How Much Are You Really Paying in Reinsurance Fees?
Many dealers think they know what their reinsurance program costs. They know the administration fee. That does not necessarily mean they know the total cost.
Many dealers think they know what their reinsurance program costs.
They know the administration fee.
That does not necessarily mean they know the total cost.
Look Beyond the Admin Fee
Potential costs may include:
A $25 Difference Can Become Huge
Suppose Provider A charges $125 per contract. Provider B charges $175.
But that does not automatically make Provider A better.
Provider B may provide better claims administration, stronger products, better investments, superior technology or higher F&I penetration that creates substantially more value.
Compare Total Economics
Ask each provider:
- What does the administrator make?
- What does the carrier make?
- What does the agent or general agent make?
- What investment fees exist?
- What other recurring charges exist?
- What termination costs exist?
- What happens if I leave?
The Bottom Line
Never select a reinsurance provider based on one fee. But never accept fees you do not understand either.
When was the last time someone independently reviewed your reinsurance program?
Confidential. No obligation. There is no charge for the initial assessment. You may discover an opportunity, a problem, or that your program is exactly where it should be. But you’ll know.