Reinsurance Associates Partner Mark Genova will teach dealers the ins and outs of the reinsurance industry next week during the RV Hall of Fame Suppliers Show in Elkhart, Indiana.
Genova said the reinsurance concept has gained traction with marine and powersports dealers but is underutilized by most RV dealerships. Genova said reinsurance is more common in the auto industry because of the number of vehicles they sell in a month.
Genova will discuss reinsurance during educational sessions sponsored by T&J Dealer Services in the Younkin Theater on Monday and Wednesday. He will be available at the T&J booth (No. 119-120 in Aisle D) for one-on-one discussions.
“I think it is just a lack of education,” Genova said. “Most RV dealers concentrate on selling the RVs and maybe getting the protections for it, but they did not realize they could participate in those insurance projects. That is what we are going to be educating them on next week.”
Genova said RV dealers can operate their own insurance companies to provide various coverage options. Reinsurance enables dealers to collect the premium up front but transfer the risk from their company to another insurance company for a portion of that initial premium.
“As an insurance company, they could be participating in those profits,” Genova said. “I will be talking about what it takes to get into reinsurance, what kind of exposure they would have and the tax benefits of doing it this way.”
Genova said most dealers could start their own insurance company for the cost of forming a company in their state, which is generally “a couple thousand dollars.”
“This is sort of like setting up a retirement account,” Genova said. “You want to feed this business, so that 15, 20 or 30 years down the road you have something you can benefit from. Dealers can benefit from it earlier if they need to, but letting it grow means 10 to 15 years down the road, you could have a seven-figure account.”
Genova said dealers’ only reinsurance risk is the money generated by premiums.
“If you put in half a million in premiums into the company and tomorrow every RV you sold just blows up. That would be an awful situation, right? Suddenly, you have $5 million in claims,” Genova said. “All you would have an exposure for is the half a million in premiums. The carrier is carrying that ultimate responsibility. The worst-case scenario is that half a million in premiums that was put into the company would go away. Then you would have a company that you would just shut down.”
Genova said reinsurance will make dealers look differently at the RVs they are selling and insuring. Insuring a vehicle that is likely to have problems, such as an older RV, does not make sense with reinsurance.
“You have to monitor the business that is being written,” Genova said. “If you do not, you could be put in a situation where you are putting bad business into a corporation that will never generate a profit.”
Genova said reinsurance offers flexibility in the policies a dealership writes. He recommended initially working with an expert to design the programs.
“That is where a company like mine comes into play,” he said. “We can sit down with you and say, ‘You are writing good business. We can make this thing grow for you.’”
