SafeAuto Branches into Agent Channel with AutoTex Acquisition

SafeAuto, previously a pure direct-to-customers non-standard auto insurance provider, will also be selling auto insurance policies through agents for the first time ever since it was founded in 1993.

A Columbus, Ohio based private insurance company, Safe Auto Insurance Company specializes in offering car insurance at state-required minimum limits to drivers who are either having difficulties getting car insurance otherwise, or just looking for an affordable way to satisfy state regulations.

Just a couple of weeks ago, SafeAuto announced its first ever acquisition of AutoTex MGA, a Dallas, TX based managing general agency – and this news was soon followed by an announcement of the appointment of its first Agency Distribution Leader.

Most non-standard auto insurance companies typically sell their policies through direct portals, either through phone or online quoting systems. Direct distribution of policies have been a winning strategy for several giants in the personal line auto insurance business – such as GEICO, Progressive, and USAA – in the past decade. Nevertheless, between 2013 and 2014, 78% of total US auto insurance industry written premiums was earned through independent or captive agents, while 22% was through direct channels. It is likely that as consumers take to the convenience of gathering quotes and managing their auto insurance policies online, having personal relationships with agents at a physical location is still a great contribution to satisfactory consumer experience.

SafeAuto’s venture into the independent agent insurance business is its attempt to reach more customers within the competitive personal auto market. Previously it only underwrote business in 17 states, most of which were within the South. Whether or not the new agency distribution leader will take SafeAuto across to the other half of the US is yet to be determined.

This graph shows how much different channels of business generate the auto insurance industry's premiums

Source: US Auto Insurance Market Data: A.M.Best

Mark Fitzpatrick

Mark is a Senior Research Analyst for ValuePenguin focusing primarily on the insurance industry, primarily auto insurance. He previously worked in financial risk management at State Street Corporation.

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