Softer sales means the pressure is mounting for F&I departments to drive profit for your dealership. If you think you have the right mix of products to weather the upcoming storm, consider this: There’s one type of insurance that every one of your customers is buying, but your dealership is not benefiting from. It’s auto insurance.

Insurance is an area often overlooked or underserved by dealers. But it’s one of the most powerful and easiest ways to avoid getting beaten on price. With the right approach, it can even increase a customer’s budget by thousands of dollars just prior to entering the F&I office.

Dealers looking to profit from insurance can pursue one of four paths. Let’s look at each in detail.

1. Refer Customers to a Local Agency.

This is perhaps the oldest and most basic approach. Dealers are often approached by a local independent agency to set up a referral payment. This model entails little to no risk for the dealership, small changes to process, and almost no required investment, but it also delivers very little in the way of value to the dealership or its customers.

Most importantly, this approach is based on viewing insurance as a problem to be solved, not a business opportunity.

2. Install a Branded Office in Your Showroom.

Some dealerships work with a single large insurance carrier, providing them with space inside the showroom. This model can help certain customers, and for them, the car-buying process is faster and more seamless.

However, this is not a solution for all customers, because one carrier simply cannot meet the needs of everyone. That lack of choice leads to few sales and even less savings for your customers. This model also has relatively high costs when you consider the need for valuable floor space, staff, and changes to your processes.

3. Build an Independent Agency From Scratch.

This approach is somewhat more innovative, and larger dealer groups have made major investments in time, money, staff, and process changes with mixed results.

Among the many considerations are the need to obtain and maintain an insurance license, meet state regulations, seek appointments from carriers, and invest significantly in technology to provide a smooth, convenient buying experience.

4. Join a Digital Insurance Platform.

Done right, partnering with a scalable digital platform offers numerous choices to consumers and requires little to no investment or process change. The model works by providing customers with access to competing auto insurance quotes on a digital device from within the dealership.

Best-of-breed solutions combine the finance and insurance applications into a single workflow, which speeds up the process. The choice of brands and streamlined process saves customers money, increases their buying power, and opens up budgets for F&I products.

Whichever path you choose, the time to take a fresh look at insurance approaches and evaluate which approach makes the most sense for your dealership.

Mike Burgiss is CPO of DealerPolicy and a 20-year veteran of the dealer software segment. Contact him at mike.burgiss@bobit.com.