General Motors’ (GM) recently announced insurance venture has made waves in the industry, with the car manufacturer launching its own insurance unit, OnStar Insurance, powered by the technology of GM subsidiary and connected car services company OnStar. GM also unveiled a new insurance agency, OnStar Insurance Services, that will be its exclusive agent.
Read more: General Motors launches into auto insurance
The move marks GM’s re-entry into insurance – an industry with which it already had decades of experience, starting from 1925 until it exited the business in 2008. The decision to step back into the insurance fold was driven by several key factors, according to Andrew Rose (pictured), OnStar Insurance president – the first reason being that GM and OnStar interact with customers during relevant life events, such as vehicle purchases and maintenance, where insurance has a logical tie-in. GM and Onstar also see an opportunity to make insurance more personalized, according to Rose.
“The pricing and rating of insurance is done by the aggregation of attributes, variables, and things [like] your education, occupation, zip code, and credit score, but that’s pulling together a bunch of people and doing averages,” he said. “We have the ability, with customer consent, to use the information on how they actually operate their vehicle, how they maintain their vehicle, where they operate their vehicle … and let people say, ‘I’m a better driver than somebody else that may have all those same characteristics.’ We think we can go out into the marketplace and be a fairer, more personalized insurance company for consumers.”
In fact, when it comes to pricing, GM was recently the focus of a ValuePenguin report that determined a new insurance offering from the car manufacturer could be more than $1,000 per year more expensive than that of its competitors. Rose commented on the validity of the report’s findings.
“Our rates are only currently available to GM customers, so I think it would be challenging to have folks understand our prices,” he said, highlighting that prices also differ for every consumer, “and oftentimes, if you look in the fine print of those comparisons, they will look for an individual vehicle and an individual’s zip code with an individual set of characteristics. Every insurance company is expensive for some people and cheaper for others, so individual comparisons like that always need to be taken with a grain of salt.”
Rose pointed to GM’s employees in Arizona – the launchpad for the new insurance offering – and noted that the prices from the quotes they’ve received “are quite competitive,” adding, “We’re not going to be the cheapest for every single person out there, but we think that we’re going to have the right combination of both price and value for many, many consumers.”
The value in the insurance offering comes from GM and OnStar’s ability to leverage the businesses’ already established ecosystems and improve customers’ insurance experiences. Today, said Rose, “If you’re an OnStar subscriber, you know that if you get into an accident, you get that immediate call into your vehicle, [with] emergency services and tow trucks dispatched. That peace of mind, that safety and security that GM and OnStar are known for, we can build on top of that.”
Down the road, GM and OnStar could use the information collected from the vehicle after a collision to make real-time assessments of damage, and then immediately order the necessary parts, get the car scheduled for repair, and set the driver up with a rental vehicle that matches their car’s make and model.
“Time is being dramatically cut out of the equation [and] the consumer is a whole lot happier,” explained Rose. “All of those things can be transformative when it comes to the claims experience – and you can even take it a step further. There are times when you’re going to end up with total losses and sometimes those takes weeks to determine. Well, we might know that answer in seconds or minutes.”
Looking into 2021, Rose says that OnStar Insurance plans to achieve a national footprint by the end of 2021, in addition to providing other insurance services.
“We want to make sure that consumers know that this is not just an offering for GM vehicles. If your garage has another make or model, we’re happy to cover that too. If you have a garage, which means you have a house or you’re renting, we can offer you homeowners’ and renters’ insurance as well,” he told Insurance Business. “The intent of this is to satisfy a consumer’s entire insurance needs.”
GM and OnStar aren’t returning to the insurance industry alone. They’ve partnered with American Family Mutual Insurance Company to make sure that their offering can meet, if not exceed, customer satisfaction, while keeping rates competitive and having experienced claims servicing teams available.
All in all, the move back into insurance “makes a lot of sense,” said Rose. After all, he added, “Who knows your vehicle better?”