Questions That Every Dealer Should Ask Their Reinsurance Provider

Questions That Every Dealer Should Ask Their Reinsurance Provider

The Funds:

  1. How much is in my trust account?  — You can see this online, any time you wish.  We also provide quarterly reviews to go over your reinsurance program’s performance.  (As you’ll see, this answer gets used over and over.)
  2. Where is my trust account held? — Your choice.  If you’d like, you can use our turnkey solution with Wells Fargo & UMB.
  3. How is the trust account invested? — Unearned premiums in trust accounts must be invested according to NAIC guidelines.  Earned premiums can be invested however you’d like.
  4. How much investment income has earned? — You can see this online, any time you wish.
  5. Do I have to file disclosure forms to the IRS or Dept. of Commerce stating I have offshore holdings? — No, because SideCars dealers don’t have holdings offshore.

Current Status:

  1. What is the current unearned premium? — You can see this online, any time you wish.  We also provide quarterly reviews to go over your reinsurance program’s performance.
  2. If the funds balance above is greater than the unearned premium:
    • Can I have a release of surplus? — Yes, we make this painless.
      • How would it be taxed? — As either a dividend or a long-term capital gains tax, depending upon the situation.
  3. What are the paid claims? — You can see this online, any time you wish.  We also provide quarterly reviews to go over your reinsurance program’s performance.
  4. What is my loss ratio? — You can see this online, any time you wish.  We also provide quarterly reviews to go over your reinsurance program’s performance.
  5. Can I borrow the unearned premiums?  On what terms? — Yes, depending upon the situation.  Our terms for this are the most competitive in the industry.

Fees and Costs:

  1. If I remit a Vehicle Service Contract for $1000, exactly how much goes into my account and when? — Let’s assume your dealer cost of a VSC is $150 (all-in, with no additional percentage fees).  This leaves $850 to be deposited into your reinsurance company’s investment account within one week.  Assuming a 50% loss ratio, this means that you have “found money” in the amount of $425—and it is tax-advantaged!
  2. What are the itemized fees and costs, Admin Fee, Cede Fee, Premium and Excise Taxes, Other Expenses? — We charge $3500 for dealers to get started.  Every January thereafter, you’ll be invoiced for $3500 (our Annual Management Fee for keeping your reinsurance company in good standing, and the tax return).  The typical dealer Admin Fee is $150 for a Vehicle Service Contract.  This $150 also includes the Cede Fee and Premium Taxes.  Since no funds ever leave the United States, there is no need to pay Excise Taxes. There are no other expenses.
  3. If there is a claim for $1000, exactly how much comes out of my account? — Exactly $1000. There is no Loss Adjustment Expense, or any other crazy fee-gouging.  Most of our dealers net-remit their claims to us, which helps their cash flow—and helps make claims simple to track.
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