Reinsurance: it's all about loss control

Automotive Assurance Group are leading industry experts in the formation, development, management and overall strategy of Reinsurance Companies.  By properly structuring, and regularly monitoring and managing our dealer’s Reinsurance Companies, AAG develops and maintains strategies to help maximize profitability and minimize losses.

Maximize the opportunities available with Reinsurance with parameters to control and mitigate losses

There are several strategies we use to help dealers minimize the losses of their Reinsurance Company.  Below we’ve identified a few of these.

Early claims

Improper reconditioning of the used car can result in claims being made shortly after they are sold. This can be a costly burden for a Reinsurance Company and heavily skew the profitability and loss ratios.  Sometimes dealerships overlook completing repairs on used vehicles for a variety of reasons, one being to keep the vehicle cost down for maximum profitability when the vehicle is sold and another being that repair issues sometimes go missed during reconditioning inspections.

This is why we recommend our dealers put a policy in place stating that claims on used vehicles that happen within a specified period of time i.e. 45 or 60 days from sale date, be reviewed and potentially passed back to the dealership to cover depending on the situation.  This would allow the claim to be paid without effecting the profitability or loss ratios of the dealer’s Reinsurance Company.  

Multiple Claims, Claim Limits & Controls

Another way of limiting loss control is to look at multiple claims.  Meaning someone complained about one issue and four issues were repaired.   Multiple Claims are often the prerogative of a service writer or service manager and not the always the request of the customer.  There are ways to limit and put controls on these scenarios like requiring approval for multiple claims or claims over a certain dollar amount.  Also involving the service manager in Reinsurance reviews and discussions can be a helpful strategy.

For any of the above scenarios, a policy must be established by the dealer and followed, not just arbitrarily decided.

An AAG Unique Benefit

One unique way AAG helps Reinsurance Companies remain profitable with low loss ratios is our way of dividing coverage classifications.  We will actually separate the risk into different ‘buckets’ and can allow you to take your higher risk vehicles and place those into a bucket so that losses related to those vehicles would not effect your reinsurance company and put the lower risk vehicles into your reinsurance company.  This is something that we would setup in your software so it is automatically placed into the right “bucket”.

Right Pocket, Left Pocket

Sometimes a decision is made by the dealer or upper management to pay a claim which lies in a ‘grey area’ of coverage.  Once that decision is made, it is a matter of which pocket you reach into to write the check.  The one that is taxed as ordinary income tax rates Federal & State or the one that is Tax exempt?  Clearly once that decision is made to pay a claim that is ‘grey’, paying it out of the dealership makes the most financial sense, leveraging your tax advantage structure of your reinsurance company.

Our most successful relationships observe one or all of the above strategies.  When is the last time your service provider reviewed and assessed your program and offered these types of strategies for your Reinsurance Company?  If it's once a quarter or less then you are not getting the service you deserve.  Please contact AAG so we can tell you how you can benefit from the dedicated team of experts at Automotive Assurance Group.  The more money you can keep in the reinsurance company, the more profitable you will be.  Let the experts at AAG help you maximize your Reinsurance Company’s performance.   Contact us today!