OEM-Insurer Partnerships Could Drive Consumer Loyalty

A new report shows both automakers and insurance carriers are facing declining customer loyalty, but by working together, they could help each other retain business.

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Nearly half of U.S. drivers actively shopped for new auto insurance policies in the past year, according to a new Deloitte report that points to a growing need for collaboration between insurers and vehicle manufacturers to reinvent the customer experience.

The report, Reinventing the Insurance Customer Experience for Loyalty, revealed 49% of auto insurance consumers explored new policy options over the last 12 months -- likely a reaction to premium increases that averaged 26% from 2023 to 2024, as cited from the 2024 J.D. Power Shopping Study.

“Auto insurers and OEMs are both grappling with declining customer loyalty,” Deloitte said. “To recapture loyalty and stay competitive, OEMs should seek to create a cradle-to-grave loyalty experience with each car.”

The report suggests that building seamless, embedded insurance options directly from OEMs could drive future loyalty. One-third of U.S. consumers expressed interest in buying “embedded” insurance from vehicle manufacturers, citing cost, convenience and time savings. Interest is even stronger internationally, the report said.

The rise of connected, electric and automated vehicles also presents new insurance challenges and opportunities. Deloitte anticipates regulatory shifts may soon assign more liability to OEMs and system partners instead of drivers, prompting a need for proactive industry transformation.

“To prepare, companies should understand these emerging developments and risks and act on the associated insurance needs,” the report's authors wrote. “Joining the mobility-insurance value chain now could give OEMs, captives and carriers a chance to dictate how change happens and secure market share and competitive advantage.”

Consumers increasingly desire a unified experience. Sixty percent of U.S. drivers want features like vehicle health reporting, safer routing and predictive maintenance, all of which can be bundled with insurance offerings through partnerships among OEMs, dealers and insurers.

Current partnerships already reflect this trend. Examples include Rivian with Nationwide Insurance, Toyota Insurance Management Solutions with Toggle (a Farmers Insurance Group brand), and GM Insurance Services, which offers policies through GM National Insurance Company.

Deloitte proposes four potential models for the future of embedded auto insurance:

Broker: OEM refers customers to designated insurers.
Product Partnership: Brand-specific insurance products co-developed by OEMs and insurers.
Managing General Agent (MGA): New or existing MGAs offering direct partnerships.
OEM/Captive Insurer: OEM-owned subsidiaries underwriting policies directly.

The report urges insurers to invest in technology, data infrastructure and partnerships to become “partnership-fit,” enabling real-time risk understanding and a shift from reactive to preventive insurance strategies.

Research also suggests that managing a vehicle across its full lifecycle can yield 1.4 to 1.6 times more profitability than a single sale model. With this in mind, Deloitte introduced the concept of a “walled garden”-- a brand-centric ecosystem of services, including insurance, that keeps customers engaged from purchase through the vehicle's end of life.

“Collaboration could allow insurers, OEMs and captives to banish pain points and invent new, desirable outcomes for customers -- effectively building a one-stop shop through undeniable convenience,” the report concluded.

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