How embedded insurance is driving growth and loyalty for tire manufacturers and dealers

The global automotive tire manufacturer market is valued at $47.26 billion in 2024 and expected to reach $82.77 billion by 2032. Asia Pacific dominates the market share due to increasing domestic passenger car sales. Additionally, there is significant market growth in Africa and Latin America. However, the European tire industry including the UK is facing challenges such as inflationary pressures and reduced inventories by distributors, resulting in declining sales. To establish new revenue streams and enhance customer loyalty in the face of these market changes, some manufacturers and dealers are turning to embedded insurance solutions - where insurance covering unexpected damage to the tires is offered at the point of sale.

Tire damage leads to unwanted costs

Proper tire maintenance is critical for vehicle safety and performance and ensuring compliance with regulations. Tires, however, are vulnerable to punctures and damage due to potholes and other surface defects on the road, as well as premature wear.

For manufacturers and dealerships, tire damage can result in:

• Warranty claims and goodwill costs.
• Customer dissatisfaction and potential loss of repeat business.
• Reputational damage, if problems are perceived as quality issues.

For consumers, the need to replace or repair a tire can lead to substantial out-of-pocket expenses.

Embedded insurance offers value to all stakeholders

Embedding insurance into tire sales to cover damage can benefit manufacturers, dealerships, and consumers alike. For manufactures and dealerships, establishing an embedded insurance program can deliver:

1. Increased revenue: Offered as a value-added service, tire insurance can generate a new income stream, beyond the initial sale of the tires.
2. Competitive differentiation: Offering embedded insurance can set a business apart in a crowded market, as the insurance is included in the purchase as a benefit.
3. Customer retention: The embedded protection can form part of the after-purchase service, encouraging consumers to remain in the manufacturer's customer life cycle, and therefore, promoting brand loyalty.
4. Data insights: Embedded insurance programs can provide valuable data on customer behavior and product performance.
5. Reduced warranty costs: By shifting some risk to insurers, businesses can potentially lower their own warranty expenses.

Offering tire insurance at the point of sale benefits the consumer, too, by providing:

1. Financial protection: Coverage for unexpected tire damage or wear reduces out-of-pocket expenses.
2. Peace of mind: Knowing they are protected against potholes and other surface defects on the road can enhance the overall tire ownership experience for consumers.
3. Convenience: Offering streamlined claims processes and access to authorized repair networks can help consumers deal with tire problems quickly and effectively.

How to deliver an effective embedded insurance program

Tire manufactures and dealerships can use a number of strategies to promote their embedded insurance program. For example, embedded insurance can be offered:

1. At the point of sale: Insurance offers are integrated into the tire purchase process.
2. Post sale: Coverage options can be promoted during customer service visits or through customer outreach programs.
3. Via online platforms and mobile apps: These channels enable the electronic purchase and online management of tire insurance policies, including claims submission.

Navigating the road ahead

Tire technology is advancing rapidly, with a shift towards tire pressure monitoring systems, smart tires, and low-rolling resistance tires (to save energy) for heavier electric and hybrid vehicles. There is also pressure on tire manufacturers to take responsibility for end-of-life tire collection, stemming from concerns about the environmental impact of improperly disposed of tires, and to adopt more eco-friendly manufacturing processes, such as the use of recycled materials in tire production.

As the market shifts, embedded insurance represents an opportunity for tire manufacturers and dealerships to drive growth, enhance customer loyalty, and create new value streams. By partnering with experienced advisors, such as Marsh, manufacturers and dealers can develop tailored programs that address the evolving needs of both the industry and consumers.

Learn more about our tire insurance capabilities

With decades of experience and long-standing relationships with leading insurance carriers, Marsh's Affinity practice offers solutions to optimize your existing tire insurance program or create a new one tailored to your unique needs. Some advantages of our program include:

• Legal and distribution models: We help you navigate the legal intricacies of your market and utilize effective distribution models for offering tire insurance.
• Digital solutions: We develop an end-to-end, digital solutionsfor you and your customers and identify options to embed insurance in your customer's sales journey.
• Customer servicing: We partner with you to give your customers the right level of support and provide options to streamline and outsource the administrative processes.
• Analytics and insights: We leverage data-driven insights to continuously improve your program performance.

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