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In Automotive, Issue 2021 October
Days Of Thunder: How Hagerty
Went From Basement Startup To
It’s 1984, and Frank and Louise Hagerty are at wits’ end, unable to find solid insurance coverage for their prized wooden boats. So the married couple comes to a simple conclusion: If they need this kind of specialty insurance and can’t find it, then surely others are experiencing the same – and that means a market need.
Just like that, Hagerty Insurance is born – launched, in the tradition of classic startup stories, in the basement of the Hagerty family home, located on Old Mission Peninsula in Traverse City. Initially, the Hagertys focused only on insurance coverage for specialty boats. But by 1991, what had become Hagerty Insurance expanded its reach, adding insurance for classic cars.
Thirty years since the classic car pivot and 37 years since that basement moment, the company – now known simply as Hagerty – is a global juggernaut. Valued at more than $3 billion, with more than 1,500 employees worldwide and an estimated membership reach of 1.8 million people, the company has now acquired some of the biggest car events in the world, further accelerating its expansion. By almost any measure, Hagerty is likely the biggest success story the Traverse City business scene has ever produced.
It’s also a trailblazer: On August 18, Hagerty announced a blockbuster deal that will make it Traverse City’s biggest-ever public company. The deal, a Special Purpose Acquisition Company (SPAC) merger with Aldel Financial, will result in Aldel being renamed “Hagerty, Inc.” and being listed on the New York Stock Exchange (NYSE) under the ticker of HGTY.
It’s been a fascinating journey from the days of the basement office and the wooden boats. For this month’s cover story, the TCBN charts the twisty paths Hagerty has traveled so far – and hears from its leaders and industry observers who tell of the many roads still to come.
Going the Extra Mile: From insurance to
all things automotive
Even for those familiar with Hagerty over the years, it’s hard to pinpoint the precise moment the company went from being “just” an insurance company to what it is now. In local circles, it’s still not uncommon to hear Hagerty referred to as “Hagerty Insurance” – even though labeling Hagerty an insurance company in 2021 is like calling Amazon a retailer of books.
Jack Butcher – Hagerty’s
president of global markets – said that insuring classic cars remains the pièce de resistance of the business.
(And yes, Hagerty still offers specialty boat insurance, though that segment is a much smaller niche.)
“That original commitment, that original
mission [of insurance], is unchanged,” Butcher said. “Well in excess of 90 percent of the revenue of Hagerty today resides
in the insurance business. But we are continuing to build around that. You can expect that we will continue to invest and grow the insurance
business, because it’s a marvelous lead for us. But what we’re finding is: Insurance is a tool that auto enthusiasts use to
protect and restore what they love. And it’s that passion around the vehicles and the love of driving that leads us to build out
around that, to serve and feed that passion with all these other automotive businesses [that we have today].”
When asked when exactly Hagerty evolved beyond
its initial insurance focus, Chief Operations Officer Coco Champagne – a 22-year veteran of the company – insisted the shift
was gradual: “I don’t know that there was a lightning bolt moment.”
Instead, there came a point – Champagne
estimates around 2012 – when CEO McKeel Hagerty made some key strategic decisions that set the business up for growth. First, it
made more sense to brand the company broadly (as “Hagerty”) than to keep the industry-specific mantle of “Hagerty Insurance.”
More importantly, Champagne said McKeel realized that growing Hagerty with a focus aimed at all 360 degrees of the automotive world would
open a lot more doors than trying to expand laterally into less specialized classes of car insurance.
“It just felt like, in order to have
mastery over our niche, [our focus should be] more around cars, and more about collecting cars and people’s passion for their cars,
[than around just insurance],” Champagne said. “That felt like more of an unmet need that we could have mastery over, versus
doing an adjacency insurance offering for somebody’s regular-use vehicle. A lot of our insurance partners do very, very well in
that space, and we couldn’t really compete with that. It was a better strategy for us to stick to doing this collector/enthusiast
vehicle insurance, and partnering with [those major insurance players].”
Today, Hagerty is the go-to partner for major
insurance carriers like Allstate, Progressive, and State Farm when it comes to policies for classic or collector vehicles. The company
also has partnerships “with nine of the top 10 insurance brokers in the world,” according to Butcher.
If insurance is Hagerty’s gravitational
center, though, the other pieces of the business are satellites that…
Read More: Form DEFA14A Aldel Financial Inc.