Response to The Faricy Boys RFQ

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Executive Summary

The Faricy Boys would benefit from switching all F&I products to truWarranty, with more than $800,000 in annual savings (see pro forma below).  

Switching to a No-Service Model is the key, as is utilizing a salaried employee for training and development.  truWarranty makes it all turn-key, including a launch timeline of 30 days or less from beginning to end.  Our answers to this RFQ provide more detail, and we would be honored to present further information in person.

A. About Us

Description of truWarranty
  • Since 2008, truWarranty has provided reinsurance consulting for over 1000 dealerships, first through partnerships with TPAs like First Extended, AUL, Allstate, MBPI, and others.  Starting in 2017, truWarranty became a full-featured third party administrator of F&I products, using A-rated insurance clips from Fortegra, and has become one of the fastest-growing TPAs in the industry.
  • truWarranty recognizes that the pandemic shifted the F&I industry in several important ways: it’s now common knowledge that consumers do not want over-priced things of any sort shoved down their throats.  Income development has changed from relying on heavy-handed, memorized sales word tracks to ensuring that fairly-priced F&I products are presented consistently and compliantly.  
  • Apple has recently reinforced the F&I industry in a huge way—most consumers are now accustomed to the concept of protecting expensive possessions like their phone, and so the old sales word tracks have become unnecessary and even detrimental.
  • It no longer makes sense for dealerships to pay one lump sum for training & development to be included with the admin fee of any given F&I product.  Pay only for what you need—the F&I product itself—and hire your own expertise for training.  Why pay $3 million extra every year for training when you can get better results with one $300,000 employee?  truWarranty can assist in sourcing this key employee for your F&I training & development.  
  • Working with truWarranty ensures that your dealership is working directly with the administrator.  Every one of our contracts is administered and adjudicated natively, by our team of 32 employees.  There are no middle-men.  There is no outsourcing.  There is no private equity nonsense.  When decisions are needed, they are made rapidly and assertively.  We have removed every ounce of unnecessary fluff.
  • Collectively, our team encompasses decades of experience in retail, adjudication, administration, and money management.  truWarranty utilizes the following partners to round out our expertise:
  • ~F&I Sentinel
  • ~Fortegra Insurance
  • ~Meenan & Associates
  • ~GPW
  • ~Reinsurance Associates
  • ~PCMI
  • ~United Missouri Bank (UMB)
  • ~Mosaic Compliance
  • ~MarksNelson
  • ~StoneEagle
  • ~Equity-4-U (truEquity)

truWarranty’s qualifications to manage accounts similar to yours
  • truWarranty currently administers contracts for more than 1000 dealers across the nation, and single-handedly represents 25% of Fortegra’s book of auto business.  
  • Our largest client is Morgan Auto Group, where we displaced multiple competitors (JM&A, Safeguard, Total Warranty Services, and Axiom) to provide the Morgan family a one-stop shop for every one of their F&I needs.  
  • Another large client of ours raised PVR by $697 just by switching from Southwest Re to truWarranty, and bringing their training & development in-house.  This translated to an additional $24 million added to their bottom line, each and every year.
  • truWarranty’s reinsurance expertise makes it easy for us to clone the existing coverages your finance managers are accustomed to selling, and assimilating all your current administrators under one umbrella.  This greatly reduces the friction of switching F&I administrators.
Location of truWarranty’s team
  • truWarranty is headquartered in Joplin, MO, with offices in Dallas, TX and Houston, TX.  
  • Our servicing team travels extensively, and also includes members from Minnesota, Wisconsin, Massachusetts, and Florida.  
  • We agree that local representation is important, which is why we strongly encourage our dealers to let us help them hire at least one full time employee to provide you the best possible service.  This employee is paid for using a small fraction of the savings you realize from paying only for what you need in F&I products.
  • In the time it takes for your new employee to get up to speed with our products and your dealerships, the truWarranty servicing team is on-site and on-call, taking care of every need your dealerships have.

How truWarranty measures success
  • Our singular goal is to help your dealerships look and feel like the TPA, without any of the hassle or cost.  
  • Real-time reporting is provided by StoneEagle’s SecureMetrics so that every dealership employee’s progress is easily monitored.  
  • Transparent reinsurance reporting ensures you always know how your dealerships stand when it comes to profit participation.
  • We listen to what *you* want for your dealerships’ goals, and then align our actions accordingly.  Helping you achieve your goals is the definition of us being successful.

B. Core F&I Services Offered

Timeline for switching to truWarranty
  • Once the dealer agreement is signed, it will take 30 days to launch The Faricy Boys from beginning to end. This is possible because of our ability to easily clone the existing program being used, reducing the amount of finance manager training (and angst).
  • Most implementation meetings are useless fluff.  From the beginning, we listen to what you want to accomplish—and then avoid having meetings about meetings.  
  • The truWarranty Executive Team is available now for presentations and on-site visits.
Review & Evaluation of Risks
  • All financial, tax, regulatory, and insurance-related risks are managed and mitigated by our partners mentioned previously.  truWarranty works closely with the leadership teams of UMB, GPW, Meenan, MarksNelson, Reinsurance Associates, and F&I Sentinel to ensure there is no unnecessary risk ever endured by our clients.
Evaluation & Recommendation of Reinsured Products
  • truWarranty has found the traditional CFC structure to be the simplest, most cost-effective participation solution for most dealership groups.  DOWCs are a very complicated (and pricey) way to achieve a slightly worse result than using CFCs.  For large dealer groups, it may be possible that a retro is the best fit.
  • With the exception of GAP, all products should be considered for participation.  It’s possible that Tire & Wheel should also be excluded, depending upon several variables.
Summary of Product Fees
  • truWarranty never charges Loss Adjustment Expenses. (these should be outlawed)
  • Dealers have the choice in the beginning between admin fees that are “all-in-one” (inclusive of ceding fee and premium tax) or lower admin fees that have a 4% ceding fee and 2% premium tax.  It doesn’t matter to us which direction is chosen.
  • United Missouri Bank (UMB) charges $250 quarterly in custodial account fees.
  • There are no hidden fees or gotchas.  
  • Admin fees and program eligibility are listed in the attached rate cards.
Summary of Income Development
  • During the initial launch, truWarranty will provide Full-Service income development at no extra charge.
  • After truWarranty has been launched (approximately 30 days), we provide dealers the option of Limited Service income development on an as-needed basis.  The cost is $800 per day per trained truWarranty professional, and can be utilized any time.  No minimums or other catches.
  • truWarranty believes the Full-Service model is no longer necessary for dealership groups who understand the power of hiring their own employee(s), especially given that a dealer will easily pay 10X the employee’s annual salary to obtain full service from a TPA.  Your Fixed-Ops Director doesn’t need a $3 million per year “crutch” like a full-service TPA, so why should anyone else?
Prompt Responsiveness
  • At truWarranty, we pride ourselves in being courteous and professional, and this absolutely includes being responsive to any requests.
State & Federal Compliance
  • All our products are reviewed for state and federal requirements by both Fortegra’s underwriting and compliance teams, as well as Meenan & Associates.  Our on-staff Risk Management Team regularly reviews all forms and works hand in hand with F&I Sentinel to ensure 100% approval by all relevant lenders.

C. Claims and Administrative Services

Claims Adjudication
  • Our team of 21 claims adjusters are all truWarranty employees, and in-house. We are proud to bring back the “human element” to claims adjudication.
Claims Reporting
  • Claims reports specific to your dealerships are easily available from anyone on our team, or can be run yourself.
  • Cession statements are also easily available from anyone on our team.
Claims Control
  • truWarranty utilizes customized claims notes for each rooftop in your dealership group, so that you are given maximum control over what claims are paid, and how.  All of our claim reimbursements happen via instant credit cards, generated automatically for the exact amount of each claim.
Monthly Claims Reports
  • Claims reports specific to your dealerships are easily available from anyone on our team, or can be run yourself.  These will include dates of loss, location, model, and amount of claims.
Monthly Cession Statements
  • Cession statements are easily available from anyone on our team, and are automatically sent out monthly.
Reinsurance options
  • CFC is the preferred reinsurance vehicle for truWaranty.
  • NCFC is no longer an option.
  • Retros may make sense if your dealerships are too large.
  • DOWCs are available, but not recommended—they’re unnecessary, expensive, and complicated.
Products Included in Reinsurance
  • Nearly every product is worth considering for participation: VSC, Bundle, Powertrain Warranty, Appearance, PDR, AntiTheft, etc.
  • truWarranty does not recommend or allow the reinsurance of GAP.  This is due to several factors outside the dealers’ control.
  • It’s also possible that certain products like Tire & Wheel should not be reinsured, either, depending on the dealership location.
Long Term Advisory Services
  • truWarranty keeps the line of communication wide open to provide general advice on F&I products, whenever the dealer needs it.
  • For tax advice, we defer to GPW and MarksNelson.
  • For investment advice, we defer to UMB.
  • For compliance advice, we defer to Meenan & Associates and Mosaic.

D. Service Team / Service Plan

A big part of our secret sauce is our approach to No-Service/Limited-Service Models.  We respectfully decline to go into specific details in a public setting, but would welcome the opportunity to map our approach out in detail, privately.

E. Proforma Program Structure

F. Performance Measurement

In conclusion

Based on the data provided, The Faricy Boys retain a lot of their trades and, as a result, sell a lot of older vehicles with higher miles.  This means they will benefit greatly from more diversity in their VSC lineup. truWarranty VSC programs go back 30+ years, and we have options for any vehicle under 500,000 miles.  We also see that The Faricy Boys sell a significant number of heavy trucks and commercial vehicles. TruWarranty’s unique commercial and unlimited mile VSC lineup will allow a higher number of VSC opportunities.  With The Faricy Boys being heavy in domestic vehicles, this is going to be key to increasing F&I profitability.  

We also noticed that ancillary production is strong with The Faricy Boys, which only adds to the potential increase we see with our ancillary lineup and additional product opportunities.  They are getting above industry average results with only 5 ancillary product opportunities—with truWarranty, product penetration can be expanded using products like our unique Battery service contract and customizable Bundle products (among others).
The Faricy Boys have loss ratios in line with industry standards, which truWarranty can easily expand on using our hands-on claims team.  truWarranty offers more direct involvement with claims and goodwill than any other TPA (to our knowledge), and we pride ourselves on providing maximum flexibility.