Wal-Mart expands non-retail portfolio with auto insurance quotes

Wal-Mart continues to expand its a la carte financial services with a new partnership with AutoInsurance.com that aims to save consumers money on auto coverage. Wal-Mart is the first retailer to delve into this type of rate comparison service now approved in six states, including Arkansas, Oklahoma and Missouri, according to Daniel Eckert, senior vice president over services at Wal-Mart Stores.

“Our business is driven by a commitment to taking products and services that are complex and pricey and making them easy and affordable,” Eckert said in a media conference call on Tuesday (April 29). 

Eckert said in a media conference call on Tuesday (April 29) that Wal-Mart has heard from many consumers about the cost of auto insurance and for many families it’s a big expense with average families spending $1,530 per year to insure their vehicles. Another 14% of drivers are uninsured, primarily because they can’t afford it, Eckert said.

In Arkansas, the average cost to insure a vehicle for a year is $665.86, according to the National Association of Insurance Commissioners. Also, 16% of Arkansas drivers going without coverage, one of the highest uninsured percentages in the nation, according to the Insurance Research Council.

“Our customers too often have to settle for auto insurance policies that aren’t the best fit and cost more than they want to spend,” Eckert said. “With AutoInsurance.com, we’re helping our customers in Arkansas save money on one of their largest household expenses.”

New Jersey-based AutoInsurance.com, is a licensed property and casualty insurance agency created after Wal-Mart presented their idea for a cleaner, more transparent method for consumers to compare their auto coverage.

The new program provides consumers the option of comparison shopping for insurance rates with a simple online portal. The consumer provides their name, address, birthdate and contact information and has the option to give the system permission to access their policy and do the rate comparison against six insurance carriers. The consumer has the option to enter their vehicle data into the system if they do want to give retrieval access.

A frequent complaint consumers have about using these type of policy comparison services is that users are often inundated with phone calls from agents trying to sell them coverage.

Josh Kazam, founder of AutoInsurance.com, said during the media call that while nine in 10 consumers do comparison shopping online, just one in five uses online comparison sites for comparing the cost of the auto insurance.

“It can take a lot of time and they are usually designed to create leads for salesmen who then are persistent in trying to sell coverage,” Kazam said. 

Once a consumer gets the quotes they can either purchase the policy online immediately, speak with a licensed agent at 800-700-7500, or save the information for a possible purchase later.

“Customers will only be contacted in the future by AutoInsurance.com or the carrier of the policy they purchase,” Kazam said. 

Wal-Mart piloted the program in Pennsylvania and recently beta tested it in Northwest Arkansas. The early results are yielding savings for many families, according to Eckert.

For now consumers can log on to www.walmart.com/autoinsurance and get the comparison or call the toll free number. The program also accepts uninsured drivers and will quote three coverage options, good, better, and best scenario, Kazam said. Wal-Mart expects to soon make the service available nationwide.

While consumers do like to find savings in regular expenditures like insurance costs, professional insurance agents can usually offer discounted premiums when multiple lines of coverage are purchased. For instance, if State Farm, Nationwide or other carriers insure a home, they will discount the typical auto coverage rates. These full service agents argue that personal rates can be tweaked and customized with various discounts that may or may not be included when shown on rate comparison sites.

Analysts said this is just another example of Wal-Mart disrupting the marketplace, helping to bring price transparency to the forefront. There is also the possibility that Wal-Mart can glean consumer data from this venture since the sign-up goes through its website portal.

Data collection is one of the ways Wal-Mart can win with this program. Direct marketing for auto services and tire sales are the tip of the iceberg. The age component also gives the retailer insight to generational data. Analysts also said the new effort is another example of Wal-Mart positioning itself in another service area outside of retail.