1. Developing an Effective Dealership Insurance Program
AutoCPAGroup
Spring Conference
San Juan, Puerto Rico

2. Presenters Today
Steven P. Gibson
President
Dealer Risk Services

3. The Dealership World Uniqueness of the Industry
Sales Volume
Monthly Analysis
Entrepreneurial Spirit of Dealers
Resiliency of the Dealers
Able to Withstand Disaster
Weather Events
Economic Downturns
Industry Challenges

4. The Challenges Pitfalls and Weaknesses Tremendous Amount of Activity
High Turnover
Lack of Corporate Structure
Versus Other Industries
Compliance and Loss Control
Monthly Analysis
Short Planning/Analysis Cycle

5. Balancing Superior Coverage with Affordable Premiums
Securing comprehensive coverage at the most affordable cost
Understand how insurance companies work
Methods they use to predict rate risk

6. The Insurance Company Model
Like any business…an Insurance Company’s financial success is based on taking in more money in premium than they pay out in claims…

7. Claims and Premiums
Insurance Companies look at many rating factors…but, their main focus is on Loss Ratios…

8. Controlling Insurance Costs
Understanding the relationship between premiums and claims is the first step in controlling costs…

9. What Insurers Look For Frequency of Claims Claims Trends
Recurring Events
View Management by their Reaction to Claims
Immediate Responses
to Accidents
Proactive and Preventative
Measures

10. Determining Your Dealership Loss Pick
To predict where we’re going…we have to understand where we’ve been. Take a look at the past…and review claims from a historical perspective.
Review 5 to 7 Years of Claims

11. Examining Dealership Claims
Map out your Loss Experience by Line
Look for trends in claims type/location
Auto Accidents
Premise Slip & Fall
Garagekeepers Claims
F & I Related Claims
Document all claims over $10K with Management Response to control future claims.

12. Lowering Premiums Risk Retention Risk Reduction Use of Deductibles
Retention Programs
Risk Reduction
Loss Control Measures

13. Claims Strategies Initiate Quarterly Claims Reviews
Consult with Counsel
In House
Outside Firm
Review with Insurer
Claims Manager & Adjusters
Review Settlements & Options
Open Claims & Reserves

14. Risk Management Strategies
Develop Specific Strategies
Initiate Risk Management Techniques
Assign a Risk Management & Safety Committee
Analyze Claims for “How & Why”
Develop Internal Reviews & Responses
Incident Reports
Preventive Measures

15. Risk Management Specifics
Examine Operations & Procedures
Outsource Loaner Vehicles
Limit or Eliminate Demos
Standardize Test Drives
Develop Inventory Controls
Control Spot Deliveries
Review and Audit F & I Procedures and Profits

16. Risk Management Specifics
Motor Vehicle Records
Run MVRs Annually
Review Quarterly for Drivers with “issues’’
Mandatory for All New Hires
Develop Accident Reviews & Disciplinary Action
Employment Practices
Develop Hiring/Termination
Procedures
Be “Honest” with Annual Reviews

17. Risk Management Specifics
Review All Forms
Utilize In-House Counsel
State and National Associations
Demo Agreements
Loaner Agreements
Buyers Documents & Agreements
Arbitration Agreements
Employment Agreements

18. Disaster and Crisis Management
Develop Disaster & Crisis Management Procedures
Natural Disasters
Hurricanes
Tornados
Fires
Man Made Crises
Disgruntled Customers
Employee Problems

19. Disaster Management

20. Crisis Management

21. Crisis Examples
In Miami, a customer was unhappy with the deal he got at a Ford Dealership. He drove his car into the dealership…INTO THE DEALERSHIP…got out, doused the car with a flammable…lit the match…and went outside and sat on the curb…
Car burned…dealership burned…Customers and Employees were shocked and running…1M in damage to the Dealership.
BE PREPARED…PROTECT YOUR PEOPLE, PROPERTY & REPUTATION.

22. How Much Risk to Assume? Understand your own tolerance
Understand your Loss Pick
Evaluating loss trends and loss
Projections
Determine economics of Deductibles and Retentions

23. Developing Specifications
Begin the process 120 days prior to renewal
Develop an RFP for the marketplace
Update Building and BPP Values
Verify with Contractor
Review Business Interruption Values
Discuss “claims scenarios” with CPA and
Operations Team

24. Critical Coverage Areas
Examine Coverage Levels in Critical
Areas
Crime Coverage – Employee Dishonesty
Employment Practice Liability Coverage
Third Party Liability Coverage
Umbrella Coverage Limits
Discuss Limits with Defense Counsel and CP

25. Identifying the Market
Identify and Understand the Garage Insurance marketplace
Who are the Players/Insurers
Direct Writers
National Carriers
Regional Carriers

26. Keys to Effective Bid Specifications
Offer an organized specification with consistent data
Include Forms
Demo Agreements
Test Drive Procedures
Loaner Agreements
Include currently valued Loss History with analysis

27. Keys to an Effective Bid Process
Consider an Industry Consultant to reach the whole market
Include the coverage & deductibles desired…using your Loss Pick as a guide
Meet with Insurance Company Underwriters and Claims Managers
Utilize Coverage Spreadsheets to Assist in Analyzing the Offerings
Negotiate Premiums, Deductibles & Coverage issues

28. Explore Alternative Premium Options
Captives and Alternative Risk Programs
Group Captives
Cell Captives
Single Parent Captives
Large Deductible and Retro Plans

29. Coverage Outside the Box
Just because your Insurer/Agent doesn’t offer a coverage, does not mean it isn’t available in the Marketplace.
Insurance Industry has a very broad scope of products.

30. Coverage Outside the Box
Deductible and Aggregate Buy Back Programs
Property/Windstorm Deductibles
Inventory Weather Aggregates
DIC Coverage
Business Interruption for Flood

31. Coverage Outside the Box
831b Captives
Explore various Domiciles and Format
Property CAT Deductible Buy Back Policies
Inventory Weather Policies
Self Insured Policies

32. Coverage Outside the Box
Stand Alone Professional Coverage
Customized policy verbiage
Broad Coverage Trigger
Security & Privacy Protection
Increasing area of Exposure
Cost of Notification & Crisis Management
Directors & Officers Protection
Minority Partners Suits

33. Summary
Use an Expert to Help You Understand and Negotiate with the Dealership Insurance Market
Be aware of your losses. Keep track of expenses & reserve changes to old losses
Explain large losses & new loss control measures to Insurance Companies

34. Summary
Explore Premium Options – Look carefully at your loss experience & analyze the economics of the risk you are assuming
Think outside the box for unique coverage that meets your special needs

35. Questions?

36. Thank You!