied providers to establish partnerships with car dealers throughout the region
- Extended warranty is the leading opportunity for distribution through car dealerships
London, 28 February 2024 –
Automobile manufacturers in many Asian countries are more likely than car dealerships to offer insurance products, and in recent years have pushed further ahead in insurance provision. In South Korea, for example, more manufacturers offered creditor insurance and extended warranties in 2021 than did in 2017, but provision rates for both products remain low among the country’s car dealers. Car dealerships remain an untapped channel for insurance distribution and this deserves the close attention of both manufacturers and non-tied insurance providers.
Finaccord’s recent study of consumer automotive financial services included over 280 manufacturers and over 700 car dealerships across 12 countries in Asia.
Key findings include:
- Car dealerships currently have many fewer insurance partnerships than car manufacturers, and provision rates for several insurance products remain low in a number of countries.
For example, in Hong Kong, all manufacturers surveyed offered motor insurance, while only 68% of dealers offered this product. Creditor insurance was provided by 88% of manufacturers in India, with only 32% of dealers offering the same. Few dealers in Thailand offered creditor insurance, with only 14% providing this product, compared to 80% of manufacturers.
- The opportunity that stands out is extended warranty. The extended warranty market across the 12 countries studied by Finaccord was worth USD 5.6 billion in 2021, a compound annual growth rate of 4.5% since 2017.
- There is a wide gap in extended warranty provision rates between car dealers and manufacturers in some countries and very low provision rates for both in others.
In Hong Kong, 63% of manufacturers offered extended warranty in 2021, while only 22% of car dealerships offered this product. In Singapore, 75% of manufacturers offered extended warranty, while only 26% of dealerships did. In South Korea, almost all surveyed manufacturers (98%) offered customers extended warranty, while only 29% of dealerships offered the same.
In Indonesia and the Philippines, extended warranty provision rates are low among dealers and manufacturers, with only 12% of dealerships and 16% of manufacturers offering this product in Indonesia, while in the Philippines, it was 16% of dealers and 13% of manufacturers offering extended warranty in 2021.
- The majority of dealers offering extended warranty in the region provide this product in partnership with manufacturers. There is a clear opportunity for manufacturers to establish partnerships with dealers that do not currently offer extended warranty to their customers but there is also an opportunity for non-tied insurance providers to form partnerships with dealers in the absence of an existing partnership with a manufacturer.
Media contact: David Parry, +44 20 7086 0287,
[email protected]
Notes to editors:
Finaccord is part of Aon’s Strategy and Technology Group. It provides market research, data and consulting services on insurance, with a particular focus on marketing and distribution topics such as affinity marketing, bancassurance and strategic alliances, as well as commercial lines insurance.
Finaccord’s series of reports on consumer automotive financial services is about the distribution of insurance products through manufacturers and dealerships in 12 Asian countries. Based on a survey of 990 organisations, it identified over 2,500 insurance distribution partnerships in place for four separate insurance products, and highlights the operating models and product providers used.