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National ASE Institute Awards EFG Companies Blue Seal of Excellence

– EFG Claims Professionals Meet Recognized Standards for Certification-

198212-ASE SealEFG Companies, the innovator behind the award-winning Hyundai Assurance program, announced today it has been awarded the Blue Seal of Excellence by the National Institute of Automotive Service Excellence (ASE), based upon the required certification level of  its claims organization. This certification exemplifies EFG’s commitment to customer service excellence while also enhancing the company’s ability to negotiate quality vehicle repairs on behalf of contract holders.

EFG continuously strives to raise the industry bar when it comes to providing superior products, administration and compliance. Earlier this year, EFG achieved 100 percent field team certification from the Association of Finance and Insurance Professionals (AFIP). With these two certifications, the company sets the industry example for leadership in effectively training, auditing and administering their clients’ business to whom these services are a critical priority.

“Our clients rely on our expertise when it comes to negotiating quality repairs for their customers,” said Barry Carter, Chief Operating Officer. “Our claims administration reflects back on their business and brand. By demonstrating our high level of expertise with this certification, we are giving our clients even greater confidence that all claims will be handled expertly, efficiently and respectfully, promoting a positive overall customer experience and driving greater customer loyalty for their business.”

Established in 1972, the National Institute for Service Excellence (ASE) seeks to improve the quality of vehicle repair and service by testing and certifying automotive professionals, the ASE National Institute exists to protect the automotive service consumer, shop owner and automotive technician. This certification provides legitimacy to both the repair shop and the claims administrator by signifying their level of expertise and recognized standard of their technical knowledge.

Throughout its 37-year history, EFG has continually demonstrated their commitment to exceed customer expectations. Customer service and claims administration standards and real-time performance is continuously projected on the company’s walls as a constant measure of performance. 95.88 percent of claims calls are answered within 90 seconds, and 96 percent of all claims are paid by corporate credit card within one hour of receipt of invoice.

EFG believes longevity and success is ultimately measured by a simple premise: keeping a promise to a customer at a time when they need it most. EFG prides itself on being a claims-honoring third-party administrator and this certification only enhances the company’s ability to fulfill that promise.

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EFG Companies F&I

The Sub-Prime Cinderella Story: Who Has The Glass Slipper?

technology-may-2014After five years of consistent increases, used car prices are expected to collapse in 2014. According to NADA, the average price of a used car rose by 18 percent from 2007 to 2013, and is now roughly 10 percent higher than the average price of the past two decades. That bubble is expected to pop as NADA predicts 42 million units to hit showroom floors nationwide. Of that 42 million, 16 million units will be a result of lease-end models being returned to franchise dealers.

For an independent dealer selling used cars, this poses a significant obstacle. Beyond the drop in price per retail unit sold, other kinds of dealers will lay claim to 38 percent of the available used car inventory. However, there is an upside. According to a 2014 Equifax study, there is pent up demand for more than 26 million vehicles. With the labor force participation rate declining and moderate wage and employment growth, it’s a good assumption that consumers will continue the trend of preferring to buy used over new.

These recession-wary consumers are more willing to shop for the best price and financing available. This partly explains why used vehicles accounted for 62 percent of all vehicles financed for the fourth quarter of 2013, according to Experian.

While we ended the year with an almost even split between independent and franchise dealer market share in used car financing, independent dealers are well positioned to tap further into the current consumer market. For example, picture what you think a typical independent dealer customer looks like:

    • What’s their credit score?
    • Do they rent or own their home?
    • Are they employed?
    • If they have gainful employment, in what industry segment are they employed?

The reality of today might surprise you. With the impact of the recession weighing on bank accounts, even prime consumers are now browsing independent dealership lots. Once you lower your eyebrows, try this number on for size: 11.4 percent of buy-here-pay-here customers fell into the prime and super-prime category in the fourth quarter of 2013.

But what’s even more interesting is the subprime category. This category has become the consumer segment that holds significant value to all dealers: franchise, independent and buy-here-pay-here alike. Of all buy-here-pay-here customers, 88 percent fall within the nonprime, subprime and deep subprime categories. 1 These same customers make up 37.3 percent of franchise dealership customers. 1 While franchise dealers are new to woo this category, they are aggressive, and in some cases offering more than what independents have in their quiver.

When it comes to providing value and creating lasting customer relationships, franchise dealerships have service departments and a deep bench of F&I products to protect and repair the customer’s vehicle. Providing benefits such as these, which have significant impact in preserving the customer’s bank account, has been an uphill battle for independent dealers, specifically in the F&I department.

With an inventory ranging from zero to 70,000 miles, franchise dealerships have significant options in providing consumer protection products. Beyond the manufacturer’s warranty, F&I product providers underwrite extensive vehicle service contracts, maintenance plans, appearance protection products and some forms of insurance, like GAP.

The benefit of this deep bench is they have a better opportunity to increase their value proposition with the customer. By providing extensive coverage on various aspects of their vehicles, they can give their customers significant protection for their bank accounts, while increasing dealership profit per retail unit with upgrades or extended coverage.

Independent dealers paint a different picture. Vehicles on an independent dealership lot have been through approximately three ownership cycles and typically range in mileage from between 30,000 and 150,000 miles. With this in mind, their F&I bench is significantly limited in comparison.

The majority of consumer protection products tailored for independent dealers limit coverage to mainly the powertrain of these older-model vehicles. The reasoning behind this is pretty straight-forward. Older model vehicles are expected to break down more and therefore F&I product providers are more hesitant to create extensive protection products for them as they would expect a higher number of claims submitted.

However, in this value versus cost environment, nonprime and subprime consumers have a new level of expectation in the terms of the products available to them from both franchise and independent dealerships. The recession has forced companies across all industries to re-evaluate the customer service experience, as well as their value proposition. There is no difference in the auto industry. Now, it’s not only prime and super-prime customers that demand the highest level of service, but rather all customers expect to have the same level of respect for their business. While some customers may not be able to afford a traditional vehicle service contract, they are still very interested in purchasing mechanical breakdown protection for their vehicle.

For this reason, F&I product providers are re-evaluating the products they develop for independent dealerships. For example, EFG Companies, a consumer protection product provider based in Irving, Texas, developed a vehicle service contract called Best ReGuards that extends past the powertrain specifically for independent dealerships. This product focuses on several extended coverages while maintaining a low cost price-point:

  • Engine
  • Turbocharger/Supercharger
  • Transmission
  • Transfer Case
  • Air Conditioning
  • Electrical
  • Fuel
  • Seals & Gaskets

Another trend in consumer demands goes beyond mechanical breakdown to include benefits around personal safety, such as roadside assistance. Again, the majority of roadside assistance plans available for independent dealers only provide limited services, if any. However, no matter their credit score, people from all walks of life need the ability to take care of themselves and their family in the event that they are stranded due to a breakdown. With that in mind, EFG paired the following roadside assistance benefits with the mechanical benefits of their Best ReGuards VSC for independent dealers:

  • Towing
  • Flat Tire Changes
  • Jump Starts
  • Lockout Service
  • Nationwide Coverage

Beyond the product itself, the company also backed it with the same product administration that franchise dealers receive. This further emphasizes and ensures the level of customer service on which independent dealers can rely, and that positively impacts their relationships with their customers.

You can see how growth in options such as this gives independent dealers a more valuable toolkit to address each customer’s specific need when it comes to protecting their vehicle. They also fortify independent dealership’s customer appreciation model, which increases their customer retention. With revamped F&I products that provide more comprehensive coverage and service, independent dealerships are positioned to:

  • Increase their product portfolio to generate greater profits
  • Cultivate customer relationships by providing new market opportunities
  • Match consumer buying trends to the dynamics of their dealerships

As supply is expected to outpace demand in 2014, independent dealerships need to expand their product portfolio to be more competitive in the market. Considering how few independent dealers have access to provide F&I products, you are going to see more providers recognizing this growing opportunity and focusing product development efforts on this fresh dealer segment.

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F&I

Underwriting and Its Impact on Your Business

Contributing Author: Cliff Eller, Executive Vice President, Product CommercializationWith the first quarter behind you, it’s time to evaluate your progress and plan for the rest of the year. As you re-evaluate dealership processes, it’s also a good idea to step back and look at your relationship with your product administrator. Are they providing products that enhance your credibility with consumers? Are their products structured with enough reserve to handle any volume of claims no matter the market conditions?

It’s important to answer the following questions:

  • Is your product provider backed by an A.M. Best “A” Rated, fully insured underwriter?
  • How long have they been with their current underwriter?
  • Who has backed them in the past?
  • Do they adequately price their products to manage the reserve to pay claims?
  • How is their customer service in their claims department?

When partnering with a product administrator, you want to be sure that their reserves are handled properly to ensure that any unpaid claims don’t reflect back on you. One of the easiest ways to determine whether a product administrator will benefit your business is to look at the relationship with their underwriter.

First, find out their A.M. Best Rating. The rating signifies the company’s financial strength and ability to meet its ongoing insurance policy and contract obligations. Simply put, if their underwriter is a reputable company that follows through on its obligations, it’s highly probable that your product administrator is too.

However, that credit rating alone cannot convey the strength of the relationship between the product administrator and the underwriter. If the administrator has a relatively new underwriter, it’s a good idea to look into their history with others. Do they hop from one to another? With whom have they done business in the past?

Looking at how long the company has been with their current underwriter or whether they flip from one to another can tell you about the company’s viability in the market. If they can’t maintain a long-term relationship, they are most likely mishandling their reserves and putting the underwriter at greater risk. Looking at the company’s history of underwriters will display a pattern. If they’ve only worked with strong underwriters, their products are probably handled properly. If they can only attract weak underwriters, they are most likely mishandling the structure and pricing of their products.

Another area to evaluate is their reserve structure. While inexpensive products are well and good, that low cost could negatively affect the funds put in reserve to pay claims. Find out how much income from each product sold goes towards paying claims. Ask how many claims are paid each year, and take a look at their Better Business Bureau rating. If the BBB is inundated with consumer complaints about unpaid claims, that could point to a reserve issue.

One way to determine whether the reserves are handled appropriately is to find out whether their underwriter’s actuaries assist in the process of pricing the products. The actuary’s primary role in this process is to protect their company from the negative impact of having too little money to pay claims. So, they would be the most stringent about making sure the reserves are appropriately priced to accommodate the associated claims exposure.  If they sign off on product pricing and structure, that’s a good indication that the reserves are set up correctly.

It is also important to find out how the product administrator takes seasonality or market changes into account. Does the company compile it’s data to determine both long and short-term trends to refine coverage and rates? For example, more claims are filed during winter for tire and wheel policies because of worse road conditions due to potholes. The key to managing this loss ratio is to plan ahead by taking this seasonal change into consideration when first presenting the price structure.

Lastly, look at their customer service in their claims department. How fast are incoming calls answered? How quickly do they process a request? How often are calls abandoned? These statistics paint a picture of the customer experience. If customers spend most of their time waiting for their call to be picked up or for their request to be processed, you can bet that they won’t buy an F&I product from you again. Even though their claim is handled by someone else, you are essentially the face of that product administrator and the consumer will always associate that negative experience with a product you sold them.

With over 36 years of innovating consumer protection products, EFG Companies knows how to structure F&I products that increase your profit and keep enough in reserve to handle whatever the market throws our way. That’s why we are the longest-standing relationship for more than 28 years with our AM Best, “A” Rated underwriter. Find out how our consumer protection solutions and go-to-market strategies will give you the edge you need to succeed in today’s market.