By Ryan Hanlon We have discussed the advantages of becoming your own lender by borrowing against the earned and unearned premiums generated by your reinsurance company. You can work with your reinsurance provider to determine when and how much to borrow and, depending on the provider, earn the interest on the loan. Another critical advantage is the fact that, because you are borrowing from yourself, you can do so without affecting your credit profile or your ability to obtain financing from third-party lenders if the need or opportunity arises. This is the power of off-balance sheet financing ..read more

By Ryan Hanlon RV dealers across America are forming reinsurance companies to capture underwriting profits on the insurable products sold in their dealerships. But if you aren’t investing your earnings — or if your provider severely limits your investment options — you may be leaving a considerable amount of money on the table. Let’s discuss five things you need to know before you select your program and your investment strategy: 1. Your Goals Are to Protect the Principal and Beat Inflation. Statista projects the U.S. inflation rate will vary between 2.25% and 2.5% over the next five years. Th ..read more

By Ryan Hanlon If you have read about how reinsurance creates a personal financial asset RV dealers can capitalize on and borrow against, you probably picked up on the frequent mentions of unearned premiums. Why is the ability to borrow against unearned premiums so important? Because all premium starts out as unearned, so limiting yourself to earned premiums severely restricts your borrowing power. The real question is why so many reinsurance providers continue to put this restriction on RV dealers. Let’s take a closer look at how premiums earn out and how proper management can make borrowing ..read more

By Ryan Hanlon You have to continually invest in your RV enterprise to grow and expand it, and financing those investments often requires borrowing money and repaying it with interest. It’s no different than taking out a mortgage to invest in a home or student loans to invest in your children’s future. But RV dealers have a unique opportunity to turn the very concept of lending on its ear: By forming a reinsurance company, you can build a personal financial asset that grows with your business and, in time, can serve as a reliable source of financing. When you borrow against your own underwriti ..read more

By Ryan Hanlon For RV dealers, one of the biggest benefits to forming a reinsurance company is the ability to convert the expense of selling service contracts into an asset. What do I mean by expense? Well, for example, when you sell a service contract for $2,500, your dealership makes a $1,500 profit (your commission) and sends the remaining $1,000 (the premium, or “remit”) to the service contract provider. When you own a reinsurance company, the provider sends the premium to your reinsurance company, less the cost of claims and expenses. This ability to earn underwriting profits and invest p ..read more

By Ryan Hanlon When we discuss reinsurance with RV dealers, we tend to focus on how various structures and programs can benefit them and their dealership, from their personal financial position to their sales, F&I and service departments. But that is not the end of the conversation. Let’s discuss three ways forming a reinsurance company can improve the customer experience you deliver — at the dealership and beyond. 1. More Products, More Protection Service contracts, GAP coverage, prepaid maintenance, appearance protection and theft deterrence and recovery products help customers avoid une ..read more

By Ryan Hanlon RV dealers form reinsurance companies to capture underwriting profits on the protection products you sell in the F&I office. That entails taking on the risk inherent to selling insurable products: Theoretically, your claims could exceed your premiums and wipe out your profits, which is why premium reserves are determined by actuarial data based on expired risk. The above scenario is, of course, extremely unlikely, given the amount of risk that has expired on past business to date. But every product generates some claims, and every underwriter carefully tracks their “earned l ..read more

By Ryan Hanlon Service contracts sold by RV dealers on reinsurance programs often include a “tieback” provision which brings customers back to your dealership or a facility in your repair network when a breakdown or failure occurs within a predetermined radius — typically 100 miles, although state limitations may apply. The benefits to your fixed operations profitability are obvious, but tiebacks can also improve your customers’ ownership experience and can help promote repeat business. Let’s discuss three key facets of service contract tiebacks: service absorption, quality control and future ..read more