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What If I Didn’t Have My Own Reinsurance Company?

Most dealership owners are on some kind of profit participation program — whether it’s performing for them is a topic for another day. World events are forcing us to look at all areas of our business to make sure we are doing everything possible to maximize our financial strength and responsibly provide for our dealerships and customers. 

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As for your reinsurance program, you may know a little or a lot. But when was the last time you asked yourself what life would be like without it? 

1. My risks would be uncontrolled. Some outside vendor would dictate my product lineup, change my terms and raise my rates whenever they want. I want to manage my own risk.

2. I could lose customers. I would not have the option to override a denied claim to make a good customer happy. I want to take care of my own customers.

3. My finance department — and their outside “handlers” — would decide what we sell. I want to control what my dealership sells.

4. Someone else could incentivize my F&I and salespeople. A bad provider may spiff my employees to sell products that may be best for them and not provide the same value to my customers as those I would select. I want my employees to be loyal to the values and goodwill of my dealership.

5. I would lose my competitive edge. I want to decide my own product features, eligibility and terms. I want to be in charge.

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6. I could miss out on new growth opportunities. My reinsurance company could provide a valuable source of cash to loan for dealership expansion without extending my bank credit line. I want to grow my own business. 

7. I would be tied to the factory’s facility improvement program. Without my reinsurance assets I may have to accept my factory’s one-sided financing terms for construction and renovation. I want to be free of factory manipulation.

8. I could lose my dealership. If there was another major economic crisis, without the ability to draw on reinsurance surplus or loan availability, I may have to close my doors. I want to keep my dealership open.

9. I would miss out on investment income. Someone else would be making all the reserve account interest generated by the products I paid for. I want to keep all the income until the last policy expires.

10. I could lose the ability to plan for my family’s future. Without a separate, properly structured reinsurance asset, I may lose a valuable resource in my succession plans. I want to control the fate of my dealership so my family will benefit from all my hard work. 

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So, there you have it — a glimpse into an alternate universe in which no dealer should be forced to dwell. If this is your reality, I urge you to seize control of your future without delay.


Why I Have a Reinsurance Company 

• I manage my own risk.
• I take care of my own customers.
• I decide what we sell.
• My employees are loyal to the dealership’s values.
• I’m in charge.
• I can grow my own business.
• I’m free of factory manipulation.
• My dealership is open because I planned for this. I own it. 
• I keep all the investment income from the premiums I generate.
• My family can share ownership in the company. We will own it.

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