Plummeting new car sales worry insurers
Bnamericas Published: Thursday, April 23, 2009
Plummeting new car sales are starting to worry several of Chile's insurers for whom auto insurance is a major line of business, local financial daily El Diario reported. The global crisis and Chile's slowing economy encouraged a drop of 50% in new car sales in the first quarter and raised a yellow flag for the country's 12 companies selling auto insurance. To offset the negative impact on their financial results executives say they are now seeking to sell more policies to people with used cars - a segment where insurance penetration is much lower than for new cars, the report said. The new strategy includes boosting sales at mass-distribution channels, like retailers, and selling auto insurance together with other products that are attractive in times of crisis, such as unemployment insurance. Insurers are also considering expanding the coverage they currently provide for used cars and possibly offering grace periods for the payment of premiums, the paper reported. The insurers did, however, rule out a price war in their efforts to lure clients, due to already tight margins due to claim levels, reinsurance prices and costs associated with auto parts and repair shops, according to the report.
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