Divisions have emerged over the possible impact of the regulatory changes to the sales of GAP insurance, which came into force at the beginning of September.
AutoProtect has said that sale of GAP products remained broadly in line with the new car sales recorded in September, despite the introduction of a ‘cooling off’ period by the Financial Conduct Authority (FCA).
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Despite this, at least one third party Gap insurance provider, Warranty Direct, has claimed the changes could lead to the GAP market shrinking.
In June the FCA published an updated set of rules for the sale of GAP insurance. The new rules made clear that before a GAP contract was concluded, the customer must have had at least two days to consider a number of facts about the product, including the fact that it could be bought from third parties.
Controversially, the FCA said the new rules were to come into force from 1 September, giving dealers less than three months to prepare for the changes.
Reflecting on September Gap sales, Mike Macaulay, head of corporate sales at AutoProtect, which provides F&I products to dealers said "We are really impressed by the GAP result delivered across our dealer network following the changes required by the FCA. The overall outcome is that there has been little or no impact to sales penetration. Given the speed with which changes to sales processes had to be made, I believe it is a great reflection on dealers capacity to adapt and to our ability to help them. "
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By GlobalDataMeanwhile Warranty Direct, which provides third party GAP insurance to consumers, said it has seen a large increase in the number of consumers looking for the product, saying the rule changes had already influenced consumer behaviour.
The company said: "Consumers are already flocking to third-party providers for cheaper equivalent policies, with Warranty Direct recording a 213% sales increase in the first two weeks of September compared to the same period in 2014. Online quotations have increased by 70% in the same period."
David Gerrans, managing director of Warranty Director, said: "While the overall size of the market is likely to shrink, this is only because consumers will ultimately be paying less for the same level of cover. The market will feel much more balanced towards consumers when dealers and third party providers account for roughly 50% of the market each."
