Hagerty, Inc. (HGTY): 5 FORCES Analysis [Nov-2025 Updated]

You're looking at a specialty niche where the incumbent has built a serious moat, and the numbers for Hagerty, Inc. in late 2025 definitely show it. With trailing twelve-month revenue hitting $1.36 billion and the full-year outlook pointing to 14-15% revenue growth alongside a massive 58-65% net income jump, the core business is humming, supported by an industry-crushing Net Promoter Score of 82 and 88.6% policy retention year-to-date. But what does this dominance mean when we break down the real competitive pressures-from suppliers, customers, rivals, substitutes, and startups? Below, I map out the five forces to see exactly where the leverage lies for Hagerty, Inc. right now.

Hagerty, Inc. (HGTY) - Porter's Five Forces: Bargaining power of suppliers

You're looking at the supplier dynamics for Hagerty, Inc. (HGTY), and the key relationship here is with Markel, which functions as both a major capacity provider and a significant equity holder. This dual role definitely shapes the bargaining power. Markel acquired a minority stake in Hagerty Group back in June 2019 for a total consideration of $212.5 million. This ownership link means that while Markel provides essential underwriting capacity, its interests are partially aligned with Hagerty's long-term success, though the relationship is evolving.

The power dynamic is shifting significantly due to a planned structural change. As of late 2025, the existing arrangement saw Hagerty Re assuming 80% of the underwriting risk, with Markel retaining the remaining 20% and handling regulatory filings and administrative support. Hagerty Re paid a 47% ceding commission to Markel under this model. However, Hagerty, Inc. has entered into a non-binding letter of intent for a new fronting arrangement, set to become effective on January 1, 2026. This move is designed to give Hagerty Re control over 100% of the premium and assume 100% of the risk, drastically reducing Markel's direct underwriting exposure and shifting their role to a pure fronting carrier.

Here's a quick look at the math showing how this transition alters the supplier relationship with Markel:

This change is expected to simplify Hagerty's financial reporting by eliminating commission revenues and ceding-commission expenses from consolidated statements starting in the first quarter of 2026. For context, Hagerty's year-to-date 2025 Written Premium was $934.4 million, meaning the 100% premium control is substantial.

Beyond Markel, the power of other suppliers is generally lower because the specialized service networks are fragmented. You see this in the appraisal and repair ecosystems for enthusiast vehicles. Because these networks are not consolidated, they have less collective leverage over Hagerty's claims costs, though individual vendors can still negotiate on specific claims. Still, Hagerty's unique asset-its proprietary data-acts as a significant counterweight against reinsurers. With a community of nearly 890,000 members in the Hagerty Drivers Club as of late 2025, the depth and specificity of Hagerty's valuation and risk data is unique to the enthusiast segment. This proprietary information limits the ability of external reinsurers to accurately price the risk without relying heavily on Hagerty's internal models.

The supplier power landscape for Hagerty, Inc. can be summarized by these key factors:

• Markel's equity stake is a historical anchor, valued at $212.5 million in 2019.
• The pending January 1, 2026 deal moves risk control from 80% to 100% for Hagerty Re.
• The fronting fee to Markel starts at an initial 2% of premium volume.
• The repair/appraisal networks are fragmented, offering limited supplier consolidation power.
• Proprietary data, supported by a Drivers Club of almost 890,000 members, mitigates reinsurer leverage.

Finance: draft the pro-forma P&L impact for the 2% fronting fee based on projected 2026 written premium by Friday.

Hagerty, Inc. (HGTY) - Porter's Five Forces: Bargaining power of customers

You're looking at Hagerty, Inc. (HGTY) and trying to gauge how much sway the customer base actually has. Honestly, the numbers suggest their bargaining power is significantly constrained by deep loyalty and the stickiness of the ecosystem they've built. For instance, customer retention is defintely high at 89%, which, when you look at the specific data for the end of the third quarter of 2025, was recorded at 88.6% for policies in force. This high retention, especially in a specialized insurance market, suggests that the perceived switching costs-the hassle, the risk of a gap in coverage for a prized asset, or losing access to specialized services-are high enough to keep customers renewing year after year.

The clearest signal of this low bargaining power comes from customer sentiment. The Net Promoter Score (NPS) of 82 is a massive indicator of brand advocacy, especially when you stack it against the industry average of 37. This gap shows that Hagerty's customers aren't just satisfied; they are promoters, which naturally lowers their incentive to shop around based on price alone. We can map this out against other key customer-facing metrics to see the strength:

Also, you have to remember who these customers are. They are a niche group of enthusiasts who aren't just buying commodity coverage; they are seeking agreed-value policies and specialized claims handling that general carriers often struggle to provide correctly. This specialization means the product itself is less substitutable for their specific need, further limiting their ability to exert price pressure. They value expertise over mere cost savings, which is a powerful dynamic for Hagerty, Inc.

Plus, the Hagerty Drivers Club ecosystem adds significant non-insurance value, which acts as a powerful moat against price sensitivity. As of the third quarter of 2025, the club boasted approximately 921,000 paid members. This community provides benefits like exclusive events, content, and marketplace access, effectively bundling services that raise the total cost of switching away from the entire Hagerty platform. To be fair, this ecosystem drives organic growth, too; 77% of Hagerty Drivers Club members reported referring someone to Hagerty in the past year. That level of organic advocacy means new customers are often pre-sold on the brand experience before they even get a quote, which is the opposite of a customer with high bargaining power.

• Customers are highly engaged enthusiasts, not general auto insurance buyers.
• The ecosystem adds value beyond the policy premium.
• High referral rates suggest strong word-of-mouth support for the brand.
• The company is scaling its total insured vehicles to 2.7 million as of September 30, 2025.

Hagerty, Inc. (HGTY) - Porter's Five Forces: Competitive rivalry

Hagerty is the undisputed market leader in specialty vehicle insurance, holding an estimated 5% market share of the total enthusiast vehicle market.

Competition is mainly from smaller niche players, not large standard auto insurers. Hagerty's top competitors include companies like SafeAuto Group Agency, Juenemann Insurance, and Heacock Insurance. Other companies in the competitive landscape include Clearcover, Root, and Metromile. Furthermore, Hagerty recently announced a new partnership with Liberty Mutual, the seventh largest auto insurer in the United States.

The company anticipates 13-14% Written Premium growth in 2025, suggesting market expansion over fierce rivalry. This growth is supported by a growing policy count, reaching 2.7 million total insured vehicles year-to-date in 2025.

Rivalry is mitigated by Hagerty's superior underwriting, which maintains an average loss ratio significantly better than broader market peers. For instance, major insurers like Travelers and AIG reported combined ratios around 92% and 86.8%, respectively, in recent quarters. Hagerty's disciplined underwriting is evident in its loss ratio performance.

Here's a quick look at the underwriting metrics that help mitigate competitive pressure:

The strength in underwriting translates into a competitive moat. You can see the operational advantages clearly when you look at the key drivers of policyholder stickiness:

• Policy retention steady at 88.6% year-to-date 2025.
• Added a record 279,000 new members in 2024.
• Anticipated 2025 Net Income growth of 58-65% (raised outlook).
• Anticipated 2025 Adjusted EBITDA growth of 37-41% (raised outlook).

The company's ability to maintain a low loss ratio, even while expanding its policy count, suggests its specialized risk selection process is a key barrier to entry for rivals.

Hagerty, Inc. (HGTY) - Porter's Five Forces: Threat of substitutes

You're looking at the competitive landscape for Hagerty, Inc. (HGTY) as of late 2025, and the threat of substitutes centers almost entirely on standard auto insurance. Honestly, for the core enthusiast customer, that substitute is functionally miles behind. Standard policies simply do not offer the specialized coverage that protects a high-value asset; they typically default to Actual Cash Value (ACV) instead of the agreed-value coverage that Hagerty provides, which is a deal-breaker when you own a vehicle worth, say, $250,000 or more.

The risk of switching to a general policy for a high-value collector vehicle is significant. If you have a classic, the difference between an ACV payout and an agreed-value payout after a total loss can mean the difference between replacing your car and not replacing it. This functional inferiority keeps the threat low, even if the price point of a general policy seems attractive initially. Hagerty's underwriting discipline, reflected in its 42.1% loss ratio year-to-date through Q3 2025, contrasts sharply with major property and casualty peers reporting combined ratios around 92% (Travelers) or 86.8% (AIG) in recent quarters.

Here's a quick comparison showing why the substitute falls short on the core insurance offering:

What really makes the threat of substitution minimal is the unique value bundle Hagerty, Inc. wraps around its insurance. You aren't just buying a policy; you're buying into the culture. This ecosystem is defintely hard for a pure-play insurer to replicate. For instance, the Marketplace revenue alone grew 135% year-over-year in the first nine months of 2025, hitting $89.9 million.

The non-insurance offerings create sticky engagement that standard insurers can't match. You see this in the membership growth and the overall brand strength. As of Q3 2025, Hagerty Drivers Club (HDC) paid members stood at approximately 921,000, with 279,000 new members added in the first nine months of 2025 alone.

The components of this value bundle include:

• Marketplace revenue reaching $89.9 million year-to-date 2025.
• Membership revenue at $47.0 million year-to-date 2025.
• Total Revenue year-to-date 2025 at $1,068.3 million.
• Total insured vehicles growing to 2.7 million as of Q3 2025.
• Media and Events supporting the enthusiast community.

To be fair, the threat is low because the substitute product is functionally inferior for the core enthusiast customer. The company's total insured vehicles reached 2.7 million year-to-date through Q3 2025, showing that customers are choosing the specialized offering despite the availability of general coverage. The company is aiming to more than double that policy count to three million by 2030, signaling confidence in this differentiation.

Hagerty, Inc. (HGTY) - Porter's Five Forces: Threat of new entrants

You're looking at a business where the barriers to entry aren't just high; they're built on decades of specialized knowledge. For a new player to even attempt to compete in enthusiast vehicle insurance, they face an immediate, steep climb based on data and skill.

The core defense for Hagerty, Inc. lies in its underwriting capabilities, which are directly tied to proprietary data. They have spent 40 years building databases and tools that track collector car values and claim histories, allowing for what you see in their economics. For instance, through the first nine months of 2025, Hagerty reported a loss ratio of just 42.1%. That figure is significantly better than the combined ratios of around 92% reported by major property and casualty peers like Travelers, highlighting the efficiency of their niche underwriting. A startup would need years and millions in losses just to build a comparable dataset to price risk accurately.

New entrants would also struggle mightily to replicate the extensive distribution partnerships Hagerty, Inc. has already secured. These alliances provide immediate scale that a startup simply cannot buy off the shelf. You see this in action with their long-standing relationship with State Farm, which introduced the State Farm Classic+ coverage through State Farm agents, expected to be available in all states by 2023. More recently, Hagerty announced a new partnership in November 2025 with Liberty Mutual Insurance, the seventh largest auto insurer in the United States, to offer their coverage to Liberty Mutual and Safeco customers starting in 2026. These partnerships are growth engines, and they are not easily duplicated.

To put the sheer scale of the incumbent into perspective, consider the financial footprint a new entrant would need to match, or even approach, to be a credible threat. It's not just about having a good idea; it's about having the operational weight to back it up. Here's a quick look at Hagerty, Inc.'s recent financial scale:

Brand recognition and the trust Hagerty, Inc. commands within the enthusiast community represent a massive, costly barrier for any startup to overcome. This isn't just about selling policies; it's about being part of the culture. They have cultivated this through years of engagement, which is now reflected in their membership numbers. As of the second quarter of 2025, the Hagerty Drivers Club (HDC) had paid members numbering approximately 908,000. That's nearly a million dedicated enthusiasts already integrated into their ecosystem, a community that provides invaluable data and loyalty that a new brand would have to spend years and significant marketing dollars to build.

Finally, the capital requirements are substantial. Launching a specialty insurer requires significant statutory capital to satisfy Risk-Based Capital (RBC) requirements, which mandate holding capital in proportion to the inherent riskiness of assets and operations. Competing against Hagerty, Inc.'s scale, which posted a trailing twelve-month revenue of $1.36 billion as of September 30, 2025, means a new entrant needs deep pockets just to meet regulatory thresholds before even writing a policy. The complexity of these capital rules, especially concerning niche asset classes, adds another layer of financial burden that only well-capitalized entities can absorb.

• Proprietary data collection spans over 40 years.
• Hagerty Drivers Club membership reached approximately 908,000 paid members in Q2 2025.
• The company's loss ratio for the first nine months of 2025 was 42.1%.
• New entrants face competition against a TTM revenue base of $1.36 billion.
• Partnerships include the seventh largest US auto insurer, Liberty Mutual.