Offering competitive auto insurance from the store helps dealers cut customer costs
In a market where affordability is increasingly becoming an issue for car buyers, dealers are finding a way to cut costs for their customers without altering their operations by helping them find competitive insurance policies.
October 24, 2018 - Though car dealers aren't allowed to act as insurance agents for their customers, some are relying on DealerPolicy, a digital insurance platform that allows customers to compare quotes for car insurance while still in the dealership. The result helps customers save money, participating dealers say, and keeps F&I product sales from competing with insurance costs.
Through DealerPolicy's web-based software, dealerships can offer customers auto insurance from a selection of providers, such as Progressive, MMG Insurance, Ohio Mutual Insurance Group, Safeco Insurance and Union Mutual in Vermont. When a customer connects to a more affordable insurance policy, the dealership can sell more F&I products and help customers who struggle to pay their monthly vehicle costs.
John Crowley, general manager at AutoFair Ford in Manchester, N.H., says for customers with affordability issues, DealerPolicy can save a deal. When a monthly payment plan isn't working for a customer, the sales associate can turn to the insurance policy to cut costs.
"If I can save you $300 with your insurance payments, you can now afford to buy the car," Crowley said.
AutoFair Ford sells about 1,300 new vehicles and 1,500 used vehicles a year.
"Their technology is really simple," Crowley said. "It prompts the process with a handful of questions, [such as] have you had a speeding ticket? Based on the answers to those questions, it'll generate quotes."
At some dealerships, such as DCH Kay Honda in Eatontown, N.J., DealerPolicy is integrated with the Dealertrack's lending platform to allow both systems to process customer information simultaneously. Integration is also available with RouteOne's lending platform, said Ryan Fitzgerald, vice president of business development for DealerPolicy.
While the dealership is shopping around the customer's credit application for a finance deal, it also is shopping the customer's information to different insurance sources.
When a sales associate scans a customer's driver's license into the DealerPolicy app, the data prepopulates the credit application, according to Ruben Arcila, general sales manager at DCH Kay Honda, which sells 2,000 new vehicles and 1,600 used a year.
While customers wait to meet with the finance manager, the sales associate can offer them competitive insurance plans generated by DealerPolicy.
"If you're keeping your customer occupied, it's not really looked at as a waste of time," Arcila said.
Fitzgerald said about 65 percent of the dealerships that use DealerPolicy utilize the combined finance and insurance application, which also integrates with Route One's credit application management system.
"We take the dealers credit app that they have now, bolt on a section of questions that are related to the insurance and allow us to generate quotes. We get the dealer to switch out to our digital credit app, and we push through [the info] to Dealertrack or Route One that automatically allows us to generate quotes in the background," Fitzgerald said.
If a customer chooses to pursue one of the quoted insurance plans, the customer can video-conference a policy agent. The policy agents are DealerPolicy employees who work for Winooski Insurance, a wholly owned subsidiary of DealerPolicy, and act as intermediaries between the insurance company and the customer. Currently, there is no fee for dealerships using DealerPolicy, and the company provides iPads and tablets to the dealership.
The first week a dealership uses the technology, a DealerPolicy representative helps train the staff. On a monthly or quarterly basis, DealerPolicy support staff checks in on each store to provide a report card.
"At some point in the future, we could start charging, but we don't know what the number's going to be," Fitzgerald told Automotive News. According to the company, 164 new-vehicle franchised dealerships use DealerPolicy, in seven states — Vermont, New Hampshire, Maine, Connecticut, New Jersey, Pennsylvania and Ohio. Thirty-one insurance providers have joined the platform, though the number of available providers varies by state. On average, dealers can show customers quotes from between 12 and 15 insurance companies on a per-state basis.
Savings on insurance plans through DealerPolicy also can help the dealership sell F&I products.
When the insurance transaction is complete and the customer saves with the new policy, the finance manager will incorporate that knowledge into their product presentation, Arcila said.
"A lot of consumers are unaware they could be potentially paying too much for auto insurance," Arcila said. "More times than not, we are able to present other products, like extended warranties or tire-and-wheel coverage, because we are able to save the customer $40 or $50 a month in their car insurance."
The tool is portable, so dealership employees also can present insurance options to customers in the service department.
DealerPolicy offers stores $50 per customer for referrals entered into the platform. On a quarterly basis, DCH Kay Honda generates about $3,000 in additional revenue from referrals, but the store splits the amount, giving $25 to the sales associate who secured the referral and adding the other $25 to the dealership's Christmas party fund.
"Our approach is, while you're here, we want to make sure you know what your options are," Arcila said. "If the customer wants to proceed, then we'll continue in our process."
DealerPolicy is a leader in the emerging Insurtech sector. With its seamless integration into the car buying process, the company's innovative solution enables car-buying customers the opportunity to purchase insurance by connecting them with licensed insurance agents while at the dealership or after they arrive home with their new car. The company delivers these benefits through an industry-first combination of partnerships with car dealers, a growing insurance carrier network, and access to licensed agents. DealerPolicy is currently operating in nine states with plans to operate nationwide by 2020.