Ben Galbreath
Hyundai recently announced plans to launch its own branded insurance carrier, joining companies like Tesla, Honda and General Motors in entering the car insurance business.
The news follows a $9 million multistate settlement Hyundai reached with attorneys general over allegations that Hyundai and Kia sold millions of vehicles without industry-standard anti-theft devices – an issue that led to insurer lawsuits and coverage restrictions after numerous break-ins and thefts.
While automakers claim they designed the move into insurance to improve customer convenience and lower insurance costs, Partner Ben Galbreath told Insurify & Insurance News Net that this adds another layer of complexity for insureds.
"It's going to trigger a significant shift in the personal auto insurance market, and has the potential to complicate things," said Ben. "As more households end up with multiple vehicles insured through different carriers, policies will become more fragmented and complex. That creates challenges not just for consumers, but for traditional carriers and agencies, particularly when it comes to offering umbrella coverage."
Ben explained that umbrella policies typically require underlying auto coverage to meet specific criteria, and automaker-issued policies may not always qualify.
Reinsurers – companies that provide insurance for other insurance companies – may also turn a critical eye toward the trend, he added.
"Reinsurance companies closely evaluate many factors of primary insurers before allowing umbrella coverage to sit over them," Ben said. "As automakers enter the space, reinsurers will need to assess a range of new risk factors, which could further complicate how and when umbrella coverage is offered across different providers."