Steal An Idea: Sell Insurance

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When you read this month's issue, feel free to steal ideas. After all, that's a big reason why we dedicated the March issue to our Top 100 winners. As an example of the good stuff you'll find, I single out Ride West BMW (page 37) and its in-house insurance business, Ride West Insurance LLC.

The agency itself doesn't add much to the bottom line, but the side benefits are significant. "It's a great way to bring customers into the dealership," explains David Swezey, the store's general manager. "And when they come in, they're going to start looking around. We sell a lot of incidental parts and accessories and apparel through our insurance business. These people come back and buy motorcycles, and they trade in their non-BMWs. So I don't understand why every dealership doesn't do it."

Customers are grateful for the convenience and, oftentimes, the cost savings. For example, Swezey was able to lower a K1200R rider's annual premium to $420 from $1,000 because the rider's auto insurer rated the model as a sportbike instead of a sport-tourer.

Happy customers lead to referrals. Strong word of mouth allows the agency to spend only $5,000 per year on advertising. Ride West insures most brands of streetbikes, dirtbikes, ATVs and watercraft. Goldwings and trikes are especially common.

Before the agency was formed, Ride West BMW had been referring customers to a Suzuki dealership that doubled as an Allstate agent. Stupid, right? Ride West thought so, so starting in 2001 it spent about a year doing the paperwork and forming a relationship with insurer GMAC. Today it also works with Dairyland, Foremost and Safeco. Setup costs were marginal, Swezey says.

When it came to initial operational costs, the little business had several advantages over traditional auto agencies: no rent and little overhead, a captive audience, shared employees and specialization. Today, Ride West Insurance pays $500 per month for its own room in the dealership, and employs an insurance manager, though part of his salary is still written off because he sometimes fills in as a finance employee.

But is there really a demand for insurance agencies that specialize in powersports? According to Swezey, many auto insurers don't cover motorcycles. Even if they do, many auto agents won't offer motorcycle insurance because the premiums are half as much for the same amount of paperwork.

Ride West BMW sells about 400 new and used bikes per year, and about a quarter of these buyers also buy vehicle insurance (in addition to the riders walking in looking only for insurance, at least initially). Ride West Insurance has accumulated about 1,000 active policies with an average premium of about $500. So overall income is roughly $500,000.

If those numbers pique your interest, check your state laws to see what is required to sell insurance. Swezey went to school for a week and took a test to get his full-line license. Every two years he has to take 40 hours of continuing education to renew the license. In his home state of Washington, people can also obtain a vehicle-only license that requires a much shorter test and doesn't need to be renewed. The store's insurance manager has this type of license.

Ride West BMW's average customer is 45 years old and pays in cash. Eight out of 10, Swezey says, don't even have a speeding ticket on their records, so insuring customers has been easy. Sportbike retailers may have a little less luck, but these same dealers probably also move a good number of cruisers and other insurance-friendly bikes.

Selling vehicle insurance is just one way that your store could do more to attract customers in a slowing market. Study the following Top 100 profiles for others.

Arlo Redwine Senior Editor aredwine@dealernews.com