Auto dealers today are using their reinsurance companies to accomplish goals that earlier, less flexible reinsurance models couldn’t help with. Traditionally, dealers only expected reinsurance premiums to cover the costs of warranty claims and cancellations. However, reinsurance administrators now offer reinsurance programs with greater flexibility — not only in terms of what types of financial… Read More
One of the most overlooked — and least understood — aspects of auto dealer reinsurance is the investment policy statement (IPS). It may seem like dry, legalistic fine print, but it’s actually the one document that will most affect how well your reinsurance company meets your needs. And just as it’s important to understand any… Read More
Creating your own reinsurance company involves several players, including your agent, reinsurance program administrator, and financial advisor. The stakes are high and the reinsurance process is somewhat complicated, so it pays to be aware of the common mistakes other dealers make — and avoid repeating them. Not understanding your investment policy statement (IPS) One of… Read More
In the past, if your vehicle manufacturer ran what is known as a retro account (which some people confuse with actual reinsurance), they paid you a certain amount for each warranty you sold. You received that money as ordinary income, either at the dealership or personal level, and it was taxed accordingly. Essentially, all you… Read More
Automobile dealer reinsurance is a specialized financial product that helps auto dealers fulfill their warranty obligations for vehicle service and powertrain contracts, GAP insurance, tire and wheel protection, and several other finance & insurance (F&I) products. In addition, it allows the dealers to gain greater control over the financial aspects of their business. In essence,… Read More