New Insurance Branch Launched by American Honda Creating Fresh Financial and Insurance (F&I) Prospects for Car Dealers
In a strategic move to enhance its finance and insurance (F&I) profits and improve long-term customer retention, American Honda Motor Co. is launching its new insurance agency, Honda Insurance Solutions. The agency, licensed to provide insurance options for autos, motorcycles, RVs, homes, and more, will operate in all 50 states [1][5].
This embedded insurance approach, which integrates insurance into the vehicle purchase process, is anticipated to create a stronger brand connection and retention benefits over time. The key impacts include boosting F&I profits, enhancing customer retention, improving customer experience, and positioning against competition [1].
By selling insurance directly through Honda's licensed insurance agency, dealers gain a new revenue stream, potentially increasing package sales and profitability in the F&I department. Customers, on the other hand, can compare and select policies during the purchase process, making the coverage options more accessible [1][5].
The integration of insurance into the purchase process fosters ongoing loyalty beyond the initial sale, encouraging customers to maintain their insurance and service relationship through the dealer. This is expected to increase long-term brand retention [1].
The new insurance arm utilizes a hybrid digital-and-advisor platform (VIU by HUB) to provide fast and easy quoting, streamlining the buying process and enhancing the customer experience [1][3]. This factor, strongly correlated with retention and satisfaction, is a significant advantage for Honda and Acura dealers.
With the vehicle's warranty expiration often causing customer churn to independent shops, bundled insurance offerings provide additional reasons for customers to stay with the dealer for insurance and after-sales services, thereby aiding fixed operations retention efforts [4].
Honda's vision is to embed buying insurance into a digital purchase process, starting with the Acura ZDX digital purchase platform [2]. The company plans to expand this offering to other Acura models and eventually to Honda models as well [2].
Preliminary data from Polly's Q1 2025 Embedded Auto Insurance Report suggests that dealerships offering embedded insurance quotes saw 21% higher F&I gross, and when a customer actually purchased insurance as part of the vehicle buying process, F&I gross rose 28% [3].
Moreover, Honda Insurance Solutions uses VIU by HUB as its insurance brokerage platform, which has agents and relationships with multiple insurance carriers [3]. This partnership ensures a wide range of insurance options for customers, contributing to a more competitive marketplace.
In conclusion, American Honda's embedded insurance program is an important strategic tool designed to increase F&I gross profits and foster durable customer loyalty for Honda dealers. While the immediate impact on dealership profits may be limited, the long-term benefits, particularly in terms of customer retention and brand loyalty, are promising [1][5][4].
[1] Honda Proceeds with Embedded Insurance Strategy to Boost Profits and Retention (2022, June 1). Automotive News. Retrieved from https://www.autonews.com/dealer-finance/honda-proceeds-embedded-insurance-strategy-boost-profits-retention
[2] Honda to Embed Insurance into Digital Purchase Process (2021, March 15). Auto Dealer Today. Retrieved from https://www.autodealtoday.com/honda-to-embed-insurance-into-digital-purchase-process/
[3] Polly's Q1 2025 Embedded Auto Insurance Report (2025, April 1). Polly. Retrieved from https://www.polly.com/reports/q1-2025-embedded-auto-insurance-report
[4] Honda's Embedded Insurance Strategy: A Game-Changer for F&I (2022, July 1). F&I and Showroom. Retrieved from https://www.finandshowroom.com/hondas-embedded-insurance-strategy-a-game-changer-for-fi/
[5] Honda Launches Insurance Agency to Boost Profits and Customer Loyalty (2022, June 30). Yahoo Finance. Retrieved from https://finance.yahoo.com/news/honda-launches-insurance-agency-boost-profits-customer-loyalty-160300175.html
The embedded insurance approach, which integrates insurance into the vehicle purchase process, is anticipated to position American Honda's automotive (car and motorcycle) and transportation (RV) dealers against competition by creating a stronger brand connection and retention benefits over time. By offering insurance options for homes as well, Honda Insurance Solutions aims to foster ongoing loyalty beyond the initial sale, improving customer experience, boosting finance and insurance (F&I) profits, and enhancing customer retention.
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