Overview of Masters in Business Interview with McKeel Hagerty
In this Bloomberg Masters in Business conversation, Barry Ritholtz speaks with McKeel Hagerty, chairman and CEO of Hagerty Specialty Insurance (NYSE: HGTY), about how a small wooden-boat insurance agency became a publicly traded leader in collector-car insurance and automotive culture. The discussion covers Hagerty’s family origins, the company’s “car club” strategy, its data advantage in valuing collectible vehicles, trends in collector cars and manuals, the rise of younger enthusiasts, and why Hagerty sees its business as part insurer, part media brand, and part marketplace.
How Hagerty Became a Collector-Car Powerhouse
From wooden boats to automotive culture
- Hagerty was started by McKeel’s parents in Traverse City, Michigan, originally insuring collectible wooden boats.
- The family identified an overlooked niche and built around a passion-driven community rather than a generic insurance model.
- The business later expanded into collector cars, trucks, boats, and other enthusiast vehicles.
The “car club” insight
- A major turning point came when McKeel realized Hagerty should stop acting like a traditional insurer and instead behave like a membership-based automotive club.
- This meant:
- speaking the language of car enthusiasts,
- building brand loyalty through community,
- and creating media, events, and services that deepened engagement.
Partnering instead of competing
- Another key strategic insight was that Hagerty did not need to replace the big insurers.
- Instead, it could partner with major carriers and specialize in the collector segment.
- That approach helped Hagerty scale while remaining focused on its niche expertise.
McKeel Hagerty’s Personal Car Story
A lifelong enthusiast
- McKeel grew up working on cars with his father and sisters.
- At age 13, he bought and restored a 1967 Porsche 911 S for $500.
- He still owns it and says it remains the first car he drives each season and the last he stores away.
Why that car mattered
- The Porsche restoration helped spark a lifelong enthusiasm for cars and the collector market.
- It also reinforced the idea that cars can be fun, emotional, and personal assets, not just financial ones.
The Business Model: Data, Membership, and Media
Insurance based on enthusiast behavior
- Hagerty’s pricing benefits from the fact that collector cars are usually:
- driven less,
- maintained carefully,
- and stored securely.
- McKeel’s late mother summarized the business well: “People take good care of their toys.”
- That care reduces risk, which supports better pricing.
Data as a competitive moat
- Hagerty built a deep database of collector-vehicle information from:
- quotes,
- policies,
- vehicle identifiers,
- sales,
- and market activity.
- The company even developed a serial-number/VIN decoder for pre-1981 vehicles to identify exact variants.
- This data powers:
- underwriting,
- valuation tools,
- market analysis,
- and auction insights.
Media and community flywheel
- Hagerty has become more than an insurer:
- Drivers Club magazine
- YouTube and streaming content
- events and concours sponsorships
- auction platforms
- valuation tools
- McKeel described this as a flywheel: media and community attract enthusiasts, which generates more data, which improves pricing and services, which strengthens the brand.
Collector-Car Market Trends
Younger buyers are entering the hobby
- Contrary to old assumptions, younger generations are still interested in cars.
- They tend to favor different vehicles than previous generations, including:
- BMWs
- Audi performance cars
- Japanese sports cars
- trucks and SUVs, especially vintage 4x4s
- Hagerty sees strong interest from women as well, reflecting a broader, more inclusive enthusiast base.
The rise of 1990s and 2000s cars
- The average model year in Hagerty’s “bull market” watchlist has shifted older and newer alike, with many desirable vehicles now coming from the late 1990s and early 2000s.
- This reflects a mix of nostalgia, real affordability, and the appeal of analog driving feel.
Manuals, analog feel, and driving engagement
- Hagerty sees a strong return of interest in:
- manual transmissions
- analog driving experiences
- cars that feel mechanical and engaging rather than screen-heavy
- Several automakers initially moved away from manuals, then brought them back in higher-priced trims when auction and market data showed strong demand.
Auctions, Valuation, and Market Intelligence
Auction expansion
- Hagerty has expanded into online auctions and live auctions, including:
- Hagerty Marketplace
- Broad Arrow (acquired after the company went public)
- McKeel emphasized that auctions must be managed carefully so the platform does not become flooded with supply and lose bidder interest.
Why data matters in valuation
- Public auction headlines often overemphasize record-setting sales.
- Hagerty’s data helps reveal the broader market, not just the top 1%.
- The company’s valuation tools have become influential because they aggregate real transaction and policy data rather than relying only on anecdotes.
Key valuation lesson
- A car’s external appearance can hide very different values depending on:
- engine,
- trim,
- serial number,
- and originality.
- McKeel used the example of the 1969 Camaro, which had many variants with vastly different values despite looking similar.
Advice for Collectors and Enthusiasts
Buy the best example you can afford
- McKeel’s advice:
- Buy the car you want to drive
- then buy the best example you can afford
- His point: older cars often drive very differently than people expect, and buying a rough example can become expensive and frustrating.
Drive the car
- He strongly discourages “garage queens.”
- His view:
- cars are meant to be enjoyed,
- sitting too long is bad for them,
- and maintenance issues can worsen when vehicles are not used.
- He recommends new owners test-drive vintage cars in daylight, learn their quirks, and accept their limitations.
Generational Wealth Transfer and the Future of the Hobby
A massive handoff is coming
- Hagerty estimates 12 million enthusiast vehicles will transfer to a new generation over the next 15 years.
- That represents roughly $570 billion in value.
- McKeel believes this will reshape the market as estates and inheritances release cars back into circulation.
Teaching the next generation
- Hagerty is actively trying to help younger enthusiasts enter the hobby, including manual-driving classes.
- The company sees its role as easing the transition from older owners to newer collectors.
Books, Mentors, and McKeel’s Broader Interests
Mentors
- Early mentors included:
- his parents,
- professors and teachers,
- and later business leaders like Bill Swanson.
- McKeel now prefers “micro mentors” — people who are excellent in one specific area.
Reading and learning
- He reads 30 to 50 books a year.
- Recent interests include:
- rock and music biographies,
- the founding of America,
- The Wealth of Nations,
- and classic sci-fi like Dune, Foundation, and Hitchhiker’s Guide to the Galaxy.
Key Takeaways
- Hagerty’s success came from reframing insurance as an enthusiast brand.
- The company’s competitive edge is its data, community, and specialized expertise.
- Collector-car demand is broadening to younger buyers, women, and owners of newer enthusiast vehicles.
- Manuals, analog feel, and usable cars remain highly desirable.
- Hagerty is positioned not just as an insurer, but as a media, marketplace, and cultural platform for car lovers.
Notable Lines
- “People take good care of their toys.”
- “Buy the car you want to drive and then buy the best example you can afford.”
- “If you stop acting like an insurance business and start acting like a club for car owners, it transforms the conversation.”
- “The average reality is much broader based and much more interesting” than the headline record-car market.