MetLife Predicts Lower Car Insurance Costs Under Hyundai Subscription

Hyundai Capital America is partnering with MetLife Auto & Home to offer customers in the lender’s new vehicle subscription program insurance and maintenance bundled into one monthly bill, and the insurer predicts the program is cheaper than if consumers bought their auto insurance separately.

The Hyundai Plus program starts at $279 for a three-year lease that bundles insurance and maintenance into the bill.

“We worked closely with Hyundai to look at their existing lease holder profile and we were able to develop a customized pricing program that allows them to lock in a fixed rate for three years,” Kevin Chean, vice president and head of MetLife Group Auto & Home, told Auto Finance News. “It’s a competitive price because when you look at insurance costs and the cost of vehicle ownership, purchasing this coverage separately would actually cost a lot more.”

There are a couple reasons insurance may be cheaper in Hyundai Plus as opposed to a customized plan. One, Hyundai is footing the marketing bill.

“There is a lot of marketing and advertising in the insurance industry — it’s one of the most marketed industries across the board,” Chean said. “This program is offered through Hyundai so we’re not offering marketing to promote this program, Hyundai is leveraging their existing marketing program to sell cars and get consumers in the door. That marketing saving gets passed to a consumer.”

Two, because it’s a fixed rate, and customers are approved through an app at the dealership, MetLife Auto & Home doesn’t have to go through the typical underwriting process for each consumer, saving the company in time, labor, and paperwork.

That fixed rate was based on existing data Hyundai had on the makeup of its lease customers and the profile of the customer is not risky to begin with.

“In order for someone to qualify for the Hyundai Plus program they have to qualify for a lease, and in order to get a lease they have to have a good credit score,” Chean said. “A credit score is highly correlated with good driving behavior. Still, we ask some basic questions such as, ‘Has the consumer had a DUI in the past three years.’”  

The fixed rate also provides the consumer with more stability, Mark Abbasi, Hyundai Capital’s vice president of product development, told AFN.

“I have car insurance and my rates just went up last year, so under this plan, the consumer doesn’t have to worry about any increasing premiums,” he said. “It gives you stability to know what the payment streams will be.”

A similar program called Care By Volvo — which offers a lease agreement with insurance and maintenance included starting at $650 per month — was found to cost less than a typical three-year lease, according to Edmunds’ 2018 Automotive Industry Trends Midyear Update. The savings amounted to $1,589 over a three year period, according to the report. Liberty Mutual is the insurer for Volvo’s program.