Market conditions, finance and insurance pricing and customers' auto loan terms are factors dealerships might take into account when establishing a reinsurance strategy for 2022, an executive at a leading F&I provider and administrator said.
David DeCredico, senior vice president of wealth building and strategic accounts at APCO Holdings, offered suggestions for dealerships evaluating their F&I product reinsurance position during an interview with Automotive News last month.
"Take a very critical look at what you have currently," he advised. Reinsurance "should become part of your 2022 planning process."
Reinsurance programs take a dealership beyond simply being a retailer of vehicle protection products to having an added stake in the underwriting results for those contracts. DeCredico called such participation extremely common and said offering reinsurance was the "price of entry" for an F&I products provider trying to win a dealership's business.
Some dealerships might not have even considered a strategy change at all. DeCredico described a scenario in which a dealership adopts a reinsurance program and they "just kind of stay there." A reinsurance structure chosen several years ago might not fit one's current goals and objectives, DeCredico said.
Dealers should examine how their reinsurance setup stacks up to the plans on the market today, according to DeCredico. They should also examine their plan's revenue stream, he said: Does money become available at the times it's needed?