At 1st City Savings FCU in Glendale, CA, auto loans make up 53.9
percent of their loan portfolio-or $76.5 million ($38.6 million
in new auto), as of March 31, 2002. In addition to financing the
auto loan, 1st City Savings also offers their members mechanical
breakdown insurance using Mechanical Breakdown Administrators, Inc.
(MBA), to administer the program.
1st City Savings began offering mechanical breakdown insurance
primarily in response to member demand. They found that many members
were reluctant to finance a car without it. 1st City Savings discovered
they could offer a more competitive mechanical breakdown product
than what was available through the dealerships.
Mechanical breakdown insurance is viewed as a value-added member
service at the credit union for two primary reasons:
- A better product - It's not just a mechanical breakdown contract
from a dealer, it's an actual insurance policy. Under a dealer's
contract, should the dealer go away or close up shop, the contract
dies. Under mechanical breakdown insurance the member, and the
credit union, is protected.
- A better price - 1st City Savings realized they could save their
members anywhere from $200 to $600 per policy-which adds up to
a substantial chunk of change when the average policy is $1,200.
The insurance product is offered to the credit union's members
by its loan officers. Tactically, the loan officer introduces the
insurance to the member ahead of closing to give the member time
to consider whether they want it. Then, at closing, the loan officer
confirms the purchase. Members have the option to pay cash for the
insurance or roll it into their auto loan. Interestingly, 1st City
Savings found many of their members prefer to pay cash.
The cost to the credit union is minimal. MBA provides both the
insurance forms and the necessary follow-up. The only cost to the
credit union is staff time to sell the insurance and in billing.
This "cost," however, is balanced by the rebate income
the credit union receives on each policy sold.
So what's the real benefit to 1st City Savings? To begin, members
love it. They're delighted they can get a comparable product to
what the dealer offers and save money. 1st City Savings will also
sell mechanical breakdown insurance to members even if the members
do not finance the auto loan through them.
Secondly, not only does the member receive better coverage, so
does the credit union. Mechanical breakdown insurance protects the
credit union from loan loss should a member need expensive repairs
to their car but be unable to afford it without insurance.
Lastly, 1st City Savings benefited from product generation. Once
members discovered 1st City Savings offered mechanical breakdown
insurance, they began to ask what other products 1st City Savings
offered. Due to member request, the credit union has added GAP to
its product line.
About Mechanical Breakdown Administrators, Inc. (MBA)
A Division of MBA Holdings, Inc.
An OTC Bulletin Board company (Symbol: MBAI)
MBA markets extended warranties for Fireman's Fund Insurance Company,
The Assurant Group (Standard Guarantee Insurance Company and American
Securities Insurance Company), Heritage Mutual Insurance Company,
RRG. MBA settles and pays all the claims associated with these policies.
They have also been a marketer and administrator for American Bankers
Insurance Company, Miami, Florida; Allstate Insurance Company of
Chicago, IL; American International Group (AIG), New York, NY; American
Modern Home Insurance Company; Albany Insurance Company, New York,
NY; and Consumer County Mutual Insurance Company, Dallas, TX.
MBA has designed a new secure website to provide credit unions
convenient and quick quoting, selling, tracking, and remitting of
sales. Go to www.mbacu.com to learn more about mechanical breakdown
insurance and MBA, Inc. Use logon: 99990048 and password: CUTEST.
This easy-to-use, self-guided website issues the policy/contract
and prints it in seconds. The member receives his "Guaranteed
Price" actual deck sheet and policy/contract or a Quick-Quote
to take home before s/he leaves the loan officer's desk. No more
going back asking for more money because it's price guaranteed.
Both Mechanical Breakdown Insurance (MBI) and/or Vehicle Service
Contracts (VSC) are available for sale in most states.
Some features of the website are worth notice. In particular, a
coverage comparison tree on the quote menu is a great feature to
show members what parts are covered on each plan that is offered.
Additionally, the website issues and tracks the sales and can make
up the remittance report.
MBA, Inc. uses national "A Rated" Insurance Companies
like Fireman's Fund, American Securities, and Standard Guarantee.
MBA's products include extended warranties on autos, trucks and
recreational vehicles, GAP Coverage, tire warranties, motorcycle
warranties, mortgage life, and credit life in all states, nationwide.
The warranty program includes twenty-four hour dispatched Roadside
Service with Toll Free (800) Service Assistance with these benefits:
- Lock out Service
- Vehicle Towing
- Fuel, Oil, Fluid and Water Delivery
- Flat Tire and Road Hazard Tire Replacement Coverage and
- NEW! WindGard (windshield rock chip repair)
- Alternate (Car Rental) Transportation Coverage,
- Battery Service,
- Trip Interruption Coverage, and
- Credit Card Claim Payments, 24 hrs. per day, 7 days per week
Claims Service; even (800) Toll Free Concierge Travel ES Services.
All this and more is available at www.mbacu.com
(logon: 99990048 and password: CUTEST). Enter the VIN and get a
Quick Quote... today.
To learn more about mechanical breakdown insurance or about www.mbacu.com,
call Terry Grant, National Sales Manager at (800)347-0303 ext #
or for information on Warranties, GAP, Tire Protection, Motorcycle,
Mortgage Life and Credit Life.