“Reinsurance is a good technical name, but really falls short in explaining one of the best things a dealer can do for themselves, their company and their customers.” said Certified Master Dealer (CMD) Jody Midgette on a Reinsurance panel at the CIADA conference in Myrtle Beach, SC in August. He went on to say, “Tracy and I talked at lunch (that’s Tracy Myers, CMD) about how the term “reinsurance” really confuses many dealers. Maybe it should be called the No-Brainer program or something.”
Tracy Myers said, “I wouldn’t be here if it hadn’t been for my Reinsurance program.” He explained how tough economic times in 2008 would have been fatal for his dealership had he not started his Dealer-owned Reinsurance Company two and a half years earlier. He went on to say, “Definitely one of the best decisions I have ever made in the car business.”
Steve Wetmore, CMD said, “It’s the best decision that we’ve made since being a dealer in the past 15 years. It gives our customers peace of mind in making a major purchase and us a capital resource to fall back on should we need to”
So, what is it you ask?
Reinsurance is a separate company, owned by you the dealer, to provide Warranties, Vehicle Service Contracts, GAP, Certified Pre-owned programs, and Collateral Protection to your customers without having to buy from a third party company.
Reinsurance puts you in the driver’s seat to be a better, more profitable dealer.
It gives you ultimate control to do what is best for your customer and your dealership.
Reinsurance increases your profitability with a return on investment better than any other single endeavor available to you in the car business.
For the Buy Here Pay Here (BHPH) dealer, reinsurance helps you provide World Class Service without going broke doing it. In fact, you improve your profit with reinsurance. Statistics show that one third of failed relationships with customers is over mechanical breakdown. They buy a car, it breaks down, and they cannot afford to fix it. When the car breaks the payments are going to STOP unless you fix their car and get them back on the road! As the saying goes, “Customers don’t pay for cars that don’t run”.
Consider that payments are the lifeblood of the BHPH business.
Why not have a system in place that no matter where your customer drives that vehicle, should they breakdown, you have a plan and the money set aside to get them back on the road? The beautiful thing is, with reinsurance, your customer continually and painlessly reserves for the unexpected breakdown. Yes, THEY are reserving for it.
For the BHPH dealer, your reinsurance company will provide premium finance for your customer’s warranty; therefore, not requiring you to pay the full price of the warranty up front, which would deplete your lending pool.
A prorated portion of the cost of the warranty is collected from the customer’s payment and forwarded to your reinsurance trust account. This will provide a constant stream of reserve to ensure when problems arise there is a well-funded system in place. Problems are taken care of, your customers stay on the road and they continue making payments.
BHPH Dealer Darla Booher, a Certified Master Dealer, said she got tired of spending forty plus hours administering total loss insurance claims. Debt Cancellation Coverage provided a great alternative to the customer needing to go out and buy insurance which in many cases is cost prohibitive. DCC is more affordable for their customers, helps with administration expenses and allows them to stem their repos. “Life is much more pleasant not having to deal with all those Insurance Companies.”
FOUR Certified Master Dealers, one message!
As Jody says, “If you’re not doing it, you should be!”
Reinsurance, It’s what Smart Dealers Do!
