Most dealers draw a straight line from their F&I department to their reinsurance company profit and then wonder why it comes up short. Information that may seem unrelated to the reports you get from your provider can go a long way toward growing your reinsurance company. You have to look at every department in your dealership to make sure they are all working toward your goals. 

1. Sales

If you think your reinsurance opportunity starts when the service contract is sold, you need to look further, right back to when your customer first walks on your lot. When they look for used vehicles, they should find certified pre-owned units, and they should be clearly advertised to ensure you get the most from the money you spent to certify them. 

Third-party CPO programs can supplement your manufacturer’s program or replace it entirely. Those warranties can usually go into your reinsurance company. And certified vehicles equipped with a powertrain warranty are going be a smoother sale for a “wrap” to expand upon the factory coverage. 

For vehicles with a little more miles on them, a short-term limited powertrain warranty is a must-have. Properly priced, these can also be ceded to your reinsurance company. 

2. Facilities

Use your reinsurance company assets to create an inviting, professional and safe buying space. Spring for the hand sanitizer stations, plexiglass shields for service cashiers, social distancing stickers and additional labor hours to disinfect vehicles after test drives. 

Consider the impact of upgrades on your reinsurance earnings, then turn it around and look for ways your reinsurance company can help. 

3. Service 

Take advantage of program features like tiebacks and denial overrides to mitigate claims and take care of special customers. Rental coverage is included in most VSC policies, so make sure there are cars available. And make sure your service manager or GM is managing claims responsibly while maintaining exceptional CSI. 

4. Business Office 

The forgotten profit barrier. If your provider cedes monthly and you only remit after the close of the month, that VSC you sold the first weekend may not hit your reserve account for two months. 

Weekly remittance is the new industry standard. You should insist your provider cedes your premium without undue delay. After all, it’s your money, isn’t it? 

If your provider offers net remit, meaning you deduct approved claims and cancellations from the amount you send in for new business, do it. You will eliminate receivables and your office manager will thank you. Minimizing withdrawals from your reinsurance reserves will make it easier to catch claims trends and maintain a healthy perspective on your company. 

5. F&I

Finally! I could write a whole ’nuther article on product selection and best practices for F&I. For now, you should look at every F&I product you sell. 

In a spreadsheet or notepad, determine your average cost per product and how much of that ends up in your reinsurance company. Level with your F&I director or GM. Tell them you want two things to happen:
• All products must provide a good value to your customers, come from reputable companies and be priced competitively. 
• All products must provide the most profit to your reinsurance company with the least amount of discernible risk. Do not accept less.

You may have to change the order of products in your menu depending on your market, your typical buyer, ease of sale and overall sales strategy. The objective is a win-win-win for the customer, the dealership and your reinsurance company. 

BONUS: You! 

Today’s automobile dealer is perhaps the greatest continuously operating entrepreneur in America. How are you sleeping lately? 

I know how it is. You live and breathe your dealership. You enjoy walking into a bustling showroom, seeing a shop full of customers, and realizing your employees’ lives are better because you took a chance and made them responsible for your success. But they need your leadership. 

Your reinsurance company is no different. It is honored to serve you but sometimes needs a bit of encouragement and direction. Take good care of it. Treat it like a valuable part of your business, keep it fed properly from all the sources in your dealership, give it every opportunity to grow and impress you, and get the best advice possible to ensure it will be there for you when you need it. 

Make sure every part of your business helps you meet your financial goals. You deserve it.