The automotive industry is driving into a new lane: insurance. Hyundai Motor Company recently filed with the U.S. Patent and Trademark Office for “Hyundai Secure+,” signaling its intent to launch a branded insurance carrier, joining a growing list of automakers—including Tesla, Honda, and General Motors—that are looking to disrupt the auto insurance market. This move isn’t simply about automakers diversifying their revenue streams. it’s a response to rising premiums, evolving vehicle technology, and a desire for greater control over the customer experience.
The filing, first reported by Insurance News Net, comes as insurance costs continue to climb. Premiums have increased by more than 40% since 2019, and insurers often spend as much as 20% of revenue on marketing, advertising, and agent commissions. By bringing insurance in-house, automakers aim to streamline costs and potentially offer more competitive rates to customers. Hyundai’s decision similarly follows a recent $9 million settlement with attorneys general from 34 states over vehicles lacking standard anti-theft devices, a situation that led to a surge in thefts and insurance claim restrictions.
Beyond the Settlement: A Strategic Shift
While the settlement undoubtedly played a role, experts suggest Hyundai’s foray into insurance is driven by broader economic factors. Guillermo Francisco Cornejo, a former Hyundai Capital executive, explained that automakers can reduce costs by keeping marketing and commission expenses in-house. “By bringing insurance in-house, auto companies can preserve the marketing and commission costs down and/or share some of that with dealerships,” Cornejo told Insurify. This strategy allows for potential profit retention and increased sales volume.
The shift also reflects a growing recognition that traditional insurance pricing models haven’t fully adapted to the rapid advancements in automotive technology. The rise of autonomous driving features, advanced driver-assistance systems (ADAS), and electric vehicles presents new risk profiles that require more sophisticated underwriting. Automakers, with direct access to vehicle data and performance metrics, are uniquely positioned to assess these risks accurately and offer tailored insurance products.
Building an Automotive Ecosystem
Offering insurance isn’t just about cost savings; it’s about building a more comprehensive and integrated customer experience. Automakers are increasingly focused on creating a seamless “ecosystem” that encompasses vehicle purchase, financing, insurance, maintenance, and connected services. This approach fosters customer loyalty and provides a single point of contact for all automotive needs.
Chad Watwood, an attorney with LawBike Motorcycle Injury Lawyers in Atlanta, highlights the benefits of this integrated model. “It enables them to streamline the dispute process and maintain control of the customer relationship,” Watwood told Insurify. By managing the entire customer journey, automakers can enhance service quality and build stronger brand affinity.
Tesla Leads the Charge, Others Follow
Tesla pioneered this trend in 2019 with its data-driven insurance program, leveraging the wealth of information collected from its vehicles to offer behavior-based pricing. Last year, Honda joined the fray, launching Honda Insurance Solutions, which integrates insurance products directly into its digital sales platforms. Ford is partnering with Alset Insurance Services to offer Ford Insure, while Rivian’s insurance program is underwritten by Nationwide and Cincinnati Insurance Company. Volvo Car Financial Services takes a different approach, acting as an agency and digital platform connecting customers with established insurers.
Even Toyota is getting involved, partnering with existing insurers to provide coverage at the point of purchase. These varied approaches demonstrate that there isn’t a single blueprint for automakers entering the insurance space. Some are opting for full-fledged insurance companies, while others are choosing to collaborate with established players.
Challenges and Concerns Remain
Despite the potential benefits, the move into insurance isn’t without its challenges. Ben Galbreath, a partner and insurance agent with Wallace & Turner Insurance in Springfield, Ohio, cautions that this shift could complicate the insurance landscape for consumers. “It’s going to trigger a significant shift in the personal auto insurance market, and has the potential to complicate things,” Galbreath told Insurify. He notes that managing multiple policies across different carriers could create complexities, particularly when it comes to umbrella coverage.
Reinsurers, the companies that provide insurance for insurance companies, are also likely to scrutinize these new entrants, assessing the unique risks associated with automaker-issued policies. The long-term impact on the broader insurance industry remains to be seen, but it’s clear that automakers are poised to grow significant players in the years ahead.
The next step for Hyundai will be navigating the regulatory approval process and building out its insurance infrastructure. The company’s application with the U.S. Patent and Trademark Office is just the first step in a complex undertaking. Consumers can expect to see further developments in the coming months as Hyundai and other automakers continue to reshape the automotive insurance landscape.
What are your thoughts on automakers entering the insurance business? Share your comments below and let us know how you think this will impact the future of car ownership.
