Younger Generations Seek Comprehensive Offerings - Insurance and Financial Services Extra Features
In a recent study by Polly Insurance, it was revealed that dealerships offering embedded insurance quotes saw a significant increase in F&I gross profit in Q1 2025. This trend, supported by consumer preference and strategic industry alignment, is transforming the automotive industry.
The CDK 2025 Friction Points Study, which surveyed 1,281 consumers who had purchased their vehicle in the previous six months, found that 66% of respondents expressed interest in buying insurance while purchasing a vehicle. Gen Z and millennial shoppers were particularly enthusiastic, with 84% showing interest.
The study also highlighted the importance of convenience and competitive pricing for customers. Embedded insurance platforms, such as those offered by Carvana, allow customers to shop and save on personal auto insurance directly at the dealership. This seamless integration appeals to customers, enhancing their likelihood to purchase insurance products through the dealership.
For instance, Carvana's embedded insurance process takes place online, reducing waiting times compared to traditional dealerships. Customers receive insurance offers from national brands via text after answering a few questions on the Polly tool, and the process requires just three clicks, according to Christina Keiser, executive vice president, strategy at Carvana.
Dealerships that optimize their product mix, including embedded insurance offerings, have seen substantial improvements in F&I income. Sonic Automotive’s 2022 Q2 results reported a 15% growth in same-store F&I gross profit, partly driven by product innovation and possibly integrated insurance solutions.
Embedded insurance can also improve customer experience and retention. By offering competitive insurance options backed by trusted brands, dealerships can enhance customer loyalty and increase repeat service visits—important drivers of long-term dealership profitability.
However, some dealerships, like Germain Toyota of Naples, FL, have reservations about embedded insurance. Finance manager Carlos Cardenas states that embedded insurance might slow the car buying process. Despite this, the CDK study found that the likelihood a customer will recommend a dealership is highly impacted by the amount of time a transaction takes, with shorter wait times resulting in higher recommendations.
In summary, offering embedded insurance supports higher F&I income by enriching the product portfolio, meeting consumer demand for convenience and cost savings, and aligning with industry trends towards integrated digital insurance solutions. This leads to improved dealership profitability metrics such as PVR and PPD while enhancing customer satisfaction and retention.
While the exact incremental revenue attributable solely to embedded insurance is not isolated in the available data, it is considered an influential element within the broader effective product mix and F&I innovation strategies reported by leading dealerships and OEM programs.
[1] Polly's Q1 2025 Embedded Auto Insurance Report [2] Sonic Automotive’s 2022 Q2 results [3] Zurich's program "The Zurich Advantage" [4] Honda's launch of Honda Insurance Solutions [5] CDK 2025 Friction Points Study
- The integration of embedded insurance platforms into dealerships, as highlighted in the CDK 2025 Friction Points Study, could potentially boost business profitability in the automotive industry by increasing F&I gross profit, as demonstrated by Sonic Automotive’s 2022 Q2 results.
- Technology plays a crucial role in this transition, enabling seamless insurance transactions through embedded platforms like Carvana's, which not only cater to consumer demand for convenience and cost savings but also enhance customer loyalty and retention.
