Hyundai Launches Own Insurance Carrier: A New Era for Automotive Insurance
South Korean automaker Hyundai has announced plans to launch its own insurance carrier, "Hyundai Secure+," marking its foray into the automotive insurance sector. This move aligns with the strategies of manufacturers like Tesla, Honda, and General Motors, who have also ventured into offering insurance services. According to a filing with the U.S. Patent and Trademark Office, Hyundai aims to provide underwriting and claims management for property and casualty insurance, focusing on automobile coverage for property damage and third-party liabilities.
Hyundai's strategic entry into the insurance industry follows a $9 million settlement with attorneys general from 34 states concerning vehicles sold without standard anti-theft protections, which led to regulatory compliance challenges and restricted coverage options. This development highlights the increasing interplay between automakers and insurance providers in managing risk assessment and claims processes, especially in light of rising vehicle theft incidents.
The economic landscape has played a crucial role in Hyundai's decision, with insurance premiums rising over 40% since 2019. Industry analysts note that nearly 20% of these premium revenues are directed toward marketing, advertising, and commissions. Guillermo Francisco Cornejo, a former Hyundai Capital executive, emphasizes that by internalizing insurance services, automakers like Hyundai can streamline costs and improve pricing models that incorporate advancements such as autonomous vehicle features.
Integrating Insurance with Automotive Offerings
By offering integrated automotive insurance solutions, Hyundai can enhance its customer relationships, providing a holistic service ecosystem that spans financial services, warranties, and ongoing vehicle service support. This strategy, supported by professionals like Chad Watwood from LawBike Motorcycle Injury Lawyers, underscores the necessity of maintaining control over customer interactions and simplifying dispute resolution within the provider-payer landscape.
Tesla pioneered this trend in 2019 by using AI-driven prior authorization and vehicle technology for behavior-based insurance pricing. Following suit, Honda established its licensed insurance entity, combining these offerings with digital sales platforms to enhance safety and customer convenience. Some automakers continue to partner with traditional carriers; Ford partners with Alset Insurance Services, while Rivian collaborates with Nationwide and Cincinnati Insurance Company.
However, the entry of automakers into the insurance domain is not without criticism. It introduces potential complexities, such as policy fragmentation for households insuring multiple vehicles with different carriers. Ben Galbreath of Wallace & Turner Insurance points out the compliance challenges, particularly concerning umbrella policy requirements. Moreover, reinsurance companies tasked with evaluating primary insurer risks may have to modify their assessments as automakers encroach upon this field, potentially shifting the landscape of umbrella coverage offerings and further complicating the regulatory environment.