Wal-Mart Stores, Inc. (WMT) Entering Auto Insurance Market

Wal-Mart Stores, Inc. (WMT) Entering Auto Insurance Market

Earlier today, April 30th, Wal-Mart Stores, Inc. (NYSE:WMT) announced a new marketing partnership with AutoInsurance.com, that will establish a website designed to help consumers compare coverage and rates for automobile insurance.

The deal does not include Wal-Mart taking a stake in AutoInsurance.com, but Wal-Mart Stores, Inc. (NYSE:WMT) receives a promotional payment per store each month. In addition, the pages of the AutoInsurance.com website now display a Wal-Mart logo, and there will also be displays and signs in stores and online directing shoppers to AutoInsurance.com.

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Statements from Wal-Mart and Autoinsurance.com

Both Wal-Mart Stores, Inc. (NYSE:WMT) and AutoInsurance.com commented on the deal. “It’s another service to help our guests save money from a monthly expense that our surveyed shoppers have said they feel they overpay for, more so than other expenses,” said Daniel Eckert, senior vice president of services for Wal-Mart U.S.

“Nearly 90 percent of people comparison shop online for products and services like airline tickets, but our survey data shows that only 1 in 5 comparison shop for auto insurance,” AutoInsurance founder Joshua Kazam explained.

Earlier pilot programs

Wal-Mart tested the partnership by running two concurrent pilot programs to test various models for the site. One of the pilot programs was in Pennsylvania and the other in Illinois. After the pilot program, Wal-Mart Stores, Inc. (NYSE:WMT)  said Pennsylvania (the pilot that was closest to the selected business model) drivers who bought policies saved an average of $1,150 on 12-months auto insurance coverage.

Other details

As part of the deal, AutoInsurance.com is paid a fee for each new policy bought through the site. This business model means low-price auto insurance carriers that offer quotes on the new site are likely to benefit from new customers choosing them with the comparative tool. However, analysts note that since the average Wal-Mart shopper is relatively price-sensitive, the comparative tool could hurt insurance carriers that weren’t offering competitive prices.

Eight states are included in the initial rollout: Arkansas, Louisiana, Mississippi, Missouri, Oklahoma, Pennsylvania, Tennessee and Texas. Other states are expected to be added in the coming months.

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