Reinsurance is an agreement between two insurers, where one transfers portions of its risks portfolios to reduce the chances of paying a large insurance claim. In this model, the reinsurer is the second business and is responsible for clearing the claims that arise from the first company.
In the dealership world, reinsurance is a separate company owned by you, the dealer, and is in charge of providing vehicle service contracts, certified pre-owned programs, GAP, warranties, and collateral programs for your clients without involving the services of third-party insurance.
Auto dealership reinsurance comes with a lot of benefits. Some of the benefits include:
- Efficient Cash Flow and Maximize Profits
Third-party warranties and insurance companies profit from monthly insurance premiums paid by their clients and are left unused after insurance claims are paid out. By incorporating reinsurance into your dealership, you tap into that profit instead.
Therefore, you get to boost your profit margin by adding another source of income into your dealership, and by extension, earn more money even if your dealership's sales are declining or lagging.
- Improved Customer Service
As the owner of the dealer-owned reinsurance company, you control warranties and clients' insurance claims. Besides, you're in charge of customer satisfaction since you control their overall experience-- unlike when they're using a third-party insurer and have to wait for the claims to be processed.
If you make it possible to keep your client base satisfied and happy, you will notice increased clientele loyalty and increased profits.
- Total Control Over the Insurance Company
Gaining total control over your insurance company allows you to gain premiums that arise from different vehicle service agreements and aftermarket insurances.
Having these premium reserves gives you an edge as a dealer and provides you with good profit and great wealth generation resources.
Interested in Owning a Dealer Reinsurance Company?
These are just but a few of the benefits of owning a dealer reinsurance company. If you need to start one and don't know where to start, please contact us. We are happy to serve you!