Tag Archive | "claims"

How to Adjudicate Claims for High-Risk Clients


In the P&A segment, working with high-risk clients can lead to financial rewards, but runaway claims bear scrutiny. At last August’s P&A Leadership Summit, I had the honor of leading a panel of experts in a discussion about anticipating, identifying and properly managing such scenarios.

I was joined by Trish Myers, a senior financial analyst with EFG Companies; Matt Russell, risk manager for AUL Corp.; Jeff Robinson, Alpha Warranty’s vice president of risk and operations; and John Sopocy, vice president of claims and risk management for Vehicle Administrative Services.

Identify the Risk

The term “high-risk” can have a number of different meanings, Sopocy said, so the first step is to identify the type of risk at play. If a dealership has a core customer base that is outside of the usual ratio the company uses to determine risk, for example, that could be skewing the results.

Myers suggested the next step could be to look at how long the service contracts have been active when the claims are initiated, as well as the severity — are they within expectations for that dealership’s vehicle mix and market? If they are consistently steep, “That can be an indication of dealers not prepping the cars for sale,” Myers said, noting dealers can fall into the habit of using claims to pay for reconditioning. She also advises providers to look at earnings and loss ratios — some early warning signs might not be valid, she stressed, so it’s important to gather all the data and take the time to understand what they mean.

This can be a complex process, Russell said, but he agreed it is necessary. “We try to split the data between the statistical side and the behavioral side. It’s important to look at those earnings and loss ratios and other statistical models, but it’s just as critical to look at the behavioral data as well.” He said a review of service-drive records can help determine whether high-risk red flags are just a series of coincidences or a clear pattern.

But just identifying a potential risk isn’t enough. “The first move, after identifying a high-risk dealership, is to have a conversation with them,” said Robinson.

In many cases, the panel agreed, the dealer and their top management team is not aware of how the products are performing. Some are getting incomplete reports from their F&I or service directors; others simply aren’t interested. This can lead to awkward conversations with dealers and dealership personnel, but determining whether a client is “high-risk” is difficult without getting the big picture.

One way to approach the subject is to ask the client to “show the numbers, don’t explain the numbers,” said Russell. He noted that he’ll compartmentalize the data, setting aside, for example, vehicles with extremely high mileage. Then he’ll segment by make and model and even by engine type, if he’s able. “In essence, we’re just trying to show the ‘Why,’” he said, which in turn helps the conversation go more smoothly. The claims administrator then avoids the appearance of leveling accusations. They are simply bringing a business problem to the table and asking, “What can we do to fix this?”

Myers agreed and said this approach is typically well-received. “I’ve never had pushback from the service manager or general manager of the dealership.” She noted that, most of the time, the provider is viewed as a partner, and the dealer wants to get to the bottom of losses and increased claims just as much as the provider does.

Control the Costs

So how can providers keep the cost of high-risk dealerships from spinning out of control? To start, said Sopocy, it’s about stating upfront what is covered — and what isn’t — so everyone is on the same page. He noted that the two biggest cost generators tend to be pre-existing conditions and “upselling,” when the customer brings their vehicle in to address one problem and the service advisor convinces the customer to fix something else.

“On a claim-by-claim basis, it can be really hard to detect that,” Sopocy noted. An individual claim for an oil gasket replacement might appear to be valid on the surface. But if the customer just came in for a standard oil change, and they were then convinced to replace additional parts, it’s a problem.

To combat that, Sopocy advises providers and administrators to have the conversation about expectations as soon as possible. Making sure that the service advisors know that it’s OK if a part is a bit more worn on an older vehicle — that doesn’t mean it has failed or will fail. Replacing it just because they can is a waste of everyone’s time and money. One of the ways they train for this, he noted, is to ask service advisors a simple question: “If this was your car, would you take $500 out of your pocket to replace the part?” In most cases, they say they would not, and that establishes the correct mindset.

The next step is to teach service advisors how to document correctly. Rather than just submitting a claim for an oil gasket, they should note in the paperwork that the customer came in for an oil change and it was noticed that the gasket showed signs of wear.

Russell agreed that getting everyone on the same page is a good first step to controlling costs. With buy-in across the board, a process that will work for everyone can be developed. “It’s about getting everyone on the same page so they know what to expect,” he said.

Robinson agreed, noting, “The dealer needs to understand that it’s a partnership, and that our goals are aligned. … When it’s a healthy book of business, the customer is happy, the service center is happy, the dealership is happy, the administrator is happy — everybody is happy.”

Redemption: Turn High-Risk Clients Into Low-Risk Clients

The panel agreed that, just because you have identified a dealership as high-risk, that doesn’t mean they have to stay that way.

Redemption is possible, Russell said, and it comes in many forms. For new clients, it may just be a matter of patience: It is not uncommon to see a high rate of claims for the first wave of service contracts that flattens out over time. He also noted that, for administrators, it is always worth checking the notes of the claims adjusters. They are on the front lines, and have a much better idea of what is actually going on. Reporting is key, because you have to understand where the problem is if there is any hope of fixing it.

In some cases, Russell pointed out, one make or model can cause the bulk of the issues. At the end of the day, the dealership has to be willing to trust and buy into the administrator’s recommendations. “It’s about trusting us, working with us,” he said.

To get there, said Sopocy, it really is critical to approach them with the numbers — show them their losses today and demonstrate what the projections will be with a different process in place. “If you lay it out, here’s where we are, and, if nothing is done, it stays the same. Here’s where we’re going to be a year or two from now, and it’s normally not a very pretty picture. And then you model it by ‘If we reduce claims, this is what can happen; if we add additional sales, this is what could happen.’ You can show them a couple different ways to get it to a better space.”

If they are a good client, Sopocy added, and they are committed to making it work, the administrator can lay out different strategies — including at least one that doesn’t necessarily include a rate increase — to improve performance across the board and reduce the client’s risk factor.

Russell agreed, adding that it’s important to understand that, in some cases, risk and redemption can’t be had by simply increasing rates. An increase for a given dealership — or even for a given geographic area — can’t be helped because the risk factors just can’t be mitigated any other way. But he stressed that the other solutions should be tried first. If the first time a dealer hears about a problem is when their rate is going up, that doesn’t make for a very profitable partnership on any level.

The agent is another important factor, Russell added. Having a solid relationship with them, and making sure they have all the tools and information they need is important. They can be the provider or administrator’s “boots on the ground,” ready and available to talk to the dealer when a problem first surfaces. “Getting the agent involved is key,” he said. “They’re the ones who hold the relationship.”

Robinson noted that the agent is the first person some dealers call when they have an issue with a claim or anything else. The agent can therefore be helpful in determining whether there is an issue that needs to be solved, with or without the administrator’s help, or whether it’s an isolated incident, a coincidence, or a spike that will level off in time.

Just because a dealership is high-risk, doesn’t mean the provider shouldn’t take a chance — and high-risk today doesn’t necessarily mean high-risk tomorrow. Many dealers will welcome the chance to work with administrators to improve programs and profits, and can end up being some of the most loyal and reliable customers the provider has on the books. It’s all about managing the risk appropriately, setting expectations, and offering the right training to the right people.

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CNA National Appoints New Vice President of Claims


SCOTTSDALE, Ariz.—CNA National is pleased to announce that, effective April 1, Mike Bacosa has been promoted to vice president of claims.

Bacosa is a long-time member of CNAN with over 20 years in the Claims Department. For the past seven years, he led CNAN’s claims organization as its senior manager and has held many other roles since starting as an adjuster in 1997. Previously, Bacosa spent a few years as a service advisor with a local Arizona Volvo and Mazda dealership.

“Mike was the obvious choice for this role,” said Joe Becker, president and chief executive officer. “Throughout his tenure here, he has demonstrated strong leadership, excellent judgment and a passion for what we do. He is well positioned to help us maintain our leadership role in the industry.”

Bacosa and his team of over 100 adjusters are responsible for resolving all incoming claims, working closely with our dealership clients and delivering the high level of service our customers expect.

“I am honored to become a part of the executive team here at CNAN,” said Bacosa. “It’s a wonderful feeling to come to work and love what you do. I am excited by the challenges this new role will present and will continue to focus the Claims Department on delivering superior service and exceeding expectations.”

 

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Mechanical Breakdown Protection, Inc. (MBPI) Launches New 3-in-1 Product


Lee’s Summit, MO – Mechanical Breakdown Protection, Inc. (MBPI), a top rated administrator, has released a new product that will increase dealer penetration and revenue due to major lender product requirements and lender approvals. This product was specifically designed and released for lenders that will not accept more than a three product package.

Coverage Includes:

  • Tire & Wheel
  • Dent
  • Windshield

Benefits:

  • Unlimited Claim Occurrences.
  • Transferable – Adds to the resale value of the vehicle.
  • Covers all costs related to the repair or replacement of listed items, including taxes and labor costs.

“This new product offers our dealers a new and exciting way to meet specific lender requirements, while also offering consumers an affordable way to protect their investment.”
– Barry Kindler, MBPI National Sales Manager

 

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MBPI Launches Phone App


LEE’S SUMMIT, MO – Mechanical Breakdown Protection, Inc. (MBPI), an extended vehicle service contract administrator, has released a new mobile application for Apple and Android devices.

The introduction of this free app will improve customer service while also enhancing agent and dealer communication. Customers and agents will be able to download the MBPI app in seconds, and instantly take advantage of a variety of benefits.

Customer benefits include instant access to:

  • Dealership information
  • Purchased protection plan(s)
  • Vehicle information, terms & conditions
  • Log maintenance

Agent benefits include instant access to:

  • Dealership information
  • Customer claim information
  • Contract sales
  • Product production and goals

“Since 1981, MBPI has stayed at the forefront of technology and customer service,” said Barry Kindler, National Sales Manager at MBPI. “Overall, the MBPI app enables us to provide the best possible service at every point of contact.”

Mechanical Breakdown Protection, Inc. (MBPI) is one of the country’s premier extended vehicle service contract administrators. For over 35 years, MBPI has built its reputation on administrative excellence, solid insurance underwriting and long term client relationships. MBPI is proudly located in Lee’s Summit, Missouri. Feel free to contact MBPI at 1-800-325-7484 or by visiting www.mbpnetwork.com.

 

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EFG Companies Pushes the Industry Again with Technology Innovation


DALLAS – EFG Companies, the innovator behind the award-winning Hyundai Assurance program, today launched Parts Wizard, a new technology platform that reduces dealer reinsurance exposure, streamlines claims administration and increases customer satisfaction. For more information about EFG’s claims administration, visit: http://bit.ly/EFGAdmin

EFG’s Parts Wizard automates the manual process of sourcing OEM, aftermarket, remanufacturered, and used parts for vehicle repairs. In addition, sourcing parts through the Parts Wizard enables dealerships to reduce future claims risk with a longer warranty than the standard OEM parts provided by the manufacturer.

All parts sourced through the Parts Wizard, come with an “end of contract” warranty covering the deductible, labor and cost of replacement parts. If any part sourced through the Parts Wizard malfunctions during the term of a customer’s contract, the cost to repair or replace that part will be completely covered without dipping into reinsurance reserves.

“Considering the number of older vehicles on the road, and the potential for consumers to use neighborhood mechanics, EFG’s Parts Wizard offers dealers a better level of control over how their claims are handled, regardless of the level of service provided to their customers by shops outside of their dealership,” said Ken Overly, Vice President, Operations, EFG Companies.

Traditionally, claims administrators must research vehicle parts with several vendors, on each vendor’s website, before negotiating with a service center. The Parts Wizard is an essential search engine that sources parts from all EFG-approved vendors at once, drastically shortening the time it takes to research parts by up to 30 minutes per claim. In addition, the technology prioritizes results based on availability and price to factor into the decision process.

“The Parts Wizard allows us to better negotiate with service centers outside of dealerships by providing the best price from vendors they likely already use and trust. The service center will either drop their price to match ours, or EFG will purchase the parts directly from the vendors and have them shipped to the shop,” Overly stated.

“At EFG, we always strive to look beyond the curve to provide industry-leading customer service and efficiency for our clients and our contract holders,” said John Pappanastos, President and CEO, EFG Companies. “The Parts Wizard is another example of EFG consistently delivering solutions that the rest of the industry hasn’t seen.”

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GWC Warranty Surpasses $375 Million in Claims Paid


WILKES-BARRE, Penn. – GWC Warranty, the best-in-class provider of used vehicle service contracts and related finance and insurance products sold through automotive dealers, has successfully topped $375 million in claims paid to date.

“Surpassing $375 million in claims is an important milestone for GWC,” said Rob Glander, CEO and President of GWC Warranty. “Our slogan is ‘No Worries, Just Drive’ because when dealers sell a GWC service contract, they can be sure that we’ll stand behind it. And their customers can enjoy their vehicle knowing that if a breakdown occurs, GWC will be there to get them back on the road quickly.

“We are thrilled to celebrate the milestone of $375 million in claims paid and we are grateful for the role our dealers have played along the way,” Glander said. “We look forward to continuing our successful partnerships for many more years to come.”

Exceeding $375 million in claims paid is the latest accolade for GWC Warranty as the company concludes celebrating its 20th year in business. Already a Motor Trend® Recommended Best Buy for Independent Dealers and rated A+ by the Better Business Bureau, in early 2015, GWC was named a Bronze Level National Corporate Partner of the NIADA. Later in the year, GWC was recognized in both SubPrime Auto Finance News’ SubPrime 125 and Auto Remarketing’s Power 300. Most recently in November, GWC took home Automotive Communication Awards in the categories of Business-to-Business Blog for the Accelerate blog and Business-to-Business Use of a YouTube Video for the Behind The Wheel dealer story series.

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