The Key to a Successful Embedded Auto Insurance Program? Finding the Right Partner.
There’s a wave of companies promising to have cracked the embedded insurance nut. They have strong pitch decks, persuasive sales teams, and some big-name venture capital firms. But here’s the simple truth: Insurance is hard. Really hard. And if you choose the wrong partner, your insurance program is going to fail, like really fail.
You need to take your time, ask the right questions, and then select the right partner. It sounds simple enough but, in reality, it’s quite challenging. So, what’s the best way find the right partner?
First, understand their insurance chops. Diligence on embedded insurance partners isn’t the same as vetting an automotive technology vendor. Don’t just focus on the technology, ROI, implementation plan, and other traditional areas of inquiry. Remember that insurance is fundamental to every successful insurance program, and insurance is hard.
A simple, yet effective, way to test a partner’s insurance knowledge is to ask how their program varies by state. A knowledgeable partner will explain that there’s not a single program that can cover all 50 states (or even the lower 48 for that matter). Ask them to explain their licensed versus unlicensed programs and rebating and referral laws. Have them walk you through states with regulatory quirks and show you how they’ve built a flexible platform to accommodate future changes to laws and regulations.
Run away from a partner that tells you they’ve got a single insurance program. They either don’t understand insurance or their product is a retread of the same old targeted marketing programs that have been around for decades.
Second, insurance is hard because it’s highly regulated. Each state has its own unique insurance rules and regulations. There’s also an alphabet soup of additional laws and regulations that may apply (things like FCRA, GLBA, FTC, TCPA, CCPA, and CAN-SPAM, among others).
As part of your diligence, go deeper than the standard pitch deck. Good questions include, “Please explain your TCPA compliance program” and, “Where do you obtain consumer consent?” Talk to their CISO about their data security and breach response plan. And, critically, check if they’ve talked to regulators prior to launching in a state. You don’t want to end up on the wrong side of the law because your vendor doesn’t take compliance seriously enough.
Last, avoid companies with a “beg for forgiveness” culture. You’ll known them from your interactions with their sales team and their lack of a strong compliance function. These companies view dealerships as customers waiting to be monetized and put short-term growth ahead of long-term partnerships. Working with these companies is like playing with fire: It will keep you warm for a while, but eventually you get burnt.
If you take your time, ask the right questions, and then select the right partner, you’ll be rewarded with a winning program.
Brendan Witherell is General Counsel for Polly, the embedded insurance leader in the automotive space. In this role, Brendan provides legal counsel to the company’s directors and senior management and is responsible for overseeing the company’s legal and compliance functions. Prior to Polly, Brendan was Senior Counsel...