Extended Service Plans: Getting Down to Business

As a retailer, you know that extended service or warranty plans are a natural product offering for your business. They’re both comforting to consumers and profitable from a business perspective. But how much do you know about how your warranty programs work? Who are the players involved and who’s responsible for the various elements in fulfilling the plan? What’s your return on investment? Understanding the life cycle of your warranty plans not only impacts your customers and profit margins, but also your brand.

Start Here

Filling in the family tree of a warranty program can be a confusing process. Who’s responsible for what, when and for how much can be seen as a burden that many retailers choose to disregard. But, unless you know the answers, you’re leaving your store and customers at risk. 

An easy starting point is uncovering who the insurance company is that’s covering your plans. The insurance company, or underwriter, is the one who insures claims liabilities from the warranty contracts. It’s important to look for insurance companies that are well-managed and well-capitalized because they are truly the foundation of your plans. This is the company that you’re building your reputation on when claims need fulfilling, even if your business fails. This is the group that needs to be trusted, vested and insured so you and your customers can have peace of mind. 

Next Steps

A service contract provider is the company that is legally and financially obligated to repair or replace the customer’s covered product. This company is your business partner. They create and administer customized extended service plans on your behalf to meet your operations’ needs, customer expectations or product requirements, and in return, collect a fee for their services. Full disclosure of costs and margins is important because once plans are agreed upon with the service contract provider your store is able to mark them up accordingly or offer them to consumers at recommended retail prices. 

If you’re not sure what you’re paying for, you have every right to ask your service contract provider a few questions to level the playing field: 

1. How is your cost divided between insurance and administration? 

2. What is each entity’s profit margin?

3. What is the program loss ratio, both overall and by product? If your loss ratio is very low it should give you the opportunity to lower prices to sell more ESPs, be more competitive or collect more profits and put them in your pocket.

4. Am I going to receive all the information I need on a regular basis to ensure I am getting the best price and product compared to the market?

5. Do you participate in a profit sharing program with your insurer? 

6. Is my program compliant to protect my company’s brand reputation? Have all statutory compliance and filings been addressed? 

7. If there is an insurer and/or re-insurer involved, what is the financial strength rating of each and who is your contact at the insurer? 

The service contract provider and warranty administrator (or third party administrator) are usually the same organization. As a customer facing group, it’s critically important that your store has access to a contact person and your customers find it easy to work with this organization. They are also responsible for training your sales representatives on the ins and outs of selling warranty plans and how to facilitate a claim. 

Since you’re paying the administrator a fee, you want to align yourself with well-respected companies that work hard to earn trust and deliver on expectations — for your store and your customers. Working with administrators that allow communication with all parties, including the underwriter, keeps the relationship in check and ensures plans operate smoothly and adhere to specific terms and conditions. Additionally, administrators contract with repair facilities to repair or replace covered products, so easy access and open lines of communication are essential in this relationship to ensure the parties involved — you and your customers — get what they’re paying for.  

The Customer’s Role

The service contract is an agreement between the service contract provider and your customer. The service contract terms and conditions may state that for service or to report a claim, the customer should call a separate number to contact the warranty administrator. For your store, keeping the administration and underwriting under one umbrella provides a hassle-free arrangement that ensures warranty plans deliver positive results for customers throughout the life of the plans.

Is Your Plan Working?

While creating an effective warranty program certainly takes a little work, becoming educated about the process and asking the right questions to ensure you’re partnering with the right service contract provider is critical to the success of your business. Bottom line, knowing who the extended warranty players are and how they impact your business can mean the difference in profit and loss — of revenue and customers. 

Filed Under: administrator, contract, customer, extended, insurance, plan, program, provider, service, warranty

Tips for Buying a Vehicle Service Contract

A vehicle service contract (VSC) is a smart investment. It can help cover the cost of unexpected repairs and keep your vehicle running at its best. But how do you know if the plan is right for you? Here are a few questions you can ask your VSC salesperson to make sure you know exactly what you’re getting.  

How Much Does The VSC Cost?
Obviously, money is one of the most important factors in the decision-making process. Is your vehicle worth the investment? If so, you’ll want more coverage, which means more money. However, the amount you pay now could add up to hundreds of dollars in savings later. 

What Does The VSC Cover?
Consider your driving habits and the make and model of your vehicle. For instance, if the company who manufactures your car is known for the quality of their interior components and you plan on keeping your vehicle in a garage, then you probably don’t need paint and fabric protection as part of your VSC. 

How Long Does The VSC Last?
Again, the way you drive has a big impact. If you plan on keeping the vehicle for several years or know you’ll be spending a lot of time on the road, then having a VSC makes a lot of sense. You’ll also want to know if your vehicle is currently under a manufacturer’s warranty since the VSC typically goes into effect after the manufacturer’s warranty expires.

Who Backs The VSC?
Make sure that the company behind your plan is reputable. Some good indicators to help determine credibility include an A.M. Best rating, which demonstrates financial strength and stability, and a Better Business Bureau rating, which assesses the company’s business practices. Also, look at how long the company has been in business and examine their background.

How Are Services And Claims Handled?
Find out if the company has a network of service providers. Are they in your area and readily available to work on your vehicle? Once this has been determined, inquire about claim submission and processing. Can you submit claims online? Does the company have a reliable customer service department to assist you? And do they provide fast and convenient service to help get you back on the road as soon as possible?

Don’t Be Afraid To Ask Any Other Questions You Might Have
You should never feel pressured into purchasing coverage that you don’t understand. If there is anything about your vehicle service contract that doesn’t make sense to you, don’t hesitate to ask. Always remember, it is the salesperson’s responsibility to assist you. If you don’t feel that you are getting the help you need to make a proper purchasing decision regarding your VSC, then you probably aren’t going to get the right help should something go wrong with your vehicle.

Got a question about one of our vehicle service contracts? Contact us online athttps://warrantech.com/contact-us/ or call at 800.833.8801. We’re happy to help.

Filed Under: A.M., automotive, Best, Better, Bureau, Business, claims, contract, service, vehicle,VSC, Warrantech

How Well Do You Know Your Service Plan/Warranty Administrator?

Service contracts and extended warranties can be a great source of revenue for retailers, manufacturers and distributors. And their use as a customer satisfaction and retention tool can never be overstated. But what happens if your administrator ceases operations or is otherwise unable to service your business?

To be an approved administrator, certain licenses must be obtained along with proof of financial stability. Most administrators in the marketplace satisfy this last requirement by securing a contractual liability insurance policy (“CLP”) issued from an insurance company. This CLP requires the insurance company to “stand in” for the administrator in the event the obligations to the consumer have not been met. But what happens if the insurance company cancels the administrator, cannot provide administrative capabilities or ceases operations?

While the name of the administrator, and often the insurer, is listed in the service contract, when the customer seeks payment of a claim or a return of their funds, and the administrator and/or insurer no longer answer their phones, where does the customer turn?

Throughout the years, there have been numerous instances where either the administrator and/or the insurer of a service contract program have gone out of business or otherwise ceased operations. When this happens, your customers may not get their claims paid or their refunds processed and YOU will be their target of ire and will often be compelled to make good to the customer out of your own pocket.  How do you prevent this?

At AMT Warranty and its subsidiary Warrantech, we believe it is critical that you know and understand the capabilities and financial wherewithal of your administrator and your insurer. Conducting due diligence and asking the right questions can make all the difference between a service plan program that provides you with revenue and customer satisfaction and one that is a customer service and financial nightmare.

To ensure your service contract providers will be there when your customers need them most, we believe you should be asking the following:

• How long have they been in business?
• What is the experience and background of their management team?
• What is the size of their business?
• What is the ownership structure of their business?
• What is their Better Business Bureau rating?
• Who is their insurer?
• How many insurers have they had over the past 10 years?
• Are they and the insurer under common ownership?
• What is the insurance structure of the CLP (e.g., is the insurance company standing in on the “first dollar” of risk or are they simply providing an excess of loss policy)?
• If your administrator is using an “excess of loss policy,” is your administrator reserving sufficient monies needed for the potential risk not covered under the insurer provided policy?
• How long has their insurance company been in business?
• What is their financial size and A.M. Best rating?
• Are the respective companies compliant with SOX, PCI, SSAE 16, etc.?
• Do they have audited or public financials?
• Have you visited their facilities?
• Are they outsourcing any critical functions?
• Are you doing reference checks?

A well designed and maintained service contract is only possible if all of the parties to the transaction are fully capable of performing their various roles and can weather periodic or irregular changes to their business model or performance, especially if your provider is not vertically integrated with the insurance company.

Filed Under: administrator, business, claims, contract, financials, insurer, manufacturers, retailers,service, warranty

AmTrust Announces Solid Profit Growth For The First Quarter 2015

AmTrust Financial Services (AFSI), the parent company of Warrantech, issued strong earnings today for the first quarter ended March 31, 2015. 
 

Operating earnings were $121.4 million, or $1.45 per diluted share, an increase of 24.6%, compared to $97.4 million, or $1.24 per diluted share, in the first quarter of 2014. First quarter 2015 net income attributable to common stockholders grew to $154.7 million, or $1.85 per diluted share, an increase of 54.9% from $99.9 million, or $1.27 per diluted share, in the first quarter 2014. First quarter 2015 annualized operating return on common equity was 26.1% compared to 27.8% in the first quarter 2014. Annualized return on common equity was 33.3% for the first quarter of 2015 compared to 28.5% for the first quarter of 2014. 
 

First Quarter 2015 Results
 

Total revenue was $1.11 billion, an increase of $0.16 billion, or 16.6%, from $0.95 billion in the first quarter 2014. Gross written premium was $1.73 billion, an increase of $0.24 billion, or 16.0%, from $1.49 billion in the same period a year ago after excluding from the first quarter 2014 $174 million in non-recurring gross written premium from the Cut Through Reinsurance Agreement with Tower Group International, Ltd. in first quarter 2014.
 

A summary of Q1 results is listed below, and the earnings release is linked below as well. Thanks to all of our employees and agents who contributed to these results. We look forward to having another strong year and appreciate everyone’s hard work in making it happen.
 

Financial Highlights
 

First Quarter 2015
 

• Gross written premium of $1.73 billion, up 16.0% after excluding from first quarter 2014 the impact of $174 million of non-recurring gross written premium related to the Cut Through Reinsurance Agreement with Tower Group International, Ltd.

• Net earned premium of $949.4 million, up 14.5% from first quarter 2014

• Operating diluted EPS of $1.45 ($0.07 attributable to gain on life settlements) compared to $1.24 ($0.02 attributable to gain on life settlements) in the first quarter 2014

• Diluted EPS of $1.85 compared with $1.27 in the first quarter 2014

• Annualized operating return on common equity of 26.1% and annualized return on common equity of 33.3%

• Service and fee income of $112.9 million, up 24.1% from the first quarter 2014

• Operating earnings of $121.4 million compared to $97.4 million from the first quarter 2014

• Net income attributable to common stockholders of $154.7 million compared to $99.9 million in the first quarter 2014

• Combined ratio of 89.0% compared to 89.9% in the first quarter 2014

• Book value per common share of $24.00, up from $22.34 at December 31, 2014

• AmTrust's stockholders' equity was $2.46 billion as of March 31, 2015
 

To view AmTrust Financial Services’ Q1 earnings release, visit the Investor Relations section at http://ir.amtrustgroup.com/ or click on the following link:http://ir.amtrustgroup.com/releasedetail.cfm?ReleaseID=910785

Enhancing Customer Service and Profit Margins One ESP at a Time

In today’s highly competitive retail marketplace, providing valuable add-on services is essential to increasing profitability and enhancing customer satisfaction. But, determining the value of an extended service plan (ESP) is often in the eye of the beholder. For some consumers, it’s seen as a security blanket, knowing their investment is protected long after the manufacturer's warranty runs out. Others, however, see warranty plans as another line item on their receipt that they can’t justify during challenging economic times. As retailers look to bolster profit margins in times of flat sales, it’s important to drive home the benefits ESPs offer consumers above and beyond the warranty terms and conditions. 

One Size Doesn’t Fit All

In light of slumping retail sales, extended warranty programs have become an essential and profitable value-add for retailers. Extended warranty plans such as product replacement programs, extended service plans, on-site service and comprehensive service programs offer distinctly different options to help customize a plan that best suits the consumer. By knowing the specifics, your staff will be better equipped to capitalize on the value these plans offer.

Satisfaction Guaranteed?

The only way to have valuable dialogue with the consumer is to have a well-represented team selling products and the services associated with them. Generally, there are four factors that go through the consumer’s mind when considering an ESP: 

1. Value of item being purchased

2. Price of extended warranty

3. Length of manufacturer's warranty

4. Length of extended warranty and date coverage begins

Through various sales tactics and techniques, your sales team can re-engage the consumer beyond the normal talking points by highlighting the services your warranty provider offers that often get overlooked: 

1. Save time and money — If a product fails during the extended term, the consumer will not have to deal with repair hassles or bills because either a replacement (delivered same day or next day) or repair of the product will be handled by the provider. Locating an approved service center by the consumer’s ZIP Code is also a valuable time savings. 

2. Ongoing support — For ongoing product support or questions about a plan, consumers can call a dedicated toll-free ESP hotline for inquiries or other details during the term of their extended warranty.

3. Trusted partner — The extended warranty plan is attached to the consumer, not the store. Since the rate of foreclosures and bankruptcies are up in today’s economy, it never hurts to point out the ownership aspect of the ESP.

The Bottom Line

The world of consumer electronics is cut throat — profit margins are slim, and prices have to remain competitive or stores lose business. For retailers, finding new ways to increase profits are not easy to come by. But, ESPs cost virtually nothing to market, take up little to no inventory space and are easy to promote. Retail personnel, especially, are in a unique position to sell extended plans to consumers because the transaction takes place lives, in-person and at the point of purchase. Timing is definitely part of the sales equation, but selling value to an informed consumer provides better customer service and sought-after profit margins.

AMT Warranty Gives Home Warranty Program for Homeowners Safety

AMT Warranty is without a doubt committed to serving consumers protect their most precious possession their home.

Experience tells us that a lot of home equipment needs repair work after they have been in use for as little as five-years.

In fact, most homeowners are experiencing a wide range of mechanical or electrical problems on an annual basis, which often can easily cost them nearly $1,000 in repair charges.

Such as, heating and air conditioning systems ordinarily need to have significant maintenance after 7 years and consistently need replacement after 12-15 years. When a home’s HVAC system stops working, repair costs may go beyond $1,500.

Nearly 25% of the aforementioned repair costs can pay for an AMT Service Corp Protection plan. AMT offers an unbelievable bargain for warranty clients as well.

The AMT Warranty Home Warranty Program presents homeowners with year-round coverage against mechanical breakdowns for lots of covered systems and home appliances.

Coverage plan by AMT Service Corp is good for 1 year and payable yearly or in month-to-month instalments.

Base Protection: 

Heating System (up to $1,500)
AC/Cooler (up to $1,500)
Internal Plumbing System (up to $500)
Ductwork (up to $500)
Water Heater (up to $500)
Internal Electrical System
Dishwasher
Range/Oven/Cook top
Built in Microwave

Optionally available Coverage: 

Pool and Spa
Washer and Dryer
Trash Compactor
Septic System
Kitchen Refrigerator
Stand Alone Freezer

Resource For This Article - http://www.amtwarranty.com/products/Home-Warranty.aspx

Related Blog :-  Deciding your product mix with Amtrust Warranty

AMT Service Corp leaders in data mining

Commonly, mathematical algorithms and statistical methods in conjunction with software programs are important within the process of data mining. The particular output is the convenient to use software that's further used by non-mathematicians to efficiently assess the info. The whole process of data mining is utilized in various purposes for instance studying client capabilities, market exploration, direct marketing, genetic makeup, text evaluation, scams determination, e-commerce industry, making warranty products, financial services, customer management etc.

Function of data mining along with business intelligence according to AMT Warranty Corp

Nonetheless, business intelligence is usually a broader arena of decision making. Business intelligence utilizes data mining as one of the most well known equipment to help make the information a lot more related in numerous applications. The particular data mining is usually coupled with business intelligence and is used in text mining, relational databases, audio data mining etc. to help make the data useful for future works.

In recent years, business intelligence has arrived up as an answer assisting companies attain their goals of profit optimisation. It is no longer simply a smart support program. Since, managers are required to take various crucial decisions every day in an organization thus reasonable and timely decisions are necessary. Institutions must focus on consumers in addition to opposition elements too along with centering on intrinsic situations.

To assemble the details via a number of programs, data mining is actually clubbed together with business intelligence to meet all those needs. Business intelligence has been established as an optimum resolution in corporations aiding 1000's achieve the goals of profit optimization. Business intelligence offers host of benefits in developing warranty products in an firm.

Reducing expenses inside businesses

In most cases, administrators will have to recover facts via different sources that explains why the business outcomes of some specific months are generally low. This consumes time and effort and cost. However, with BI solutions, information is fetched from several sources along with aids administrators analyze the results. This lowers the actual charges because paying for BI option would be all one corporation needs. Besides this, BI alternatives furthermore trim down the intake of time. To paraphrase, extracting data right away is an effective remedy to cut costs and also improve proficiency of the corporation.

AMT Warranty - Removing Low-quality products 

BI remedies support executives understand the useless products eating cost by data mining and remove these as soon as possible. The key performance indicators or KPIs are assessed and therefore, inferior quality items are wiped out.

Study the particular productivity of promotion programs along with AMT Service Corp

BI options helps with releasing an evaluation report of the advertising promotions by acquiring data of sales, cost, customers, products along with turn over. It will help operators track the particular programs that have been powerful in past and can be put in place once again, when necessary.

Analyze competitors, increase business the Amtrust Warranty manner

By far the most essential of any business is to learn about the competitor’s ability. As a result, BI remedies assist the supervisors consider rivals list as well as put together a checklist of potential clients. It may help in computing sales, customers, reports of advertising campaigns, so aiding professionals with broadening tactics.

The application of business intelligence and data mining has drastically helped companies in creating efficient strategies to develop the particular business. It has been bringing out intelligent as well as quick solutions to assist businesses significantly. Although every small or large scale company is implementing successful BI remedies yet there are several such evaluations envisioned in a long time to come.

For more details visit here - http://amt-warranty.blogspot.in/

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