The embedded auto insurance market showed substantial gains in the first quarter—revealing some huge market opportunities for dealerships looking to increase their F&I profits.
The details: A report by Polly shows that the embedded insurance market has nearly tripled since its 2023 low—with more consumers shopping for insurance during the car buying process and saving on coverage by opting to lock in that insurance at the dealerships.
Among Polly’s top 10 most engaged dealer partners, the average F&I gross was 21% higher when customers merely saw insurance quotes (without even purchasing insurance)—translating into an average increase of $320 higher F&I gross profit per deal.
Even more impressive, Polly found that when customers actually purchased an insurance policy, those dealer partners saw even greater improvement, with an F&I gross of 28% or $432 per deal.
Polly found that the national average insurance quote dropped slightly in Q1 2025 to $195/month, reflecting some minor relief in insurance affordability. The struggle for car buyers to find reasonable insurance quotes has also fallen—with 19 out of 20 buyers now receiving competitive insurance offers.
What they’re saying: “As front-end profit continues to shrink, dealerships are seeking new ways to protect profit. Our data shows that embedded insurance is not just a value-add for customer satisfaction, it’s becoming essential to protecting a dealership’s bottom-line,” said Mike Burgiss, Chief Marketing Officer for Polly
Why it matters: Polly’s Q1 findings not only speak to the value of adding insurance to the car shopping experience; it also spotlights the growing viability of embedded insurance as a means for dealerships to improve their F&1 revenue.
Between the lines: The findings revealed in Polly’s Q1 embedded auto insurance report could also be a huge boost to dealerships when it comes to younger car buyers.
A J.D. Power study found that 47% of millennial and Gen Z customers are interested in embedded car insurance, compared to 35% of Gen X and 19% of baby boomers and pre-boomers.
Polly found that 81% of Gen Z and millennials would like the option to purchase insurance while buying their vehicle.
What they’re saying: “Younger consumers are more open to trying an emerging channel. They don’t have decades of experience with their agent, so they’re not as attached,” stated Stephen J. Crewdson, Senior Director of Insurance Intelligence at J.D. Power (via Investopedia).
Bottom line: With front-end profits shrinking, dealerships could find embedded insurance as a reliable revenue stream to help boost their F&I grosses. The model not only has the potential to enhance customer satisfaction, but also appeals strongly to younger buyers, who are more open to bundling insurance with their vehicle purchase.
Article originally posted on Car Dealership Guy
Author: Marcus Amick