Dealers might wish to rethink auto insurance

The notion of customers buying auto insurance at the same place they buy their car has been “sorely kind of neglected,” according to Elliot Schor, JM&A Group vice president for sales operations.

Dealers view auto insurance sales as an extra step, extending a lengthy car-buying process and affecting customer satisfaction, Schor said Monday. The mindset was, “ ’Let me just sell the car.’ ”

But based on recent accounts from JM&A and Asbury Automotive Group, dealers might want to rethink that philosophy.

Salty, an insurance technology company, and Asbury announced in July they had established a partnership to add car insurance quotes to Asbury’s online retail tool Clicklane. According to Asbury CEO David Hult, the dealership chain’s customers spend nearly $350 million on insurance annually. Asbury ranked fourth on Automotive News‘ list of the top 150 U.S. dealership groups based on 2020 new-vehicle sales.

Hult said on a July 21 earnings call that Salty presented quotes from more than a dozen carriers to Clicklane users. Asbury gets a commission on premiums and other policies picked by the customer, and the retailer saw “good upside and opportunity” to the arrangement, Hult said.

The partnership interested Asbury as another revenue stream and as facilitating a “sticky” customer relationship, Hult said during the Aug. 12 J.P. Morgan Automotive Conference. Asbury already pitched traditional finance and insurance products on Clicklane, and “it just seemed natural to offer car insurance,” Hult said.

He anticipated high-net-worth customers wouldn’t switch carriers, but other consumers might, and called the option a “nice value-add” for buyers.

JM&A on Tuesday announced it had partnered with DealerPolicy and J.D. Power subsidiary Darwin Automotive to offer auto insurance sales at is 3,800 dealerships.

Schor said the setup aggregates quotes from 30 insurers, another potential change from prior dealer forays into auto insurance.

“You’re not hitching your wagon to one provider,” he said.

Like Hult, Schor said offering auto insurance makes a dealer’s customer “a little stickier” and brings in more revenue. However, Schor stressed the fiscal benefit to the dealer not in terms of commissions from the new insurers, but in additional sales of traditional F&I products.

By saving a customer money on their car insurance, they have more money available to buy things off an F&I menu — and they do, according to Schor. He said JM&A “almost couldn’t believe” the F&I numbers it saw with DealerPolicy’s option in place.

“It’s pretty amazing, the dramatic increase in penetration,” he said.

JM&A on Tuesday said consumers who use DealerPolicy save an average of $64 a month on their auto insurance. This can translate into F&I gross profit increases that have reached 44 percent.

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