Protecting Members with MBI

Mechanical Breakdown Insurance (MBI) benefits members as well as credit unions from loss. See how one California credit union was able to offer a more competitive mechanical breakdown product than what was available through auto dealerships.

 

By My Credit Union

 

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 # 308
or for information on Warranties, GAP, Tire Protection, Motorcycle, Mortgage Life and Credit Life.

 

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June 24, 2002


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