By Ryan Hanlon
Traditionally, RV dealers had two ways to make money: Own a dealership and own the property it sits on.
Today, RV dealers are forming reinsurance companies, adding a third leg to the stool of your enterprise by directing underwriting profits on the sale of F&I products away from factories and insurers and into your own accounts.
So my question to you is this: Do you own or rent your F&I business?
The Missing Leg
Owning your F&I business means making money on the “front end” (the store) and making additional money on the “back end” (the reinsurance company). If you’re sending your hard-earned premium to some ivory tower, it’s like you’re only renting your F&I business — you don’t own it!
If you are fortunate enough to own your dealership as well as the real estate, just imagine how much revenue and how many benefits and tax write-offs you would lose if you didn’t. Not to mention the fact that, should you decide to sell your dealership, you can still own the land and lease it to your future buyers.
To be clear, you don’t need to own the land to start a reinsurance company; you need only own a dealership. However, whether reinsurance is the second leg of your stool or the third, it’s critical to maximizing your earnings in the short and long term.
The Reinsurance Effect
The benefits of reinsurance are not limited to the dealer — far from it. If you have never owned a reinsurance company, you may be shocked at the transformative effect it can have on your dealership, from F&I to sales, service and customer satisfaction.
First and foremost, forming a reinsurance company means making decisions based on what works best for your business. You will get new insight into how products are sold and claims are handled and, depending on the program and provider, new ways to improve both.
More service contract, GAP and ancillary sales means more of your customers are protecting their investments and enjoying a better ownership experience. It also means more customers are likely to return to your dealership for service and, hopefully, their next RV purchase.
But that’s not all. Many reinsurance programs include tools that help dealers take care of their customers, including:
- Tieback clauses to ensure they get friendly, professional service at your dealership or an in-network shop.
- Overrides to give you more control over the claims process.
- A-Person status to empower you or one of your managers to make the best decisions for all sides and track your performance.
We will take a closer look at each of these tools in the weeks ahead. In the meantime, if you have any questions about how reinsurance works, your current program or anything else, please feel free to reach out today.
Ryan Hanlon is a managing director for Portfolio, a leading provider of reinsurance and F&I programs for RV dealers, and a 16-year industry veteran. For more information or to schedule a confidential consultation with a Portfolio reinsurance expert, email inquiry@portfolioco.com today.
