The fluctuating dynamics of used car prices, auto financing, and insurance markets are making GAP landscape navigation increasingly challenging.
Here’s what you need to know:
- Used Car Prices: Post-pandemic shifts caused a decrease in used car valuations, affecting GAP losses, especially in contracts issued in the last 2 years.
- Auto Financing: Rising interest rates are shaking up credit accessibility, reducing GAP losses with effects varying by portfolio.
- Insurance Market Dynamics: The dip in used car values is encouraging insurers to designate claims as total losses more frequently than before.
- Claims Staffing: As GAP claims return to more normal volumes, make sure that you have enough claims adjusters. Claims were minimal during the pandemic and staffing levels may have fallen.
- Earning Strategy for GAP: Consider a refined Rule-of-78s approach to align GAP reserves with claims over the contract term for precise experience evaluation.
At Kerper Bowron, we are here to guide you through these complex scenarios with data-driven insights.
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