Auto Dealers Can Improve Profitability With New Digital F&I Product


Warren Buffet spoke about the economic advantages of creating a toll bridge.  Dealers already have the physical real estate where the digital toll bridge to the auto insurance market needs to be.   

Auto Insurers spend roughly $10 billion annually on marketing to maintain or grow their market share.  This marketing spend is notorious for both its visibility and its inefficiency.  Besides brand awareness and entertainment, how many people are in the market to switch insurers as they watch TV?  The insurance industry has the lowest digital conversion rates of any industry.  Insurers spend between $487 and $900 to acquire a new customer.  Any model that will improve conversions will be very appealing. 

Why is this relevant to Auto Dealers?  First, dealerships have always been the right "location" for insurers to capture new customers.    Consider that roughly 83% of consumers want to deal with everything associated with purchasing a vehicle either at the dealership or during the buying process.  Car insurance is mandatory and will be added to the existing carrier and policy or converted to a new insurer.  Dealers have not made the latter easy for consumers, as it is not a dealer's core business. 

Honestly, this concept is not new, but a suitable model has not materialized yet.  Why not?

The insurance industry is regulated.  Therefore, dealers cannot directly offer auto insurance.  Instead, a registered broker or a captive agent must be on-site or available to complete the insurance buying process.  Dealers have not been enthusiastic about competing sales agendas inside their stores.  Not only does this add more sales friction to the buying experience, but a 3rd party introduces it; therefore, the dealers do not control the methods and service directly.   Exhausted car buyers have not wanted to navigate this process and have opted for the path of least resistance.    In addition, adding a non-dealer employee to a dealership adds HR and other human-introduced complexities to the dealership-consumer interface.

There have been some traditional carrier partnerships where a dealer will refer a consumer to an insurance carrier or connect them directly during the F&I discussions.  Unfortunately, dealerships have not found this financially beneficial as it fails to hit the mark with customers.  Finally, some marketplaces have worked to perform some bundle magic for the consumer.  Unfortunately, this process often presents as an MGA or clearing house and adds costs to underlying carriers.  Based on the lack of success, the insurance "idea" has been branded a distraction from a dealer's F&I products that are more profitable.    In reality, misaligned financial incentives and poor product execution have produced headwinds for dealers to profit on required auto insurance policies for every vehicle they sell.

The catalyst for change in this paradigm is the vehicles themselves becoming more critical in the insurance process.  Have dealers noticed the OEMs are starting to get into the insurance game?  Why is that?  Everyone understands that autonomous vehicles are on the way.  But, before that, cars are engaging in the driving process.  The risk of accident and cost to repair is now impacted directly by the underlying ADAS and other technology installed. 

Insurers are just beginning to transition their underwriting strategy to incorporate vehicle build data in their models because of this technology trend.  So, who can serve up the vehicle data and the consumer at the purchase?  Que the music for the eureka moment. 

The new auto insurance customer will be served up by dealers from their physical marketplace through the digital MotorDNA® marketplace directly to insurers.   The dealer receives compensation for its unique and valuable position without additional costs or distractions.  It's time for dealers to get credit for their instrumental position in the mobility ecosystem.

Effectively harnessing this reality would be a boon for auto dealers.  Dealers will benefit from the redirected insurer's marketing budget dollars from carpet bombing our TVs and add words on Google.   When done effectively, an auto insurance carrier can interact directly with a high intent buyer during an ideal time when they make related buying decisions. 

MotorDNA® built the insurance marketplace to provide vehicle build data and the consumer directly to insurers, allowing them to offer real-time quotes based on the installed features. 

Dealers should look carefully at the Carvana deal with Root.    These and more newcomers are looking to cut directly into dealers' revenue and profit margin.  OEMs, Tesla, GM, and others are also entering the auto insurance market.  Ford is working to sell its data directly to aggregators and insurers.  Dealers can now actively participate by partnering with MotorDNA® to ensure a relevant and profitable future in the auto insurance game.     

MotorDNA® has created a patent-pending "Auto Insurance Digital Marketplace" that is the only location insurers can directly access vehicle build information to deliver insurance quotes.  MotorDNA® allows dealers to collectively turn its marketplace into a digital marketplace and allows multiple insurers to pay for the opportunity to provide a quote.   MotorDNA® delivers quotes directly from reputable insurers based on the vehicle build and Monroney Sticker information. 

Best news yet, it's self-sustaining and not a distraction.  QR Codes and 30-second description steers consumers to a user-friendly self-directed interface to upload their sticker.  Insurers provide quotes, and the consumer digitally decides how and when they want to.  Simple.  Dealers get paid. 

The collective potential economic opportunity for the dealerships is in the billions.  Don't be disrupted; disrupt and add value.  Dealerships that capitalize on the trend of data and access will siphon advertising money wasted to deliver value and customers directly to Auto Insurers.  By offering this online marketplace at checkout and letting buyers upsell themselves, your dealership will assist its consumers in buying safer cars and simultaneously lowering the total cost of ownership!   

Simple, direct to the consumer, streamlined and modern buying experience.   Dealers get credit and paid for funneling customers into the "digital marketplace" and dealers' very own "TOLL BRIDGE."

To understand the potential financial windfall for your dealership(s) and how to sign up for free, reach out to



Author: Tom War