Archive | Actuary

Does the IRS Notice 2016-66 Impact You?

Does the IRS Notice 2016-66 Impact You?

The IRS sent a notice, 2016-66, which requires filings by entities which meet specific requirements. These entities may include dealer- or producer-owned reinsurance companies, as well as the dealership itself and the owners of the dealership. Originally, the filings were due by Jan. 30, 2017 but the IRS extended the deadline to May 1, 2017. … Read More »

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What’s Going On With GAP?

What’s Going On With GAP?

If you follow GAP, you may have noticed that many companies are seeing dramatically higher losses. What are the reasons this is happening? First, we need to know how we got here. After the financial crisis, loss ratios were historically low, due to the combination of robust used-car prices and restrictive financing. In other words, … Read More »

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VSCs in 2016: New Terms, New Costs

VSCs in 2016: New Terms, New Costs

For the 2016 model year, there are some major changes in the warranty market which will impact service contracts. First, of course, it will increase the costs for the same service contract. Some claims that were previously covered by the manufacturer’s warranty will now be covered under the service contract. Second, the claims would be … Read More »

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Staying Ahead of the Earnings Curve: Alternative Methods of Examining VSC Experience

Staying Ahead of the Earnings Curve: Alternative Methods of Examining VSC Experience

One of the most common metrics utilized in evaluating the profitably of a book of vehicle service contract (VSC) business is the earned loss ratio, calculated by dividing the current cumulative losses paid or incurred by the earned premium-to-date. Earnings curves help a company appropriately match revenue with expected VSC liabilities by providing the percentage … Read More »

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Will CFPB Regulations Trickle Down to Providers & Administrators?

Will CFPB Regulations Trickle Down to Providers & Administrators?

Alright, as an owner or executive of a company, waking up in a cold sweat at 2am happens more often than you would like. There are many different reasons for this (e.g. stress over money, kids, a big business relationship, heartburn from eating a meatball sub too late at night, etc.), but regardless of the … Read More »

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Earnings Curves: Matching Premium with Losses…and Refunds?

Earnings Curves: Matching Premium with Losses…and Refunds?

With vehicle service contracts (VSCs) extending coverage over multiple years and premiums collected at the beginning of the contract, it is extremely important to have a benchmark to assess the profitability of the contracts that have been issued. Recognizing profitability (or lack thereof) early in the life of the contracts will assist a company in … Read More »

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