16 Questions to Ask if Your Dealership is Considering an In-House insurance Agency

Today’s dealerships are being squeezed from the front and back of profit margins and owners who are looking to the future for sustained growth are looking beyond just the standard income streams. 

June 5, 2023

Today’s dealerships are being squeezed from the front and back of profit margins and owners who are looking to the future for sustained growth are looking beyond just the standard income streams. 

They want something more, something that sets up solid revenue for decades to come regardless of economic conditions. With that comes closing that customer lifetime loop - sales, service, finance, and now insurance. 

Insurance as a part of the lifecycle adds that recurring revenue stream whether it’s through an app-based insurance program or, as we talked about last time, having an in-dealership insurance agency (IDIA). 

But before any dealership embarks on that journey, it’s important to ask the right questions, to know exactly what kind of insurance presence you want, and what the key differences are between agency types. This will dictate the type of relationship you’ll have with the insurer and what it will look like for future revenue.

If your store is looking into offering insurance through an IDIA (in-dealership insurance agency) arrangement, take a look at these questions you must ask…

16 Key Questions to Ask an Insurer (yes…it’s a lot but you need this information ahead of time)

  1. Will we be dealing with a captive agency or an independent model agency?

  1. What will commissions look like in years 1-6 based on current sales volume (what will future revenue REALLY look like?)

  1. When an agency is issued to my dealership, are we the owner and if so, what are the terms of ownership?

  1. What happens if we want to sell the book of business and how involved is that process?

  1. Who owns that book of business? 

  1. Is this a virtual model or in-dealership department with licensed people on my payroll? Do I choose the staff?

  1. How many carriers does your company have access to? Are there any local carriers and if so, how many?

  1. What happens if a carrier leaves my immediate market for auto insurance? 

  1. Will we have access to both standard and non-standard carriers in our market?

  1. Does the insurer we are working with have true access to the carriers as a managing general agent (MGA) or are they just a middleman between everyone? Is this a direct relationship?

** important consideration here as an MGA may have no real authority to protect       your IDIA, your book of business or your standing with carriers.

  1. Who are we signing a contract with exactly? How many different companies will we be doing business with, and who holds the liabilities? 

  1. What percentage of commissions are they paying out to us as an IDIA and what is the total commission split?

  1. Speaking of commissions, are they split between the dealership and the MGA (assuming that structure), or is there a middleman taking a cut as well?

  1. Are there performance bonuses in place and what would they look like?

  1. If the company we sign up with gets additional commissions and an annual renewal or retention bonus from the carriers themselves, do we share in those bonuses and if so, what’s the split?

  1. Will someone come to our dealership and work with our team to ensure the perfect people, process and productivity is in place and maintained during the life of my insurance agency? Will we get operational support to help maintain steady growth?

It’s a pretty exhaustive list but it will help your dealership decide if this is the right step for you. Having an in-house agency does have many benefits but no matter what your ownership decides, it’s critical to be asking all the right questions right from the start so that your store is not caught ill-informed about what’s in it for you and how your customers will be impacted.

DealerSure is here to help you navigate some of these murky insurance waters and have staff that can help you better understand your options and help you get an IDIA set up if that’s a direction you want to go for an additional revenue stream.

We’re here at dealer-sure.com and happy to help you walk through the sets to open an agency of your own or to enable your staff with the DealerSure App to help them save your customers money during the deal on car insurance. Either way, we’ve got you covered. 

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