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Author
Ben Jastatt
Sr. Director, Marketing
Auto insurance rates rose significantly over the last few years (52% in the last 24 months alone.) However, most of that increase happened in 2023, and rates have largely flattened in 2024. This is good news for dealers and consumers and throws cold water on the narrative in the media this year that insurance rates are continuing to rise.
Yes, average quotes are still up from last year (9.2%), but they have remained relatively steady over the last four quarters. It seems carrier rate requests and Department of Insurance decisions have largely taken effect.
These findings provide some hope that insurance rates will remain steady, and not rise, for the next few quarters.
Steady rates give consumers a clearer picture of their total budget when headed to the dealership, and dealers will see fewer insurance surprises when closing deals.
Insurance Opportunity Keeps Improving
The embedded opportunity continues to improve for dealers in 2024. We’ve even begun to see improvement in some unlikely places like California.
While rates are still high in California, more insurance companies have opened back up for business there.
That means many insurance buyers are seeing multiple competitive rates for the first time in a while. All this in one of the more challenging markets in the country.
New York remains a difficult insurance market, which impacts the embedded opportunity. However, much of the rest of the Northeast is trending in a positive direction.
Over the last quarter, the average front-end gross continued to stagnate and even decline slightly to an average of $1,304 per transaction, a 21% YOY decline.
Back-end gross remained steady at $1,854 over the past 12 months. It now contributes an average 59% of the per vehicle gross profits.
The trend line is clear. Back-end is more important than ever, and dealers will become more reliant on it for profitability than they have in years.
Insurance and Back-End Gross Improvement Across Top 10 Dealerships
In our Q2 report, our top 10 dealer groups saw higher F&I gross to the tune of 20%. That number dropped slightly in Q3 to 18%.
This slight decline was largely a function of normal retail spending fluctuations.
18% Higher F&I Gross Profit with Insurance Quotes at our Top 10 Most Engaged Dealer Groups
When customers received auto insurance quotes at our top 10 most engaged dealerships, those dealers saw 18% higher back-end gross profit on average than dealers who did not offer insurance quotes at the point of sale.
