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“THE NEED FOR ON-SITE INSPECTIONS IN SUPPORT OF AUTOMOTIVE EXTENDED SERVICE PLAN CLAIMS ADMINISTRATION” Tom Powers Director, Business Development PowerPoint PPT Presentation

“THE NEED FOR ON-SITE INSPECTIONS IN SUPPORT OF AUTOMOTIVE EXTENDED SERVICE PLAN CLAIMS ADMINISTRATION” Tom Powers Director, Business Development Magoo’s Automotive Consultants, Inc. Purpose, Presenter, Magoo’s

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“THE NEED FOR ON-SITE INSPECTIONS IN SUPPORT OF AUTOMOTIVE EXTENDED SERVICE PLAN CLAIMS ADMINISTRATION” Tom Powers Director, Business Development

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“THE NEED FOR ON-SITE INSPECTIONS IN SUPPORT OF AUTOMOTIVE

EXTENDED SERVICE PLAN CLAIMS ADMINISTRATION”

Tom Powers

Director, Business Development

Magoo’s Automotive Consultants, Inc.


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Purpose, Presenter, Magoo’s

  • Purpose: To highlight the “why?” and “how?” of vehicle inspections in support of auto warranty claims administration

  • Presenter: Tom Powers

    Director, Business Development

  • Magoo’s Automotive Consultants

    • 17 years in the vehicle inspections business

    • Tens of thousands mechanical inspections

    • A network of 4,000 skilled inspectors across the US, parts of Canada and other territories


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Auto Warranty Industry

$9 Bil. / Year

3rd-Party

$2 Bil.

OEM

$7 Bil.

Automobile Warranties & Extended Service Contracts

The Automotive OEM Warranty & Extended Service Contract Industry

Source: SEC Filings, Warranty Week


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OEM Administrators

  • OEM warranty administrators have advantages –

    • Leverage through ongoing relationships

    • More established fees / service norms

    • Repair facility network (dealerships)


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3rd-Party Administrators

  • TPAs are at a disadvantage –

    • Little leverage

      • Many one-off transactions

      • Across-the-board rates / service norms

      • Repair facilities that are motivated to maximize their repair revenue

    • Higher risk, greater potential for fraud, higher probability of inflated repair orders


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Needed: An Honest Broker

  • TPAs need objective, 3rd-party inspections conducted by highly qualified mechanics

  • Most adjusters are NOT mechanics!

  • Most decisions need to be made immediately – people are waiting!

  • Every claim represents a potential angry customer and/or legal liability

  • In a perfect world, each adjuster could meet with all parties involved to reach a fair and mutually agreeable conclusion

  • In a perfect world …


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ESP Administration:Orchestrating The Players

  • Car/Policy owner

  • Policy Seller

  • Administrator (Seller or TPA)

  • Repair facility

  • Insurer/underwriter

  • Inspection Provider


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This Is Not “Voodoo!”

The inspection/validation process is about identifying factual evidence and documenting the “cause and effect” the facts reveal


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The Service – Fact Analysis

  • Mechanics report on-site to verify facts -- “cause of failure” and “extent of damage”

  • A written report with - digital photos …

    documenting the observed facts

    and the supporting expert opinion

  • Inspectors often call in “live” from the field, then secure, written reports are made available online within 24 hours


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The Product – Field Reports


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“Deny, Deny, Deny”

Why not simply deny claims and put the burden of proof on the consumer?

  • Negative press

  • Bad news travels fast – especially via the net

  • State Depts. of Insurance: fines/sanctions

  • Litigation


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Denial Companies …

  • They come and they go …

  • Mostly they go!

  • Sound business practices and repeatable standards lead to longevity and a solid reputation in the ESP administration industry


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Best Practices

  • Establish Inspection Guidelines/Standards

  • Standardized Claims Validation Process

  • Utilize an unimpeachable 3rd-party Inspection Service

    Without a total commitment to claims validation integrity, the process breaks down!


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Inspection “Triggers”

  • Dollar amount ($1,000 +)

  • Suspect Claimants (numerous claims)

  • Unknown/suspect repair shops

  • Suspect administrators (internal fraud)

  • Random testing for quality control


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Why We Inspect –In their own words …

  • Quantifiable Savings - $400 for each $100 spent on inspections

  • “Soft Savings” – reduced litigation, fewer customer disputes

  • Supports the ability to make quick decisions – customers are waiting!

  • Builds a knowledge and experience base for handling future claims and designing new warranty products


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Inspection ServicesFor Other Industries

  • Quick lubes

  • Insurance companies (garage policies)

  • Lease return / financial institutions

  • Consumers-to-Consumer (via Carfax)

  • Manufacturers

  • Home warranty inspections, etc.

    We provide eyes, ears, expertise, and a digital camera -- on site!


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Right For Your Industry?

  • What’s the value of the average claim?

  • Owned, leveraged, known or unknown repair facilities?

  • High potential for inflated repair estimates?

  • Is the warranty highly prized in your product’s/service’s value proposition?

  • Do claims administrators need to make “on-the-spot” decisions over the phone?


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What’s Around the Bend?

  • Live cams/reports via hi-speed wireless

  • GPS confirmation of locations

  • RF Tags

  • The sky’s the limit!


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Q&A


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