Archive | Actuary

LLPW: A Good Concept that Hasn’t Gotten Far Off the Ground

LLPW: A Good Concept that Hasn’t Gotten Far Off the Ground

In the early 2000s, manufacturer warranties were 36 months or longer and some manufacturers had begun to extend the base warranty further but limited the extended protection to the powertrain parts. The original Limited Lifetime Powertrain Warranty (LLPW) concept was developed primarily for the Japanese makes. At that time, Toyota and Honda dealers were trying … Read More »

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GAP: Back from the Brink

GAP: Back from the Brink

In 2008, many administrators were concerned about the profitability of the GAP business. Not only was the frequency of claims increasing, but the severity of GAP claims were going through the roof. Used-car prices were collapsing as demand dried up – and insurance companies were settling total losses at a significant haircut from one year … Read More »

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Beyond the Failure Rate: How Psychology Impacts VSC Claims

Beyond the Failure Rate: How Psychology Impacts VSC Claims

When an administrator develops a new product, the actuary must simultaneously find a price that will be competitive in the marketplace, incentivize production and provide enough funds to settle all the claims. While all these concerns are critical, it is paramount to ensure that a product generates enough revenue to settle all expected claims. In … Read More »

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Changing Warranty Terms: Impact on Service Contracts

Changing Warranty Terms: Impact on Service Contracts

In the last five years, manufacturers have generally increased warranty terms on vehicles sold, even though a few have recently scaled back or reverted to the former terms. If you sell new or extended eligibility coverage, this change will impact your business in several different ways. First, and most obviously, it will lower the costs … Read More »

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