Are reinsurance/captive programs safe? Yes, reinsurance programs have been around for decades. Most automotive dealers utilize reinsurance programs for their aftermarket warranty programs. Reinsurance programs can also be found in health care and other consumer product industries. Our business partners include organizations such as Morgan Stanley Wealth Management and Wilmington Trust. Our programs are underwritten by an "A" rated carrier with professional services provided by a number of highly experienced firms.
Are reinsurance programs difficult to setup and operate? No, programs can be up and running in as few as 4 weeks. Little to no work is required of dealers to launch our programs. We provide all reinsurance entity setup and management, including annual tax filings, legal services, and investment management services through Morgan Stanley Wealth Management. Typically, our clients do less work than they did under their traditional provider's program.
Are dealers insulated from risk? Yes, that is the very point of a reinsurance structure, to cede and transfer risk away from an event that generates risk, through a primary insurer or underwriter and onto a reinsurance vehicle. Ask your CPA for feedback about automotive dealers that utilize reinsurance programs, or contact a local automotive dealer to discuss their program.
Do reinsurance programs comply with all laws? Yes, our programs comply with all state and federal laws, including but not limited to all state service contract and insurance laws (including in highly regulated states such FL, NY, CA, etc.) and regulations, as well as all state and federal statutes, including IRS laws and regulations.
Are reinsurance programs underwritten? Yes, all of our programs are underwritten by an "A" rated carrier with $2B in assets, and our obligations to provide plan services to customers are backed by an entity having a market cap in excess of $3B.
Are dealers obligated to provide any services to customers? No, other than selling plans to customers, dealers provide no plan services. We are obligated to provide those services.
Are the capitalization and upfront costs high? No, there are no upfront capitalization costs to set up and operate any of our reinsurance programs. There are some minor upfront setup administrative fees, but there are no captive capitalization costs.
Why convert into a reinsurance warranty program? There are many reasons but chief among them are: No dealer pays another dealers' claim losses, which nearly always occurs under "traditional" programs; profits are much higher as a function of the reinsurance structure; reinsurance programs offer tax and estate planning benefits not available from "traditional" programs; and dealers incur less risk.
Do the warranty plans cost more than those provided by "traditional" providers? No, upfront plan costs are very competitive and nearly always cost less when reinsurance earnings are incorporated into cost calculations.
Do dealers have to do their own service work and take claim calls? No, our program is designed as a turnkey program. We provide all program services, including taking all claim calls, servicing damaged items, and performing all other program administration duties.
For more information or to receive a custom quote, contact us at [email protected], or call us at 561-450-7200.