By: Lee Bowron, ACAS, MAAA

As an actuarial consulting firm, we spend a lot of time deriving the specific cost for F&I products, both from an overall perspective and down to the granular level. For example, we develop models which inform you that the cost of a wrap service contract for a Hyundai Elantra with 30,000 miles and 2.5 years of service will be $45 less than a Hyundai Elantra with 45,000 miles and 3.5 years of service. (Note, we just made up these numbers).

So we are very precise with our estimates of what drives service contract claims. However, we don’t seem to be very precise when setting the final price to the consumer

To read the rest of the article please click on the link below:

http://pa-magazine.com/featured-articles/are-we-setting-the-right-price/

While publicly available data is not available for GAP writers, it is clear of that 2011 will go down as a profitable year for GAP Insurance.

This is due to two factors: the lower leverage permitted by the credit markets and the high value of used cars.

To read the rest of the article  click on the link below:

http://pa-magazine.com/featured-articles/gap-where-do-we-go-from-here/

◦Buy a new Hyundai after May 1, 2011
◦Perform all recommended service at a Hyundai dealer
◦Between 24 and 48 months, trade-in your vehicle for a new Hyundai
◦The value of your trade in will be guaranteed.

To read the rest of the article click on the link below:

http://pa-magazine.com/featured-articles/carrier-and-administration-relations-best-practices/

Vehicle service contracts have traditionally been sold as a single pay product purchased at the time of vehicle purchase. While the typical retail charge for the vehicle service contract (VSC) can be in the thousands of dollars, the availability of the vehicle finance contract provides a ready source of funds to pay the full cost.

However, there are many excellent marketing opportunities for a service contract where a finance contract is not available to pay this cost. These include…

To read the rest of the article click on the link below:

http://pa-magazine.com/featured-articles/month-to-month-vehicle-service-contracts/

Hyundai recently announced an innovative program: a trade-in value program which guarantees the value of the customer’s car.  Here is how the program basically works:

To read the entire article click on the link below:

http://pa-magazine.com/featured-articles/hyundais-new-trade-in-value-guarantee/

GAP (Guaranteed Asset Protection) insurance is an insurance product that insures the difference (if any) between the loan balance and the actual value of the underlying asset. Typically, this insurance is sold in conjunction with a traditional insurance product and guarantees that an insurable event will be  sufficient to satisfy any lien upon the asset. While this type of insurance is used to cover a variety of exposures, the largest asset class is private passenger vehicles.

 http://www.casact.org/pubs/forum/11wforumpt2/Bowron_Kerper.pdf

http://pa-magazine.com/featured-articles/considerations-when-designing-new-products/

Read the http://pa-magazine.com/featured-articles/gap-is-there-hidden-equity-in-the-unearned-premium-reserve/ article at P&A Magazine.

Read the Beyond the Failure Rate: How Psychology Impacts Service Contract Claims article at P&A Magazine.