How Embedded Auto Insurance Can Help Dealers Close Better Deals and Make More Cash in F&I

Dealerships are currently facing unprecedented challenges. Rising customer expectations, reduced consumer buying power, and lower F&I revenue have created the need for diversification and the creation of new income sources.

In this article, we will explore how embedded auto insurance can provide a solution to these challenges, helping dealers close better deals and generate increased revenue in F&I.

UNLOCKING THE UNTAPPED POTENTIAL OF INSURANCE INCOME

When it comes to car purchases, insurance is a fundamental requirement for all customers. However, dealerships often miss out on the opportunity to monetize insurance in every deal. By embedding auto insurance into the sales process, dealerships can tap into this untouched potential, creating a recurring income stream that adds value to every transaction.

WIN-WIN-WIN: CUSTOMER SAVINGS, BUYING POWER, AND F&I PROFITS

Embedded auto insurance not only benefits dealerships financially but also provide significant advantages to customers. When customers save money on insurance, they often allocate those savings toward additional F&I products, increasing their buying power and driving higher F&I profits. Our data shows that in 2022 on average, our customers reported saving $69 per month and $728 per year*, resulting in an average increase in buying power of almost $3,500**. This creates a win-win-win situation, benefiting the customer, the dealership, and the F&I department. Based on over 33,000 vehicle transactions, dealerships partnering with embedded insurance platforms have seen an average increase of $538 in back-end gross per deal.***

DRIVING LONG-TERM, STABLE INCOME FOR DEALERSHIPS

Embedded auto insurance offers dealerships a unique opportunity to earn long-term, stable income. This residual income accumulates over time, providing a lifetime commission at the customer level. Additionally, our data*** shows that when customers purchase an insurance policy, they are more likely to buy additional F&I products, further boosting profitability for dealerships.

And unlike other F&I products that require effort and time to sell, insurance is a completely automated process when successfully embedded into a dealership sales process. What’s more, it can generate recurring income for licensed dealerships. Every customer requires insurance to drive their new vehicle, and by integrating insurance options seamlessly into the sales process, licensed dealers can effortlessly earn ongoing commissions without additional effort or resources.

THE POWER OF AUTOMATION AND INTEGRATION

Embedded auto insurance solutions leverage automation and integration to enhance the customer experience and maximize profit potential for dealerships. These solutions engage 100% of customers with insurance offerings at the right point in the sales process, using custom triggers based on the dealership's in-store process. By seamlessly integrating insurance quotes into the sales process, dealerships can streamline operations and eliminate the need for manual information collection.

COMPREHENSIVE SUPPORT AND ANALYTICS

Unlike traditional independent agents or direct binding with carriers, embedded auto insurance providers offer comprehensive support to dealerships, ensuring a smooth implementation and ongoing success. Dedicated teams assist dealerships in maximizing per-deal profits, provide analytics to track performance and earnings, and offer in-store marketing assets to enhance the customer experience. In addition, embedded auto insurance providers can provide access to detailed analytics to help optimize efficiency, drive performance, and maximize profitability.

Embedded auto insurance presents a significant opportunity for dealerships to boost revenue and overcome the challenges faced in the automotive industry. By seamlessly integrating insurance options into the sales process, dealerships can unlock untapped potential, generate recurring income, and provide a better customer experience. And the convenience of purchasing auto insurance at the same time as a car enhances customer satisfaction and increases customer loyalty. As dealerships realize the dual benefits of enhanced customer experience and increased revenue, embedded auto insurance will become an essential component of successful F&I strategies.

* Average auto insurance savings based on new Polly auto policyholders nationwide in 2022 who reported savings. Potential savings will vary.

** Based on policies with reported savings sold nationwide by Polly Agency in 2022; based on used car APR of 9.3, new car APR of 5% and a 72-month loan term. Potential savings will vary.

***Based on 33,246 vehicle transactions between July 2022 and February 2023, comparing deals in which car buyer purchased insurance from Polly to non-Polly deals.