How Hagerty Morphed From Being an Insurance Biz to Cornering the Classic Car Market

[Jlaa]

This is a fascinating read on Bloomberg:

Bloomberg - Are you a robot?

Hagerty Insurance Moves to Corner Classic Car Market (unpaywalled)

I did not know Hagerty purchased so many car shows - Redwood, Amelia Island, licensed LeMons, etc.....

 

[a777fan]

Thanks for the link @Jlaa !

Fascinating is the lunacy that some can display when justifying the fact that they like cars, they like making money, and they figured out a way to so both at the same time. “Saving the car culture”.

I can guarantee you that if Hagerty was wiped off the face of the earth tomorrow, we’d all still wake up, log on here, and continue to b*tch and whine at and with one another about our latest mechanical foible, or the next part thats now suddenly NLA. And I’d love every minute of it.

McKeel can jump off a cliff.

 

[Gatorblue92]

Interesting read. I don't fault them for their growth and hope it does preserve car culture but it seems like they will become "too corporate" in short order. Too bad since I've been using them as my insurer since I got my 240D back in 2006 and have no complaints.

 

[maw1124]

Great article. Thanks @Jlaa. I took notice of calling the company culture "rural." That one has me thinking. On balance, I'll welcome more tech, more organization and less schmoozy insider vibing at car shows. But keep the champagne flowing. That's more or less what Traverse City, MI tries to do. Still feels pretty rural to me, not that there's anything wrong with that.

maw

 

[gsxr]

Wonder what effect this may have on my Hagerty insurance rates (due for renewal in a few months).

"Those who did pay the {California Mille in 2021} $9,500 entry fee reported lackluster accommodations, a disorganized driving route and three dinners where the only meat offered was pork. (A Hagerty spokesperson says that only one of the dinners included pork.)"

$9500 to enter a car show? Clearly I'm not their target market, lol.

 

[LWB250]

Interesting that some of the people they spoke to who are unhappy about what Hagerty is doing are ones who were getting things comped due to their reputation or relationship with the promoter/venue. Brings back memories of the MBCA and what a bunch of entitled douchebags its "ruling class" was in the late 90s.

Dan

 

[ace10]

As I reported earlier... my premium decreased this year.
They answer the phone when I call.
Short of filing a claim and finding out about their service on that side of things, I remain a customer with few complaints.
I give zero shytes about premium car events.

 

[Harv]

Spicy piece. Tough comments about "third wife". She didn't pull any punches.

I think it's pretty clear Hagerty is trying to buy everything it can and have a piece of everything classic car related. The Radwood purchase seemed to have jumped the shark big time when you are hosting that event in literally one of the most expensive zip codes in the country.

 

[LWB250]

As I reported earlier... my premium decreased this year.
They answer the phone when I call.
Short of filing a claim and finding out about their service on that side of things, I remain a customer with few complaints.
I give zero shytes about premium car events.

Well said. I'm right there with you.

Dan

 

[gerryvz]

Brings back memories of the MBCA and what a bunch of entitled douchebags its ruling class was in the late 90s.

From what I know and have seen, I don't think much has really changed at the MBCA. Except that the club is closer than ever to being run into the ground. It's been a long, slow decline from the 35K+ members that MBCA had in the late 1990s to less than half of that now.

 

[gerryvz]

As I reported earlier... my premium decreased this year.
They answer the phone when I call.
Short of filing a claim and finding out about their service on that side of things, I remain a customer with few complaints.
I give zero shytes about premium car events.

True, but all of it comes at a VERY premium price point, at least the last time I got a quote from them for my E500. It was preposterously priced.

 

[gsxr]

True, but all of it comes at a VERY premium price point, at least the last time I got a quote from them for my E500. It was preposterously priced.

Hagerty quotes seem to vary in different states. Was your preposterously priced quote from TX or MD?

They also require you to have a daily driver not more than 10 years old, but your wife's new Toy Yoda should qualify for that.

 

[ace10]

True, but all of it comes at a VERY premium price point, at least the last time I got a quote from them for my E500. It was preposterously priced.

My premium is ~$6.75 per thousand. Multiple vehicles.
I have max + driving points and zero claims.
Virginia is typically one of the lower costs states for auto insurance.

 

[Harv]

Speak of the devil..

 

[gerryvz]

Hagerty quotes seem to vary in different states. Was your preposterously priced quote from TX or MD?

They also require you to have a daily driver not more than 10 years old, but your wifes new Toy Yoda should qualify for that.

This was from Maryland, at the end of 2021. They quoted me $1,117 annually for a self-imposed value of $45K on my car, or around $25 per $1,000.

This was with having another daily driver, perfect driving record, <2,500 miles per year driven, yadda-cubed. Only one car would have been insured with Hagerty (the E500).

 

[daantjie]

"Save classic car culture", puh - leeze... More like "save yourself, kill 'em all"! Guys, I think this is just the most capitalistic thing I have read all day. Take something and exploit it to the tits. Rinse repeat. Nothing new here.

 

[ace10]

According to this Forbes table, only PA, NY, LA & FL have higher auto insurance costs than MD.

Car Insurance Rates By State

The state where you live plays a significant role in determining your car insurance costs. Factors such as mandatory coverage types, vehicle repair costs, medical expenses and more contribute to the differences in car insurance rates by state. The national average cost for car insurance is $2,126

www.forbes.com

That was the first search result. I'm sure the rest will shuffle things around differently. But MD is always on the high end. It's all those Maryland drivers.

 

[duuder]

True, but all of it comes at a VERY premium price point, at least the last time I got a quote from them for my E500. It was preposterously priced.

Same for me vs American Collector which I went with

 

[gsxr]

My premium is ~$6.75 per thousand. Multiple vehicles.
I have max + driving points and zero claims. Virginia is typically one of the lower costs states for auto insurance.

That is CHEAP. ~$7 per thousand including comp+collision combined?

This was from Maryland, at the end of 2021. They quoted me $1,117 annually for a self-imposed value of $45K on my car, or around $25 per $1,000.
This was with having another daily driver, perfect driving record...

$25 per K is high, IMO.

Hagerty is charging me right around $13 per $K, perfect driving record, zero claims, etc etc. Idaho is supposed to be cheapest according to Ace's link but that wasn't my experience... maybe it was the Boise 'burbs that were high relative to the unpopulated areas. And why does the stupid Forbes article not allow sorting the list of 50 states based on the column heading? Instead they only show all 50, or the 10 highest, or the 10 lowest. If want to figured out the rang from the other 30, too bad.

 

[ace10]

Same for me vs American Collector which I went with

They prohibit weekday usage. That's a non-starter for me.

 

[ace10]

That is CHEAP. ~$7 per thousand including comp+collision combined?

That's my rolled-up, all-in premium cost. Full coverage with a deductible lower than my regular car insurance.

 

[gsxr]

They prohibit weekday usage. Thats a non-starter for me.

Srsly??

 

[ace10]

Srsly??


View attachment 165092

IIRC, we ran through all the insurers' conditions a few years back. Forum search is busted, but I think there's a list somewhere around here.

American Collector is pretty tight on what they allow

Collector Car Insurance Eligiblity | American Collectors Insurance

Not every old vehicle is eligible for collector car insurance. Find out what qualifies for the Agreed Value classic car insurance protection.

americancollectors.com

"Is NOT used for regular commuting."
"Occasional pleasure-use driving."

My take is that they don't want you driving your car, unless it's to a show. Or maybe getting some gasoline.
I cannot abide that.

Hagerty has much more liberal T&Cs.

 

[LWB250]

IIRC, we ran through all the insurers a few years back. Forum search is busted, but I think theres a list somewhere around here.

American Collector is pretty tight on what they allow

Collector Car Insurance Eligiblity | American Collectors Insurance

Not every old vehicle is eligible for collector car insurance. Find out what qualifies for the Agreed Value classic car insurance protection.

americancollectors.com

Is NOT used for regular commuting.
Occasional pleasure-use driving.

My take is that they dont want you driving your car, unless its to a show. Or maybe getting some gasoline.
I cannot abide that.

Hagerty has much more liberal T&Cs.

One of the reasons I've always used Hagerty. And there's no specific requirement on what your daily driver is, just that there has to be a "regular" car for each driver in the household before you can insure a "classic". Newest car in my collection is a 2008. No issues with Hagerty getting a policy for the CL600. Full coverage, collision, comp, everything, valued the car at $10k, I think, was about $800/year. Not bad for Florida, but definitely cheaper than a "regular" policy, which would also not pay out full value in the event of a loss. I discussed this with my agent and he told me that even if the Hagerty policy was more than a "regular" policy I should go that route, which makes sense, since the Hagerty policies are stated value.

My Allstate guy writes my Hagerty policies, but I've done them directly, too, and the price wasn't any different. The few interactions I've had with Hagerty have been quite pleasant.

Dan

 

[duuder]

IIRC, we ran through all the insurers conditions a few years back. Forum search is busted, but I think theres a list somewhere around here.

American Collector is pretty tight on what they allow

Collector Car Insurance Eligiblity | American Collectors Insurance

Not every old vehicle is eligible for collector car insurance. Find out what qualifies for the Agreed Value classic car insurance protection.

americancollectors.com

Is NOT used for regular commuting.
Occasional pleasure-use driving.

My take is that they dont want you driving your car, unless its to a show. Or maybe getting some gasoline.
I cannot abide that.

Hagerty has much more liberal T&Cs.

Yes, for pleasure driving - They have rates based on mileage usage starting from 1200/2500 ect bit weekday usage isn't one I've heard off

 

[Jlaa]

As I reported earlier... my premium decreased this year.
They answer the phone when I call.
Short of filing a claim and finding out about their service on that side of things, I remain a customer with few complaints.
I give zero shytes about premium car events.

Spicy piece. Tough comments about third wife. She didnt pull any punches.

I think its pretty clear Hagerty is trying to buy everything it can and have a piece of everything classic car related. The Radwood purchase seemed to have jumped the shark big time when you are hosting that event in literally one of the most expensive zip codes in the country.

I am no expert at this stuff, but looking through their 2022 10K, I am not really sure about the quality of their overall business model (as opposed to just JUST show / marketplace business or JUST their underwriting business).

2022 underwriting biz revenue = 307+403 = 710 Million
2021 underwriting biz revenue = 272+296 = 568 Million
Underwriting Revenue increase = +25%
However, OPERATING results have gone from 10M Loss to 68M Loss. From FY21 to FY22 we see operating expenses increasing from 629 -> 855 = +36%

So expenses are increasing faster than underwriting revenue.

Note that car show / marketplace revenue has gone from 52 -> 77 from FY21 to FY22 but that's small peanuts compared to their underwriting business and not nearly enough to offset that major increase in operating business. FWIW the only thing making their net income line look better is the increase of fair value of the liabilities reflected by warrants ----- these warrants being potentially dilutive to existing shareholder's equity (although they expire in 2026).



I try to look at Price to Sales (as opposed to Price to Earnings) sometimes, knowing how companies love to manipulate earnings numbers. HGTY's P/S ratio has climbed to just about 6x (see below)



Now let's look at other companies with large automobile underwriting businesses -

• Progressive - 1.6x
• Berkshire Hathaway (GEICO) - 3x
• Allstate - 0.58x

And this 6.11x P/S ratio is even while HGTY stock price has kind of slow-motion declined to 8.62.... Investors seems to be willing to pay A LOT (in stock price) for each dollar of sales materialized by the company. Maybe investors see a lot of growth coming in the future with the show / marketplace business ...... hmmmmmm .........



Meanwhile, all the latest "Changes in Beneficial Ownership" forms filed show SALES of stock, not purchases --- by the CEO, the Pres of Hagerty Media & Events, the SVP General Counsel, etc....

 

[a777fan]

Great analysis as usual @Jlaa. I personally see you as a secret day trader, regardless of what you're willing to admit.

So in summary -

Hagerty is spending more than they are making. Demand for their stock is out of whack with the value of their sales in comparison to their market segment competitors, and their exec team has decided its a good time to cash out.

Did I get that right?

 

[Jlaa]

Great analysis as usual @Jlaa. I personally see you as a secret day trader, regardless of what youre willing to admit.

So in summary -

Hagerty is spending more than they are making. Demand for their stock is out of whack with the value of their sales in comparison to their market segment competitors, and their exec team has decided its a good time to cash out.

Did I get that right?

Hahahaha, I am about 100% opposite of a day trader (who goes on momentum) - I'm a classic long haul value investment horizon = infinity type of guy, even if I rarely have the cajones to make any big bets personally. I just like reading through this stuff as a hobby.

Yes, you have that directionally right -

It seems to me that HGTY's underwriting business is doing okay with some good growth. However, it also seems that their foray into marketplace / show business is driving up operating costs with very little to show for it in terms of accretive revenue. If I were a shareholder, I would be asking HGTY why their continued investment in marketplaces / showplaces makes sense.

"Saving car culture" seems to be a good slogan for customers, but doesn't do anything for shareholders. Perhaps "Saving car culture" is the thing that's driving the +25% YoY increase in their underwriting business ..... though if that is the case, then what's happening is for every incremental dollar they are spending, they do not seem to be getting an additional dollar in sales, let alone earnings......

I don't know if the exec team has decided that it's a good time to cash out (those stock movements are not huge) .... but .... if the exec team has confidence in the long term strategy and execution of that strategy, then why not buy instead of sell?

I tried looking at Progressive's Form 4s but I saw a huge bucket of RSUs sold ---- and given the dilutive effects of share-based-compensation to existing shareholders, I decided to look up Berkshire's Form 4s instead ..... because Berkshire doesn't do share-based-compensation.

And look what Greg Abel (successor to Buffet once Buffet passes) just did in late March of this year (less than 30 days ago):



Abel just bought what looks to be a TRUCKLOAD of shares, on the open market. He's eating his own dog food. Is the HGTY team eating its own dog food as well?

 

[ace10]

How many current customers have posted here and reported zero complaints?
How many former customers have posted here?

 

[maw1124]

Yeah... they're clearly betting on long term affinity insurance sales, with multiple cars per household, etc. Stock price analysis is always a snapshot in time sort of thing, so their spend to grow market share (er, "saving car culture") won't pay diddly today but their gamble is in the future the spend will drop and the underwriting business will increase. Customers tend to be more sticky than customer acquisition costs -- the costs will go away and hopefully the customers won't. We shall see. But as a public company they're now spending other people's money.

maw

 

[Jlaa]

Yeah... theyre clearly betting on long term affinity insurance sales, with multiple cars per household, etc. Stock price analysis is always a snapshot in time sort of thing, so their spend to grow market share (er, saving car culture) wont pay diddly today but their gamble is in the future the spend will drop and the underwriting business will increase. Customers tend to be more sticky than customer acquisition costs -- the costs will go away and hopefully the customers wont. We shall see. But as a public company theyre now spending other peoples money.

maw

Good observations. I wonder if the collector-automobile-insurance-market has customers that are more or less sticky than the regular-automobile-insurance-market. We see Progressive / Farmers / Allstate / State Farm / GEICO battle it out with endless commercials, fighting for customers who switch, all the time.

As well, I wonder if the collector-auto-insurance-market has has a different trajectory w.r.t. 6% interest rates vs 0% interest rates.

 

[maw1124]

Stickiness is of course THE question @Jlaa as you well know.

I see the adverts but I don't know how much switching actually happens. If it does, I'll take it, as over time that 15% or more savings that gets waved around should mean numerically lower rates for all of us. But I don't think it happens in reality, just more shopping. Every time I shop rates I feel like I wasted time, and as I monitor this agreed value policy discussion (with this group and others) I get the sense a lot of other people do too.

This is the first time I'm seeing "cost per $1k of coverage" as a metric (thanks guys), which tells me (1) it's still early and the market, the concepts and the marketing concepts are all still forming; so (2) Hagerty might be in fact buying the lead horse position it wants in that marketplace. I generally favor better mouse traps and am happy when people deliver them, so I hope these trends continue, because -- let's face it -- I'm in the affinity group and both agreed values and a data driven rising floor under those values are good for me.

And I now have a metric to work from to see if I'm not still wasting my time thinking about it. Is that a monthly or annual metric? My experience with Geico (4 cars, FL) is about what @LWB250 indicates above (CL600 v S55, which is fairly comparable), but no stated value and no restrictions. So I've been stuck wondering how much I actually care about the stated value. The same data (Hagerty, BaT, etc.) supports the value in either case.

maw

EDIT... quick math says that if Hagerty can get me in that $7-$10 per thousand window on an annual basis and can get me anywhere near the values I have in mind, then I need to call them while they're spending money to buy customers.

 

[LWB250]

EDIT... quick math says that if Hagerty can get me in that $7-$10 per thousand window on an annual basis and can get me anywhere near the values I have in mind, then I need to call them while theyre spending money to buy customers.

This is one of the issues I've had with Hagerty. When I bought the Columbus, OH 400E they insisted on a minimum value that was well above what I thought it was worth, but it was that or nothing, so I went with it. I've had a couple of instances where my value and their stated value differed, with me being on the low side.

My local agent will ask me what I think the car is worth, then tell me what Hagerty values it at. If they're higher, we go with that.

Dan

 

[maw1124]

I wonder if there's any value to having a local agent in the middle the way @LWB250 is doing. Looks like I'm going to find out. I hope it's not a time suck.

maw

 

[ace10]

There isn't and difference. At least not in the premium $$ sense.
I left my last agent two renewals ago. He was writing both Hagerty and my regular home/auto. My new agent didn't carry Hagerty, so I secured the covered direct. Premiums didn't change. I spoke at great lengths with a CSR who was "retired" from his career but was doing some WFH call center work. Hagerty simply pockets the commission if you go direct.

 

[ace10]

I'd wager that there's some bulk purchasing power going into the pricing I shared earlier. I'm not insuring a single vehicle.
Also, there might be some zip-code-level pricing. I live in the country, in a low cost state. Most of the claims coming from my zip are probably going to be deer strikes.

More data to ponder:
My 190E costs $9.50/1000 to insure
While my '67 FJ40 is $4.15

(These are the highest and lowest cost to insure vehicles I own)

Same guaranteed values, same coverages. The 190E has an airbag and ABS, while the FJ40 has no seatbelts, zero overhead protection and manual brakes. Both would be written off after anything more the slightest of incidents.

Perhaps they just use a random number generator for pricing?

 

[gsxr]

I see the adverts but I dont know how much switching actually happens. If it does, Ill take it, as over time that 15% or more savings that gets waved around should mean numerically lower rates for all of us.

For NON-agreed value policies, the teaser rates (15%+ savings, etc) evaporate after the first couple of renewals. It is very common to see a 5-10% premium increase with no incidents/claims. Then they keep increasing, because they can. After 2-4 years you may be paying above market rates. I've been tracking this for 10+ years once I figured out Allstate was hosing me, then found Liberty Moo, Snoopy (MetLife), and State Farm eventually did the same thing.

But I dont think it happens in reality, just more shopping. Every time I shop rates I feel like I wasted time....

If your rates are remaining stable, shopping rates may be a waste of time. If they are increasing steadily, it's worth checking periodically. HOWEVER, note that most companies penalize frequent switchers. They all share data and know who's been naughty and who's been nice. If you think you can switch every year and keep the teaser rate, it might not work that way. Generally want to stay with a company for at least ~3 years if they aren't screwing you too badly.

This is the first time Im seeing cost per $1k of coverage as a metric ...

Remember, this is for agreed value policies only. Not standard policies.

And I now have a metric to work from to see if Im not still wasting my time thinking about it. Is that a monthly or annual metric?

Annual. Hagerty bills annually.

My experience with Geico (4 cars, FL) is about what @LWB250 indicates above (CL600 v S55, which is fairly comparable), but no stated value and no restrictions. So Ive been stuck wondering how much I actually care about the stated value. The same data (Hagerty, BaT, etc.) supports the value in either case.

It depends if you want full market value in case of a total loss, without a fight. Agreed value mostly guarantees you'll get the amount expected, although the buyback could be excessive, if you wanted to keep the carcass afterwards. Without agreed value (Geico, etc) you get to fight with the lizard for months as they repeatedly lowball you. It isn't fun. Generally only want to insure low-value daily drivers with standard insurance, and/or cars without full coverage. It gets tricky if you daily drive something really nice / valuable.

EDIT... quick math says that if Hagerty can get me in that $7-$10 per thousand window on an annual basis and can get me anywhere near the values I have in mind, then I need to call them while theyre spending money to buy customers.

Use their online quote tool. But remember this is for pleasure-use cars only, not daily drivers.

Also, there might be some zip-code-level pricing. I live in the country, in a low cost state. Most of the claims coming from my zip are probably going to be deer strikes.

Absolutely they rate at the zip code level. This is why Idaho shows as the cheapest state in the Forbes article, but within a ~100 mile radius of Boise (largest metro area in the state), rates are NOT that great.

More data to ponder:
My 190E costs $9.50/1000 to insure
While my 67 FJ40 is $4.15

Same guaranteed values, same coverages. The 190E has an airbag and ABS, while the FJ40 has no seatbelts, zero overhead protection and manual brakes. Both would be written off after anything more the slightest of incidents.

I've seen some weird rate differences between model years of the same chassis, i.e. facelift 036 costs more than non-facelift, for example. And for my DD 034's, the 1995 gets substantially higher premiums than the 1994, for no reason - I axed a couple different agents, they were at a loss to explain it, just that the underwriting department attached a higher premium to the 95. Makes no sense.

Perhaps they just use a random number generator for pricing?

I think there is a random number generator used somewhere in the equation, definitely.

 

[maw1124]

All agreed @gsxr... the lizard has been getting carried away a bit lately, which has caught my attention. That's generally not good for the lizard. It almost looks like necessary admin every 5-7 years so I'm a couple years late.

maw

 

[LWB250]

Agreed, they all do this to a point. I've been with Allstate for over 10 years, and when they start creeping up I call my agent and tell him I'm going to shop them and amazingly my rates go down or remain the same at the next renewal.

Do realize that some insurers will penalize you if you jump around, in some cases they won't insure you if you leave and want to come back. I think Allstate has an unofficial "cooling off" period of 2-3 years. At least that what I gleaned from my agent when he warned me about leaving. That may be a scare tactic, but I've heard about it from others who shopped, left, then wanted to come back.

Dan

 

[gsxr]

Agreed, they all do this to a point. Ive been with Allstate for over 10 years, and when they start creeping up I call my agent and tell him Im going to shop them and amazingly my rates go down or remain the same at the next renewal.

YES. This is why you should track the rates and watch for the gradual increases for no reason, and after a few years, call your agent and (politely) threaten to jump ship. Very often, they can 're-rate' the policy and magically find some discounts.

Do realize that some insurers will penalize you if you jump around, in some cases they wont insure you if you leave and want to come back. I think Allstate has an unofficial cooling off period of 2-3 years. At least that what I gleaned from my agent when he warned me about leaving. That may be a scare tactic, but Ive heard about it from others who shopped, left, then wanted to come back.

I think this is a real thing. Also, some insurance companies appear to not give you their best teaser rate, if you are bailing after a short time with your current insurer. For example if you've only been with Allstate for 1 year and are getting a quote from MetLife, Snoopy may not give you a great rate because they are afraid you'll leave them for greener pastures in another year. Etc. I wouldn't be surprised if your ex wouldn't take you back right away either. Be careful when switching...

 

[ace10]

My premium is ~$6.75 per thousand. Multiple vehicles.
I have max + driving points and zero claims.
Virginia is typically one of the lower costs states for auto insurance.

My 2024 renewal premium came in at $7.80 per thousand.
I made many changes to vehicle mix and declared values since last report, and I standardized all my coverages at $1K Collision, $0 Comp incl glass.
So it's likely that there's an increase baked in there, but it's probably pretty small.

I joined PCA in order to get a "5% discount" on my Hagerty insurance.



Turns out that it's 5% off the premiums for coverage other than collision and comprehensive. Which amounts to basically zero (0.3% to be exact)
So I cancelled the PCA membership. I have no interest in being flim flammed by an organization for which I have no need.

This was actually the third time Hagerty has pissed me off in the past two months. The most egregious being a week-long delay by them to not insure a vehicle. A vehicle which I had already dropped from another policy. They were entirely unapologetic about, too.

I'm DEFINITELY sensing a change in how Hagerty operates. But unless/until such time that it hits me in the wallet, I have no incentive to shop around.