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Reinsurance

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WHAT IS IT?

Owners & General Managers of Car Dealerships can truly benefit from reinsurance programs by reinsuring their F&I or Finance Products like Extended Service Contracts, GAP Coverage, Prepaid Maintenance, etc. Nearly all products sold in the Finance Department can be reinsured. Reinsurance allows dealers to profit from unused service contracts and create a secondary profit center. Dealerships gain operational advantages such as improved customer retention with a 40 mile tie back (when a customer needs to make a claim and they are within 40 miles of your dealership you can require them to come to you first for service), streamlined sales, and detailed risk and pricing analysis by our actuaries. Reinsurance can protect your dealership in economic downturns, offering access to large sums of cash, a new revenue stream without altering existing processes, and offers preferential tax treatment.

Example

You are signed up with a pretend warranty company called ABC Warranty. Let’s say that ABC Warranty Company charges you $800 for a 5 year service contract. You sell 10 service contracts per month.

$800 x 10 = $8000 a month 

$8,000 x 12 = $96,000 over 1 year 

$96,000 x 5 = $480,000 over 

Over 5 years you will have paid the ABC warranty $480,000!

Reinsurance allows you to keep that $480,000 inside a new company that you own. And after all the claims are paid to customers there will be money left over. That left over money now becomes yours to keep as profit. Why let ABC warranty company keep YOUR profit?
Keep in mind that this is only 1 product, most of our clients also reinsurance Tire & Wheel Road Hazard, Ding & Dent, Etch, Theft, GPS, GAP & more….. Think of all the profits you are missing out on!
We offer a done for you solution that allows dealer principals and or general managers to receive all the benefits of reinsurance WITHOUT any of the risks.

Some additional benefits include

  • Little to No Taxes 
  • Investment opportunities – choose your your reinsurance company invests the premium 
  • Lonas –  the ability to borrow money from your reinsurance company
  • Total Control – you have final say on all the claims
  • Private label contracts & brochures – brand it as your own

WHO IS IT FOR?

Both new franchise & used car dealers often switch to reinsurance for both financial reasons and to eliminate headaches caused by extended service contract providers that create issues with claims, lack of support, give you zero control, and provide no training, which reinsurance programs overcome.

We have over 2,000 dealerships nationwide participating in reinsurance programs. They have received positive feedback and improved dealership stature, reinsurance is becoming a strategic move to enhance business operations and financial stability.

THINGS TO CONSIDER BEFORE GOING WITH REINSURANCE

Dealer principals should consider the following things before switching to reinsurance.

1. What are my long term goals?

If you plan on owning your dealerships for 3 years or more and want to maximize your profits, then reinsurance might be a good option.

2. How many vehicles did you sell last year?

If you sold over 250 vehicles, reinsurance may be a good fit.

3. Is my finance department performing?

Are you hitting at least 40% penetration on service contracts in the finance department? If you are, then reinsurance could be a great option. If you aren’t, then you are leaving money on the table and your finance department needs a bit of training.

 Check out our F&I Training HERE.

If you can check off these three requirements then reinsurance is going to help you make a lot more money. Reinsurance Companies cost from $5000-$10,000 to get started and take about 60 days to set up.

Request more information

I already have a reinsurance company.
How do I know if I'm getting a good deal?

Can you answer these questions?

  • How much money is in your account? Where is your money held?
  • How much have you received in distributions? Are they to you or the dealership?
  • Are your distributions taxed as ordinary income?
  • What is the performance of your block of business, loss ratio, production, investment & interest income?
  • What is the timing of funds deposited to your account? Quarterly, monthly?
  • Do you direct the investments? Do you choose the money manager?
  • Can you borrow funds from your company? Loans from earned premium? Loans from unearned premium?
  • How are your claims paid? Who administers claims?
  • How are your rates developed?
  • Do you have a detailed report on your block of business? All products included in the report? How often do you get your report?
  • Does someone personally review the report with you?
  • If I remit $X for a service contract, exactly what goes into my trust account?
  • Are there any additional loss adjustments expenses?
  • Who is your provider?

If you can’t answer these questions, you most likely should be looking for a new Reinsurance provider. 

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Dealer Reinsurance is also available for :

  • Reinsurance for Auto Dealers
  • Reinsurance for RV Dealers
  • Reinsurance for Powersport & Motorcycle Dealers
  • Reinsurance for Trailer Dealers
  • Reinsurance for Boat Dealers

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