Impressive research! Well done! While insurance is indeed government-mandated for car ownership, Hagerty doesn’t necessarily enjoy a guaranteed or exclusive foothold. Do you think that other large insurers, like GEICO or State Farm, could decide to allocate resources toward this niche classic car segment, eroding Hagerty’s customer base?
Thanks for reading! There's certainly always a possibility but I think the evidence would indicate otherwise. 9 of the top 10 insurers have decided to exclusively partner with Hagerty instead of compete against them because they realized that Hagerty is just that much better at underwriting and servicing the claims. Importantly, this niche segment typically only makes up ~10% of the total household premium so these large insurers would much rather "outsource" that emotionally important piece of the business and keep the remaining 90% rather than risk dropping the ball and losing the whole business.
Great read Tuan, very comprehensive write up of a quality business!
Thanks Zach! :)
Impressive research! Well done! While insurance is indeed government-mandated for car ownership, Hagerty doesn’t necessarily enjoy a guaranteed or exclusive foothold. Do you think that other large insurers, like GEICO or State Farm, could decide to allocate resources toward this niche classic car segment, eroding Hagerty’s customer base?
Thanks for reading! There's certainly always a possibility but I think the evidence would indicate otherwise. 9 of the top 10 insurers have decided to exclusively partner with Hagerty instead of compete against them because they realized that Hagerty is just that much better at underwriting and servicing the claims. Importantly, this niche segment typically only makes up ~10% of the total household premium so these large insurers would much rather "outsource" that emotionally important piece of the business and keep the remaining 90% rather than risk dropping the ball and losing the whole business.
Hagerty is a great business.
Have you read Greenlight Capitals writeups? They are excellent.
Thanks for reading Matt. Do you mind sharing the link to the writeups?
My bad Tom, it's Greenhaven Capital not Greenlight (although they have some great writeups too).
Initial writeup is from their Q2 2022 letter: https://static1.squarespace.com/static/5498841ce4b0311b8ddc012b/t/63828b47a89b9902cff228f3/1669499719982/Greenhaven+Road+-+2022+Q3+final.pdf
They have periodic updates in their quarterly letters, and here is a more recent presentation from them: https://docsend.com/view/czdsxjfp6dssv8zt