Car rental is a $1.4 billion business in Australia. Out of 6.8 million annual bookings, between 30 and 40 percent of customers opt-in to purchase accident liability insurance (commonly called excess reduction) from the rental company. These peace-of-mind fees add roughly one-third to the daily rental rate, making the market worth around $185 million annually to the rental car companies – with very little overheads. Until recently, Australian consumers had very few options for reducing their car rental excess. Today, however, it is possible to obtain this cover from standalone insurers at excellent rates.
Managed by Allianz Global Assistance,Tripcover.com.au is the first company in Australia to specialise only in car rental excess insurance and will be expanding sales to New Zealand beginning in October 2012. Popular in the UK and Europe, this service type is new to Australia.
After only six months in operation, it seems that car rental companies see the writing on the wall. “They seem to be trying everything in their power to prevent their customers from learning about this new service option”, says Mr. Sherlock, founder and GM of Tripcover. Although Tripcover has extended generous offers to the car rental comparison sites to promote their excess insurance, for a hefty 20 percent commission, most of these companies have been slow to accept. “It seems that the car rental comparison sites’ enthusiasm to participate has been cooled by their concerns of ‘upsetting’ their car rental suppliers”, says Mr Sherlock, who heard this concern directly from a number of prominent comparison site owners. “...it’s a very sensitive subject for us as the suppliers HATE us promoting other (insurance) options”, said one comparison owner.
Even without the cooperation of car rental comparison sites, Tripcover is starting to get some traction on their own site, which sells the excess insurance directly to the consumer. Since the company entered this niche market they’ve doubled the number of policies sold each month. They expect the rapid growth to continue because there are so many renters in the market who are still unaware of their options if they waive the car rental companies’ offer to reduce their excess. “Renters can simply go to Tripcover.com.au anytime or use their mobile to get their excess, of up to $6,000 covered”, reported Mr. Sherlock. “Slowly but surely word must be getting out as we’re not spending very much on advertising, being still in beta, and the bookings are still coming in. It’s very exciting to watch.”
Frequent renters of cars would be aware of the elephant in the room regarding the peace-of-mind fees that car rental companies offer customers to limit damage liability (commonly called "excess reduction" in Australia).
Their insurance rates are usually from $22 to $27 per day to reduce the excess to $300. This can increase the cost of car rental by a third. Tripcover's rental vehicle excess insurance starts at just $9.30 per day, is managed by Allianz Global Assistance and has a 14-day money-back guarantee.
Tripcover can finally provide an alternative source of peace-of-mind coverage – sometimes up to 66 percent cheaper than rental companies' rates.
Tripcover’s cause is to offer car rental customers the peace of mind that comes with having their car rental excess covered without costing an arm and a leg. Working with Allianz Global Assistance, we have used our combined experience in the car rental industry and travel insurance sector to produce this car rental excess cover for the Australian market.
The Tripcover concept was hatched out of the founders’ previous experience in a car rental comparison business and their industry contacts. But unlike their first start-up, they have begun this project with a simple, step-by-step approach and have run it, so far, on a shoestring. Des Sherlock is founder and manager and Steve, his brother, is his advisor.