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September 2019

What Is Insurtech, And Why Is It A Benefit To Consumers?

In a country where the cost of living keeps rising but wage growth is mostly stagnant, it’s incredibly important for individuals and families to be smart with their money.

As a famous old saying goes, “A penny saved is a penny earned.”

There are many strategies and tricks that consumers can use to use to save a little more in their bank accounts or scrounge up some extra fun money, but one area that a lot of people don’t think about investigating is what they pay for insurance in all of its various forms.

Luckily, the recent rise of a concept called “Insurtech” is changing the industry and — more importantly — helping consumers save thousands of dollars.

What is Insurtech?

According to the website Investopedia, Insurtech is “the use of technology innovations designed to squeeze out savings and efficiency from the current insurance industry model. Insurtech is a combination of the words “insurance” and “technology,” inspired by the term Fintech.”

The definition continues:

“The belief driving Insurtech companies and investments by venture capitalists in the space is that the insurance industry is ripe for innovation and disruption. Insurtech is exploring avenues that large insurance firms have less incentive to exploit, such as offering ultra-customized policies, social insurance, and using new streams of data from Internet-enabled devices to dynamically price premiums according to observed behavior.”

To put all of that another way: by utilizing new technological advancements, companies are able to make the world of insurance faster, easier, more convenient, and more affordable for consumers.

How does Insurtech benefit you?

Beyond making insurance more cost-effective, Insurtech can benefit you as a consumer in a wide number of other ways, depending on the company and what they’re offering.

Some common uses of Insurtech include receiving online quotes for home, auto, extended warranty, or vehicle replacement cost insurance that can be compared to competing companies, connecting consumers to live agents through chat systems wherever an internet connection exists, understanding coverages in more detailed and interactive ways, and many more.

Broadly speaking, Insurtech gives consumers more control and flexibility over how they manage their insurance.

How Obvi uses Insurtech

As we wrote about in another recent blog post, buying a vehicle from a dealership can be a stressful experience, especially when the topics of extended warranty and financing payments enter the conversation.

But what if you could purchase Extended Automobile Warranty, GAP Insurance and New Car Replacement Insurance all from the comfort of your own home — and at a significantly lower price than what is offered at a dealership? That’s where Obvi comes in.

Visit Obvi’s website on a computer, tablet or smartphone and you can enter your information yourself and receive a free quote within minutes. It’s that simple! But if you do need any help in the process or have any questions, an Obvi Advisor is usually just minutes away via web chat, phone call or email.

The most important benefit of Obvi using Insurtech, though, is how the technology helps us offer our customers a fair price and financial peace of mind. Many people can’t comfortably afford a $4,000-$5,000 repair bill, and nobody wants to pay off a huge remaining loan balance on a vehicle that has been written off. As mentioned earlier, being smart with your money is incredibly important these days.

Obvi’s products

Check us out online to learn more about our Extended Automobile Warranties, GAP Insurance and New Car Replacement Insurance, or feel free to contact us so we can help determine which of our products best suit your needs. Customer satisfaction is our top priority, so we’re always here to help.

The Risks Of Buying Extended Car Warranties From Dealerships

car dealership risks

Have you ever walked out of a car dealership’s finance office carrying keys to a new vehicle and a bundle of complicated paperwork — without feeling entirely comfortable or informed about what you just purchased?  If so, you’re not alone.

Most of us think we can rest easy once we get to the finance office, but the unfortunate reality is that this is where the some of the biggest dealer fees exist, hiding in insurance premiums and monthly payments.

Finding a new vehicle to purchase can be a stressful and confusing process, and those problems are often made worse when you add in an overload of information about extended warranties and financing payments. It’s not uncommon for car buyers to leave the finance office confused with all the different options.

While many car dealerships are honest and trustworthy, some of them aren’t. These other dealerships often deploy deceitful sales tactics to help close a deal, focusing more on getting into your wallet than offering you services that you need or want.

Here are the biggest things to watch out for in the finance office.

Huge markup on insurance

That’s right, motor vehicle dealers have been provided a restricted insurance license to sell GAP Insurance, New Vehicle Replacement Insurance, and Extended Warranty on your vehicle.  What most people don’t know is that the markup is huge — 40, 50 and even 60% or higher commission charged by the dealers and built into these products.  Let’s breakdown these products:

  • GAP Insurance is for financed/leased vehicles: One of the unique aspects of the Canadian automotive world is long-term loans and negative equity. What GAP Insurance does is pay off any remaining loan balance if your vehicle is a write off, giving you the peace of mind to finance for up to 96 months with nothing down.  Remember: your primary insurer settles the loss on the vehicle and doesn’t consider that you will be left with a loan balance to pay off.
  • New Vehicle Replacement Insurance: As mentioned above, your existing insurer will settle any total loss claim based on the current depreciated value of your vehicle.  With NVR you will benefit from the insurance proceeds to buy a brand new vehicle without any additional costs to you.
  • Extended Warranty: That’s right, Extended Warranty is now considered insurance in Western Canada.  Why? So many problems within the industry drove the need for regulation to protect the consumer.  What many people don’t know is that dealers have competition, and the coverage from independents is just as good if not better. Plus, you will benefit from transfer options, half the cost, choice of repair facility and the list goes on.  Buying a new vehicle? The manufacturer’s extension might not be insurance, but the same heavy commissions are loaded within. Luckily, insurance alternatives exist and offer huge savings!

Upselling the payment plan

An extra $9 a week for 8 years… that sounds a lot better than $3,744, right?  Nothing wrong with financing options, but make sure every single product they are selling is presented to you as a total cost. Whether it’s automotive sales or a household appliance, salespeople are trained to understand your monthly budget to hide the actual cost.

This CBC Marketplace episode shows just how aggressive the payment plan is pushed.

Fast-talking, aggressive salespeople

According to a 2017 investigation by the Automobile Protection Association, the addition of extra charges by car dealerships was “rampant” in Calgary.

Don’t be afraid to ask a salesperson to slow things down, repeat themselves or write out specific numbers for you. Taking the extra time to fully comprehend what you’re buying could save you thousands of dollars.

A lack of willingness to help down the road

You wouldn’t buy house insurance from a realtor, or life insurance from a doctor — so why are we accustomed to buying car insurance from car dealers? The reality is that the insurance market has taken time to get online and that was the only choice consumers had. However, now we can buy directly from the company who will be paying the claim.

Think about this scenario: a total loss claim has occurred and you’ve emailed the finance office about your problem, but they haven’t emailed you back after a long period of time. You decide to call the dealership, but your call gets bounced between a couple of different employees and then you’re told to contact the warranty/insurance provider of the plan they sold you. The sad truth is that the finance office has ZERO involvement in the claim and is limited to obtaining commission dollars from you.

Let’s also not forget the biggest myth in the industry: “if you buy the manufacturer’s product from me you can rest assured all claims are covered, no matter what.”  Not exactly the case — the extended warranty from the manufacturer is subject to terms and conditions just the same as insurance policy. Read our blog here to learn more.

The Obvi advantage

For the team at Obvi, customer satisfaction is the highest priority.

We know how important vehicles can be in people’s lives. Our goal is provide as much peace of mind as possible that you’ll be in good hands and back on the road again soon. As both a seller of extended automobile warranties and a handler of claims, we’re with you every step of the way. And while dealership salespeople can be pushy when commissions are on the line, that’s not the case with Obvi. More than anything else, we want you be satisfied with your experience.

Visit our Extended Car Warranty page to find out more of feel free to contact us any time if you have any questions.