Tricolor made another move on Tuesday to grow its business that focuses on the sale and financing of vehicles to the Hispanic consumer.
Tricolor unveiled what it called a “groundbreaking, affordable” auto insurance option for low-income and credit invisible customers through its affiliate company Tricolor Insurance. After testing the product earlier this year, Tricolor will begin rolling out the new insurance offering throughout all of its markets in Texas and California.
“Car owners with limited incomes or credit histories are often forced to pay double the auto insurance rates of comparable coverage for mainstream credit consumers,” Tricolor chief executive officer Daniel Chu said in a news release.
“We are committed to providing our customers with a trusted, high quality and affordable car buying and ownership experience that extends from the moment they step into our dealership through vehicle ownership,” Chu continued. “Auto insurance is a critical part of that, and we are thrilled to offer a new lower-cost alternative for deserving customers.”
Tricolor said the nonstandard auto insurance industry comprises approximately 30% of the $140 billion personal auto insurance market. It is highly fragmented with roughly 25,000 nonstandard agents across the country yet concentrated geographically, with Texas, California and Florida accounting for 52 percent of all direct premiums in 2017, according to A.M. Best.
Tricolor noted insurance agencies serving this customer segment often offset perceived cancellation risk by charging high origination fees. Tricolor explained that it can eliminate these agency fees — including point of sale, endorsement and cancellation fees — using risk insights gained from its data-driven underwriting models.
“Pricing transparency is a significant component of delivering a compelling value proposition,” Tricolor chief product and strategy officer Mauricio Delgado said. “We are leveraging the insights gained from providing affordable, high-quality vehicles and financing to underserved Hispanics to provide a lower-cost alternative auto insurance option.
“Unlike agencies which must support high customer acquisition costs, our dealerships provide a robust lead generation channel, allowing us to deploy a lower-cost model,” Delgado continued.
“Tricolor is uniquely positioned to draw on its brand, lead generation strategies, technology platform and back-office capacity to scale this initiative as part of our broader financial services platform,” Delgado went on to say.
Tricolor Insurance Agency, an affiliate of Tricolor Auto Group, currently serves as an agent for 10 nonstandard carriers and markets its services throughout Tricolor’s 28 dealerships in Texas and now also through its eight Ganas dealerships in southern California.
Currently available only to Tricolor customers who make a vehicle purchase, the company plans to extend its insurance offering to all vehicle owners later next year.
Combined, Tricolor and Ganas have served nearly 50,000 customers and originated nearly $1 billion in paper by using its proprietary model to segment risk since its founding in 2007.