Tag Archive | "GAP"

Wise F&I has Connected with MaximTrak


ST. LOUIS – Wise F&I, a long standing company in the automotive finance and insurance market, has a full suite of voluntary protection products available through MaximTrak, A RouteOne Company. MaximTrak offers a highly customizable all-in-one F&I menu platform and streamlines access to Wise F&I products for their mutual automotive dealers. Access to Wise F&I’s full suite of products including: GAPWise, WiseCARE, TIREWise, WiseTVP, THEFTWise and KEYWise are all available through MaximTrak. Offering Wise F&I products through MaximTrak further enhances the customer experience by providing speed and accuracy to the process.

Matt Croak, president of Wise F&I stated, “Connecting our products to MaximTrak’s F&I menu system further exemplifies our focus on compliance, technology and simplicity for the customer.” Both companies have a long history in the automotive F&I industry and both are committed to offering products and solutions to enhance the car buying experience.

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CNA National Distributes Over $40 Million for Dealer Participation Plans for 2016


SCOTTSDALE, Ariz.—CNA National Warranty Corporation (CNAN) returned over $40 million to automobile dealers across the U.S. through its various participation plans for 2016. This brings its inception-to-date total to more than $424 million.

“Over the past five years, we’ve seen a significant increase in returns,” says Joe Becker, president and chief executive officer. “This performance demonstrates the strength, stability and flexibility of these programs. They deliver the dependability our dealers expect and deserve regardless of the participation option selected.”

With CNA National, dealers can select the participation program that best serves both their business and individual financial goals. The company offers a retro program, as well as reinsurance, including CFC (controlled foreign corporation) and NCFC (non-controlled foreign corporation) structures. CNA National’s NCFC—Palo Verde Holdings—is managed by a board of directors made up of dealer shareholders. It has over $220 million in assets, making it an excellent choice for dealers wanting to maximize investment returns while minimizing risk.

CNAN reinsures warranties, GAP and tire-and-wheel protection in addition to vehicle service contracts. The company has earned multiple awards as “Best Reinsurance Provider” in the Dealers’ Choice Awards, including first-place honors in 2011, 2012 and 2013.

 

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Wise F&I Integrates with OptionSoft Technologies


St. Louis, Mo.  – Wise F&I is a leading finance and insurance product provider connecting automotive dealers to their products through menu integration. The recent integration with OptionSoft Technologies allows dealers to access of Wise F&I products through one of the leading menu providers in the automotive software industry. Wise F&I has its full suite of branded products including GAPWise, WiseCARE, TIREWise, WiseTVP, THEFTWise and KEYWise, all available on the OptionSoft menu. The integration provides up-to-date pricing, speed and accuracy for the dealership. Wise F&I and OptionSoft integration in turn deliver a better car buying experience.

“We are always looking at ways to create efficiencies and to better support the car buyer,” said Matt Croak, President, Wise F&I. “OptionSoft supports that through our products direct availability on their menu system.”

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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, consumers couldn’t finance much more than the car was worth and the vehicle wasn’t depreciating as fast as in the past.

This double benefit had industry loss ratios for GAP insurance below 20%. Note that industry results aren’t available for the more common GAP waiver. In 2014 and again in 2015, those loss ratios increased by a large margin, and it is likely that we will see another increase in loss ratios in 2016. Why is GAP suddenly so unprofitable?

The Used-Car Effect

The used-car market is the basis for the settlement of the physical damage and the most important factor in determining the value of GAP claim. A 1% decrease in the used-car index will imply a 6% increase in GAP claims, based on our research.

The good news is that, overall, used-car prices are at a high level and have not seen significant deterioration in the last five years. However, some segments, such as compact cars, have seen dramatic decreases. According to Manheim Consulting, the average price of a compact car has fallen 11% in the last 18 months. This type of decrease will cause a large increase in GAP severities for this type of vehicle.

Predicting the future value of used cars is difficult, but there are signs that a decrease could be coming. The increasing number of vehicle sales will increase the number of late-model used cars. This is especially a factor when leasing rates are high since the majority of these cars will be back on dealer lots in a few years. For example, industry data shows that leasing returns will increase around 40% by year-end 2018. What will this additional supply of vehicles do to pricing?

Financing Trends

Another important factor is the financing market. As lenders allow more negative equity to roll into loans, the potential gap increases. Companies should track the ratio of loan-to-vehicle value in their books. It is likely that business originated in dealerships will have wider credit swings than those generated by financial institutions.

There is some evidence of increasing loan-to-value ratios. In their Spring 2016 Semiannual Risk Perspective, the OCC specifically noted the increased risk to lenders from increased loan-to-value ratios. The impact of increasing LTVs is easy to see, since all of the increase will, at least initially, be covered by the GAP contract.

An important consideration when examining credit information is that this occurs at a time of the vehicle purchase and not at the time of the claim. So there is a delay between the credit market and the impact of GAP claims, while changes in used-car prices will impact GAP claims instantaneously.

Therefore, if the loss ratio increase is mostly on the most current business written, it might be due to financing considerations while broad based increases may point to higher frequencies, repair costs or a downturn in used car prices.

Propensity of Total Losses

All GAP claims begin with a total loss occurrence. A total loss is dependent on both a triggering event (a physical damage claim) and the determination of a total loss by the insurance company. There is evidence that both of these are on the rise. What would cause the amount of total losses to be increasing so much? This will be the subject of a feature article in a later issue.

The increase in GAP losses is due to combination of several factors, including underlying loss frequency and severity, financing and some disruption in the used vehicle market. Some of these changes may be structural, such as higher repair costs resulting in more vehicles being deemed total losses. This will not likely abate in the near term.

Used-car prices, which have remained high, are an additional concern since a lowering of used-car values would only increase pressure on the GAP market. Aggressive financing continues to be a concern as well. Those factors, along with each of the variables described above, will bear scrutiny in the months and years to come.

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AFIP’s Robertson Joins PALS Roster


LAS VEGAS — Organizers of the annual P&A Leadership Summit have announced that David Robertson, longtime executive director of the Association of Finance & Insurance Professionals (AFIP), will serve as a featured speaker at the event, which is scheduled for Aug. 30–31 at Paris Las Vegas.

“In his training, Dave’s primary focus is on personal integrity and accountability, but the value of the products AFIP-certified F&I professionals sell is not far behind,” said David Gesualdo, show chair and publisher of P&A magazine. “His message is an important one, and we are honored to bring him to the PALS stage.”

Robertson’s address, “Carrying the Torch to Light the Flame,” will begin at 10:00 a.m. on Wednesday, Aug. 31. He is expected to discuss the role of F&I product providers and agents in delivering and maintaining a positive message about the many benefits products such as vehicle service contracts, GAP coverage and appearance protection, among others, bring to car buyers.

“My presentation is a call to action that identifies grassroots initiatives and collective public awareness campaigns to ensure that car buyers continue to look first to the selling dealer for these time-tested services,” Robertson said.

To register for the 2016 P&A Leadership Summit, click here. Attendees who register by midnight tonight, Aug. 5, will enjoy a $100 discount.

To inquire about sponsorship and exhibition opportunities, contact David Gesualdo via email hidden; JavaScript is required or at 727-947-4027.

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PALS Early Bird Pricing Expires Tomorrow


LAS VEGAS — The $100 early-bird registration discount for the upcoming P&A Leadership Summit ends at midnight Friday, organizers announced today. The event will be held Aug. 30–31 at Paris Las Vegas.

The P&A Leadership Summit is the industry’s only event designed to meet the specific needs of high-ranking executives in the F&I industry. This year’s conference includes sessions dedicated to digital F&I, GAP losses, threats facing the industry and much more.

“Thanks to the hard work of our advisory board and past attendees, we are able to offer the most compelling agenda in our four-year history,” said David Gesualdo, show chair and publisher of P&A magazine. “I encourage anyone who is serious about our industry and our future in it to sign up today.”

To register for the 2016 P&A Leadership Summit, click here. To inquire about sponsorship and exhibition opportunities, contact David Gesualdo via email hidden; JavaScript is required or at 727-947-4027.

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