Hagerty, Inc. (HGTY): Business Model Canvas [11-2024 Updated]

Hagerty, Inc. (HGTY) has carved a unique niche in the insurance industry, focusing on classic and enthusiast vehicles. Their business model is intricately designed around key partnerships, specialized services, and a dedicated community of automotive enthusiasts, making them a leader in this specialized market. Explore how their value propositions, customer segments, and innovative channels contribute to their success in the realm of classic car insurance and community engagement.

Hagerty, Inc. (HGTY) - Business Model: Key Partnerships

Insurance Carrier Partners

Hagerty collaborates with multiple insurance carriers, with a significant partnership with Markel Group, Inc. This partnership generates approximately 93% of Hagerty's total commission revenue. The alliance agreement with Markel was amended in December 2023, increasing the base commission rate to 37% from 32% on personal lines auto business. The contingent commission now ranges from -5% to +5% of annual written premium.

For the nine months ended September 30, 2024, Hagerty Re's earned premium from insurance carriers was $474.9 million, a 23.5% increase from the prior year.

Hagerty Drivers Club Affiliates

The Hagerty Drivers Club (HDC) is a key component of Hagerty's business model. Membership revenue for the nine months ended September 30, 2024, was $42.4 million, reflecting a 7.2% increase compared to the previous year. The bundled HDC memberships with new insurance policies contributed an increase of $5.4 million, or 15.8%.

The HDC membership also serves as a platform for community engagement and provides additional services to members, enhancing customer retention and loyalty.

Automotive Events Organizers

Hagerty partners with various automotive event organizers to enhance brand visibility and member engagement. Revenue from marketplace activities, which includes auctions and sales facilitated through partnerships, reached $38.3 million for the nine months ended September 30, 2024, marking a 54.2% increase year-over-year. This growth was driven by successful auction events, including the Monterey Jet Center auction.

Through these partnerships, Hagerty not only showcases vehicles but also builds relationships within the automotive enthusiast community, further solidifying its market position.

Reinsurance Partners

Hagerty Re has established key relationships with reinsurance partners to mitigate risk. The company has a quota share agreement to cede 50% of the risk assumed from a subsidiary of Markel related to high-net-worth accounts. As of September 30, 2024, Hagerty Re's total premiums assumed were $199.7 million for the quarter.

Effective January 1, 2024, Hagerty Re entered into new reinsurance agreements that allow for greater coverage against catastrophic events, with a retention limit of $28 million. This strategic approach ensures financial stability and supports growth initiatives by reducing exposure to potential losses.

Partnership Type	Key Metrics
Insurance Carrier Partners	93% of total commission revenue from Markel; Earned premium of $474.9 million (2024)
Hagerty Drivers Club Affiliates	Membership revenue of $42.4 million (2024); $5.4 million increase from bundled memberships
Automotive Events Organizers	Marketplace revenue of $38.3 million (2024); 54.2% increase year-over-year
Reinsurance Partners	Quota share agreement ceding 50% risk; Total premiums assumed of $199.7 million (2024)

Hagerty, Inc. (HGTY) - Business Model: Key Activities

Underwriting classic car insurance

Hagerty, Inc. specializes in underwriting classic car insurance, which is a critical component of its business model. For the nine months ended September 30, 2024, Hagerty reported earned premium of $474.9 million, an increase of $90.4 million or 23.5% compared to the same period in 2023. The total written premium for the same period reached $827.1 million, reflecting robust growth in the classic car insurance market.

Metric	2024 (9 months)	2023 (9 months)	% Change
Earned Premium	$474.9 million	$384.5 million	+23.5%
Total Written Premium	$827.1 million	$714.3 million	+15.8%

Managing Hagerty Drivers Club memberships

The Hagerty Drivers Club (HDC) is another key activity, providing members with various benefits including access to exclusive events and services. For the nine months ended September 30, 2024, membership fee revenue totaled $42.4 million, reflecting a 7.2% increase from $39.5 million in 2023. The membership count also saw significant growth, with 867,596 paid members reported in 2024 compared to 815,007 in 2023.

Metric	2024 (9 months)	2023 (9 months)	% Change
Membership Fee Revenue	$42.4 million	$39.5 million	+7.2%
Paid Member Count	867,596	815,007	+6.5%

Conducting vehicle auctions

Hagerty also engages in conducting vehicle auctions, which is a vital revenue-generating activity. In the three months ended September 30, 2024, marketplace revenue, which includes auction services, was $21.6 million, representing a significant increase of 66.2% compared to $13 million in the same period of 2023. This surge is attributed to successful events such as the Monterey Jet Center auction, which significantly boosted sales volume.

Metric	2024 (3 months)	2023 (3 months)	% Change
Marketplace Revenue	$21.6 million	$13.0 million	+66.2%

Providing vehicle valuation services

Vehicle valuation services are essential for supporting Hagerty's insurance underwriting and marketplace activities. The company utilizes its extensive data on classic vehicles to provide accurate valuations, which enhances its service offerings. This valuation service contributes to overall revenue, with valuation-related income included within the broader membership and marketplace revenues, totaling $99.6 million for the nine months ended September 30, 2024, an increase of 20.4% from $82.7 million in 2023.

Metric	2024 (9 months)	2023 (9 months)	% Change
Total Revenue (including valuation services)	$99.6 million	$82.7 million	+20.4%

Hagerty, Inc. (HGTY) - Business Model: Key Resources

Proprietary insurance technology platform

Hagerty has developed a proprietary insurance technology platform that enhances its operational efficiency and customer experience. This platform is integral to managing policies, claims, and customer interactions, allowing for streamlined processes and improved service delivery. The technology supports a robust data analytics framework that informs underwriting and pricing decisions.

Experienced underwriting and claims teams

The underwriting and claims teams at Hagerty are comprised of seasoned professionals with extensive experience in the specialty insurance market. As of September 30, 2024, Hagerty's earned premium stood at $474.9 million, reflecting an increase of $90.4 million, or 23.5%, compared to the previous year. This growth is attributed to the expertise of the underwriting team in assessing risk and managing claims effectively, which contributes to the company's profitability and customer retention rates.

Network of automotive enthusiasts

Hagerty leverages a vast network of automotive enthusiasts, which is crucial for its brand identity and customer engagement. The company has over 867,596 paid members in its Hagerty Drivers Club (HDC) as of September 30, 2024. This community provides invaluable insights into customer preferences and trends in the classic car market, fostering loyalty and enhancing customer satisfaction.

Strong brand recognition in classic car community

Hagerty is recognized as a leading brand within the classic car community, which is a significant asset. This brand equity drives customer trust and loyalty, resulting in a high policy retention rate of 88.8% as of September 30, 2024. The company's marketing and outreach efforts, including events and partnerships, further solidify its reputation and visibility in this niche market.

Key Resource	Description	Impact on Business
Proprietary Insurance Technology Platform	Streamlines policy management and enhances customer experience	Improves operational efficiency and customer satisfaction
Experienced Underwriting and Claims Teams	Professionals with extensive specialty insurance experience	Contributes to profitability through effective risk assessment
Network of Automotive Enthusiasts	Community of over 867,596 paid members	Fosters loyalty and provides insights into customer preferences
Strong Brand Recognition	Leading brand in the classic car community	Drives customer trust and high retention rates

Hagerty, Inc. (HGTY) - Business Model: Value Propositions

Specialized insurance for classic and enthusiast vehicles

Hagerty, Inc. offers specialized insurance products tailored for classic and enthusiast vehicles, which represent a niche market. As of September 30, 2024, Hagerty's earned premium reached $474.9 million, reflecting a 23.5% increase from the previous year. This growth is driven by the company’s ability to write higher-value policies and respond to the unique needs of classic car owners.

Hagerty maintains a strong retention rate of 88.8% for policies in force, showcasing customer loyalty in a competitive landscape. The increase in underlying policy premiums is attributed to inflation and rising vehicle repair costs, which have necessitated higher insurance premiums.

Exclusive member benefits through Hagerty Drivers Club

The Hagerty Drivers Club (HDC) provides exclusive benefits that enhance the overall value proposition for members. Membership revenue for the nine months ended September 30, 2024, was $42.4 million, a 7.2% increase year-over-year, indicating strong demand for club services. Benefits include:

• Access to automotive events and gatherings, fostering a sense of community among car enthusiasts.
• Discounts on services and products, enhancing the overall value for members.
• Insurance policy bundling, which has contributed to a 15.8% increase in membership revenue linked to new insurance policies.

The HDC membership base grew to approximately 867,596 paid members by September 30, 2024, compared to 815,007 in the previous year.

Access to expert vehicle valuation tools

Hagerty provides expert vehicle valuation tools that cater to the needs of collectors and enthusiasts, offering insights into the market value of classic cars. This service is particularly valuable in a fluctuating market environment, where accurate valuations are critical for buyers and sellers alike. The company reported a 20.4% increase in membership, marketplace, and other revenue to $99.6 million for the nine months ending September 30, 2024.

These valuation tools not only assist in determining insurance needs but also enhance customer engagement by providing valuable market data for collectors.

Community engagement through automotive events

Hagerty actively engages with its customer base through a variety of automotive events, such as car shows and auctions. For instance, the marketplace revenue reached $38.3 million for the nine months ended September 30, 2024, marking an increase of 54.2% compared to the previous year. Events foster community and loyalty, serving as platforms for enthusiasts to connect and share their passion for vehicles.

The increase in marketplace revenue indicates not only a growing interest in such events but also the effectiveness of Hagerty's marketing strategies in attracting participants and buyers.

Value Proposition	Key Metrics	Year-over-Year Change
Earned Premium	$474.9 million	+23.5%
Membership Revenue	$42.4 million	+7.2%
Membership Base	867,596 members	+6.4%
Marketplace Revenue	$38.3 million	+54.2%
Policies in Force Retention	88.8%	+0.1%

These value propositions not only differentiate Hagerty from its competitors but also create a robust ecosystem that caters to the specific needs of classic car enthusiasts, ensuring sustained engagement and loyalty in a specialized market.

Hagerty, Inc. (HGTY) - Business Model: Customer Relationships

Personalized support for policyholders

Hagerty, Inc. provides personalized support to its policyholders, focusing on customer satisfaction and retention. The company has a strong emphasis on maintaining a high level of service, which is reflected in its operational metrics. As of September 30, 2024, the company reported a Net Promoter Score (NPS) of 82, indicating a high level of customer loyalty and satisfaction.

Membership engagement through events and newsletters

Membership engagement is an essential aspect of Hagerty's customer relationships. The company reported a membership fee revenue of $42.4 million for the nine months ended September 30, 2024, which is a 7.2% increase compared to the previous year. This increase is largely attributed to new insurance policies bundled with Hagerty Driver's Club (HDC) memberships. Additionally, Hagerty organizes events for its members, fostering a community centered around automotive enthusiasm and providing opportunities for interaction and engagement.

High Net Promoter Score indicating customer loyalty

The Net Promoter Score (NPS) of 82 is a clear indicator of customer loyalty at Hagerty. This score has remained consistent from the previous year, showcasing the company's ability to maintain strong relationships with its policyholders. The NPS reflects the likelihood of customers recommending Hagerty's services to others, which is crucial for organic growth and customer acquisition.

Active communication via digital platforms

Hagerty actively utilizes digital platforms to communicate with its customers. The company has increased its communication and engagement efforts through various online channels. For instance, Hagerty's total revenue from customer contracts reached $433.4 million for the nine months ended September 30, 2024, demonstrating the effectiveness of its outreach efforts. The rise in marketplace revenue, which was $57.2 million for the same period, indicates strong digital engagement and customer interaction.

Metric	Q3 2024	Q3 2023	Change (%)
Net Promoter Score	82	82	0.0%
Membership Fee Revenue	$42.4 million	$39.5 million	7.2%
Total Revenue from Customer Contracts	$433.4 million	$370.7 million	16.9%
Marketplace Revenue	$57.2 million	$43.2 million	32.4%

Hagerty, Inc. (HGTY) - Business Model: Channels

Direct sales through online platform

Hagerty, Inc. leverages its online platform for direct sales, allowing customers to obtain quotes and purchase insurance policies efficiently. As of September 30, 2024, the company reported commission and fee revenue from direct sources amounting to $104.2 million, reflecting an increase of 15.1% compared to the previous year.

Insurance brokers and agents

Insurance brokers and agents serve as a significant channel for Hagerty, contributing substantially to the company's revenue. For the nine months ended September 30, 2024, commission and fee revenue from agent sources reached $301.3 million, an increase of 16.6% year-over-year. The company maintains strong relationships with agents to enhance customer acquisition and retention.

Hagerty Drivers Club website and events

The Hagerty Drivers Club (HDC) plays a crucial role in the company's channel strategy. Membership revenue for HDC was reported at $42.4 million for the nine months ended September 30, 2024, representing a 7.2% increase year-over-year. The club not only offers insurance products but also hosts events that engage automotive enthusiasts, thereby reinforcing customer loyalty and community building.

Social media and automotive publications

Hagerty effectively utilizes social media and automotive publications to reach its target audience. The company's marketing efforts in these channels significantly enhance brand visibility. As of September 30, 2024, Hagerty's total revenue from marketing and advertising initiatives was approximately $57.2 million, an increase of 66.2% compared to the previous year. This growth reflects successful outreach efforts that resonate with automotive enthusiasts and collectors.

Channel	Revenue (in millions)	Year-over-Year Growth (%)
Direct Sales (Online Platform)	104.2	15.1
Insurance Brokers and Agents	301.3	16.6
Hagerty Drivers Club Membership	42.4	7.2
Marketing & Advertising Initiatives	57.2	66.2

Hagerty, Inc. (HGTY) - Business Model: Customer Segments

Classic car owners and enthusiasts

Hagerty targets classic car owners who are passionate about preserving and enjoying their vehicles. As of 2024, the company has approximately 1.5 million policies in force, a significant portion of which are dedicated to classic and collectible vehicles. The average premium for classic car insurance has increased due to rising vehicle values and inflation, leading to greater revenue opportunities for Hagerty.

High-net-worth individuals

High-net-worth individuals represent a key customer segment for Hagerty, as they often seek specialized insurance products tailored to their luxury and collectible vehicles. In the nine months ended September 30, 2024, earned premiums for high-net-worth accounts reached $474.9 million, marking a 23.5% increase from the previous year. This growth is attributed to an increase in the number of policies written and higher average premiums due to increased vehicle values.

Collectors of specialty vehicles

Collectors of specialty vehicles, including vintage cars, motorcycles, and other unique vehicles, are another important segment for Hagerty. The company reported a total written premium of $827.1 million for the nine months ended September 30, 2024, up from $714.3 million in the same period in 2023. This reflects strong demand for insurance products that cater to the specific needs of collectors, including coverage for vehicle restoration and value appreciation.

Automotive event participants

Hagerty also serves automotive event participants, such as those who attend car shows, auctions, and rallies. The company's marketplace revenue, which includes events, grew to $57.2 million for the nine months ended September 30, 2024, an increase of 54.2% compared to the previous year. This growth indicates a robust interest in events that celebrate automotive culture, further enhancing Hagerty's position in the market.

Customer Segment	Policies in Force	Earned Premiums (in millions)	Growth Rate (%)
Classic Car Owners	1,494,510	$474.9	23.5
High-Net-Worth Individuals	—	$474.9	23.5
Collectors of Specialty Vehicles	—	$827.1	15.9
Automotive Event Participants	—	$57.2	54.2

Hagerty, Inc. (HGTY) - Business Model: Cost Structure

Employee salaries and benefits

Salaries and benefits for Hagerty, Inc. totaled $161.0 million for the nine months ended September 30, 2024, representing an increase of $0.9 million, or 0.5%, compared to the same period in 2023. This increase was driven primarily by annual merit increases and higher employee benefit costs.

For the three months ended September 30, 2024, salaries and benefits were $47.2 million, a decrease of $4.1 million, or 8.0%, compared to the same quarter in 2023.

Marketing and promotional expenses

Marketing and promotional expenses were included within the sales expenses, which amounted to $146.8 million for the nine months ended September 30, 2024, an increase of $22.0 million, or 17.6%, compared to the previous year. This increase was attributed to a rise in costs associated with higher Marketplace inventory sales and broker expenses.

For the three months ended September 30, 2024, sales expenses reached $59.1 million, an increase of $11.4 million, or 23.9%, compared to the same period in 2023.

Claims and loss adjustment costs

Claims and loss adjustment expenses for Hagerty were $226.5 million for the nine months ended September 30, 2024, reflecting an increase of $67.1 million, or 42.1%, compared to 2023. This increase was largely due to estimated losses associated with Hurricane Helene.

For the three months ended September 30, 2024, losses and loss adjustment expenses totaled $99.4 million, a significant increase of $41.9 million, or 73.0%, compared to the same quarter in 2023.

Technology development and maintenance

Expenses related to technology development and maintenance were included in general and administrative expenses, which totaled $62.1 million for the nine months ended September 30, 2024, a decrease of $2.8 million, or 4.3%, compared to the previous year.

For the three months ended September 30, 2024, general and administrative expenses were $20.8 million, a decrease of $1.3 million, or 6.0%, compared to the same period in 2023.

Expense Category	Q3 2024 (in millions)	Q3 2023 (in millions)	Change (in millions)	9M 2024 (in millions)	9M 2023 (in millions)	Change (in millions)
Salaries and Benefits	47.2	51.3	(4.1)	161.0	160.1	0.9
Marketing Expenses	59.1	47.7	11.4	146.8	124.8	22.0
Claims and Loss Adjustment	99.4	57.5	41.9	226.5	159.4	67.1
Technology Development	20.8	22.1	(1.3)	62.1	64.9	(2.8)

Hagerty, Inc. (HGTY) - Business Model: Revenue Streams

Insurance premiums from classic car policies

Hagerty, Inc. generates significant revenue through insurance premiums from classic car policies. For the nine months ended September 30, 2024, earned premiums amounted to $474.9 million, reflecting an increase of 23.5% compared to $384.5 million in the same period of 2023 . The growth in earned premiums is attributed to higher policy issuance and retention rates, alongside a 16.2% increase in underlying policy premiums .

Period	Earned Premiums (in millions)	Percentage Change
2024 (9 months)	$474.9	23.5%
2023 (9 months)	$384.5	-

Membership fees from Hagerty Drivers Club

Membership fees are another key revenue stream for Hagerty. For the nine months ended September 30, 2024, membership fee revenue reached $42.4 million, a 7.2% increase from $39.5 million in 2023 . This growth was primarily driven by new insurance policies bundled with Hagerty Drivers Club memberships, which contributed an additional $5.4 million .

Period	Membership Fees (in millions)	Percentage Change
2024 (9 months)	$42.4	7.2%
2023 (9 months)	$39.5	-

Auction fees from vehicle sales

Auction fees are also an integral part of Hagerty's revenue model. For the nine months ended September 30, 2024, marketplace revenue, which includes auction fees, totaled $38.3 million, reflecting a substantial 54.2% increase compared to $24.8 million in 2023 . This increase can be attributed to strong auction results and a rise in marketplace inventory sales .

Period	Auction Fees (in millions)	Percentage Change
2024 (9 months)	$38.3	54.2%
2023 (9 months)	$24.8	-

Fee-based services from vehicle valuations

Hagerty also earns revenue from fee-based services, including vehicle valuations. For the nine months ended September 30, 2024, other revenue sources, which include valuation services, amounted to $18.8 million, showing a 2.9% increase from $18.3 million in 2023 . This revenue stream includes sponsorship, admission, advertising, and valuation services .

Period	Fee-based Services Revenue (in millions)	Percentage Change
2024 (9 months)	$18.8	2.9%
2023 (9 months)	$18.3	-

Updated on 16 Nov 2024

Resources:

1. Hagerty, Inc. (HGTY) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Hagerty, Inc. (HGTY)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Hagerty, Inc. (HGTY)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.