Understanding Reinsurance Underwriting
Reinsurance for dealerships means being given control over the service contracts and other F&I products they offer. Where once these were controlled by a third-party provider, this time, it's the dealership who oversees everything about their F&I products, from reinsurance underwriting to premiums, claims and everything in between. But before the reinsurance program can be put in place, the dealership must agree to bear some of the risks involved in the F&I contracts.
Reinsurance underwriting
Reinsurance underwriting is a process that involves analyzing the applicant's or buyer's financial capacity, their vehicle usage behavior, and records of past claims, among others. The underwriter may check other factors as well if they need further information to make a more educated decision regarding the appropriate F&I products for the buyer that correspond with their financial standing, vehicle usage, preferred coverage and so on.
The process may take anywhere from a couple of hours to a few days, depending on the information gathered.
The reinsurance underwriter fully understands that their job can make or break the dealership's relationship with their customer, so they approach the underwriting process with great care knowing that the customer has put their trust on the dealership to give them the best F&I coverage.
How dealerships benefit from reinsurance
Dealerships with their own reinsurance company earn from the premiums paid by customers as well as having a share of the underwriting profits and claims paid, depending on what has been agreed upon by the reinsurance program provider and the dealership.
Apart from having a share of the profits, paid claims, and/or premiums, dealerships may also earn additional income by investing a portion of the premiums fund in equities and other investment platforms. They may also use the funds and/or earnings from their reinsurance company to expand the dealership, either by increasing their inventory or opening a second branch.
To reiterate, here are the reasons why dealerships should have their own reinsurance company and undertake reinsurance underwriting among other things:
- Increase their bottom line
- Diversify their portfolio by investing in equities, etc.
- Have more control over F&I product offerings
- Have the discretion to approve or reject claims
Establish your own reinsurance company; call Torque Group at (800) 859-0590
Do you wish to have more control of your F&I offerings to customers? Want to learn more about reinsurance underwriting? Feel free to call Torque Group at (800) 859-0590. You may also leave a message here. We'd be glad to discuss our reinsurance program with you.
