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Case Study: 3-Store Group Revamps It’s Reinsurance Program

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CASE STUDY

3 Store Group Spikes Underwriting Profit with JM&A Group

 

The Client

A three store automotive group on the West Coast that had a 10-year relationship with its F&I reinsurance provider was not receiving a satisfactory return on customers’ product.

The dealerships and their reinsurance program were part of what the incumbent provider described as a “special deal,” but administration of their portfolio changed to JM&A Group when offered the potential to lower loss ratios and create a closer, more interactive partnership with a new provider.

JM&A Group - Claims and Reinsurance Callout

 


 

The Challenge: The set it and forget it approach

In many cases, an F&I provider simply sets up the program and then steps back, not interacting heavily with the client after the fact. That’s more or less what previously happened for the LA area dealership group.

The provider offered only limited in-store assistance with training and associate development, leaving dealership representatives on their own. The previous provider did not monitor the book of business closely to detect whether there were opportunities to generate extra value by modifying product offerings or pricing structures.

Dealing with this hands-off approach and seeing loss ratios climb higher than predicted on used vehicle reinsurance and GAP programs, the organization connected with JM&A Group. A side-by-side examination of the existing program with new potential offerings, revealed several opportunities to reduce fees and begin a more mutually beneficial relationship.JM&A Group - Claims and Reinsurance Callout

 


 

The Solution: Simple and transparent fees with performance consulting

From the initial comparison of fee structures and plan options, it became clear that JM&A Group’s hands-on, collaborative and data-driven approach to reinsurance along with a simple and transparent fee structure could save the organization money.

The comparison involved a sample service contract, showing where each dollar of the deal would go. By tracing the path of funds spent on taxes and fees, the organization’s leadership team realized that they were paying extra taxes because the current provider was domiciled in a different state with higher premium taxes. Furthermore, the current setup involved paying a ceding fee on each deal — JM&A Group’s offerings do not.

Working with JM&A Group on reinsurance means improving products and offerings over time, based on hard data analysis. Using Tableau-based analytics and visualizations as part of a sophisticated reporting program, JM&A Group personnel can pinpoint areas where certain products are not generating optimal value, suggesting adjustments, as appropriate over time, that can lead to ever-improving margins and results.

Taking such a close view of the reinsurance program and an active approach to associate development, the collaboration has become a true partnership. When one party benefits, so does the other, and there is room for the relationship to stay strong and expand over the years.

It’s easy to see how far the organization has come in under two years. The previous program, in which a disconnected reinsurance partner had created a suboptimal lineup of fees and taxes, and had a hands-off approach to reserve adequacy analysis, was a source of wasted opportunity for profit. By embracing the JM&A Group model, the three dealerships have unlocked that hidden value.

JM&A Group - Claims and Reinsurance Callout

 


 

By the Numbers

While it’s good to hear about a positive experience with dealership transformation, the true proof is in the numbers. Every component of the new system has yielded better profit margins for the dealership, with the results only increasing month after month. These figures tell an impressive story.

Average F&I PVR

2019

$1193

2020

$1350

Q1 2021

$1446

 

Based on annual vehicle sales of 6,821, the admin and ceding fee savings were $106,271.


Vehicle Service Contracts (VSC)

2019

21%

2020

32%

Q1 2021

38%


Products Per Deal (PPD)

2019

0.92

2020

1.44

Q1 2021

2.00

 

The pattern is clear: JM&A Group’s transparent fee structure and reserve discipline along with the in-store development and support, put the automotive group on a path towards increased profitability.

In an era when dealerships need to secure their financial position by maximizing returns from all available revenue streams, there is great value in implementing such a clear, effective and profitable approach.

See how a similar change in your organization can help maximize your  reinsurance program by reaching out to JM&A Group today. → 

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