Walmart is entering the auto insurance business in its latest move to offer affordable financial services to customers, the company announced Wednesday.
The world's largest retailer is partnering with AutoInsurance.com, a price-comparison and shopping website. The website was created after Walmart approached parent company Tranzutary Insurance Solutions with the idea to create an integrated auto insurance service that lets consumers shop for and purchase policies on one site, instead of directing them to the individual sites of specific insurance providers when they're ready to buy.
After piloting the service last year in Pennsylvania, it's now available in eight states, with plans to roll out nationwide in the coming months. The site pulls in your existing insurance policy and lets you compare rates across companies including Progressive, Travelers, Esurance and Safeco. It allows shoppers to buy policies directly from AutoInsurance.com.
"This is something Walmart had been studying and hearing a lot from their customers on," says Daniel Eckert, senior vice president of services at Walmart. "As we started to investigate what was out there in the marketplace, there was no simple, accessible, transparent way to do auto insurance."
Walmart does not operate the service but will serve as the sole marketing partner to promote the website. Walmart will have displays in store entrances and in store aisles, as well as promote the service on its own website. It will receive monthly payments for each store where the service is promoted, Eckert says.
In a survey of customers who participated in the pilot last year, Walmart found the average savings of those who bought policies through AutoInsurance.com was more than $1,100 a year.
The insurance service is the most recent of Walmart's continually expanding financial services offerings. Earlier this month, Walmart announced a new money-transfer service that allows customers to transfer and pick up money between Walmart stores across the country. The service comes with two pricing tiers and charges less than $10 for up to $900 in transfers. Competitors can charge up to $75 to transfer the same amount, Walmart says. Walmart already offers money transfers through MoneyGram.
On a call with media on Tuesday, Eckert said the retailer is also testing a life insurance service with Tranzutary Insurance Solutions in South Carolina and Georgia.
Still, financial services are just a small part of the company's overall revenue, says Ken Perkins, an equity analyst with Morningstar. Walmart's strategy in the financial services sector is likely more about contributing to consistent messaging.
"It's not really a driver of the business," Perkins says. "But if the company is trying to communicate (that) it's a low-cost provider and looking out for its customer first ... these are easy ways to hit that home."
A Walmart bank may not be out of the question — it's not unheard of in retail, Perkins says. Canada's largest retail company, Loblaw Companies Limited, operates its own bank — but positioning itself to continue to compete on price and product offerings with the likes of Amazon and dollar stores is probably a more immediate priority.
The financial services "are kind of add-ons," Perkins says.