Tag Archive | "Insurance Administrators"

Resource Automotive: An Interview with Charlie Robinson

Agent Entrepreneur’s Managing Editor, Diana Jacobi, recently spoke with Charlie Robinson, president and COO of Resource Automotive Group, to get a feel for what makes Resource unique and what sets them apart from the competition. Because Resource includes quite a diverse group of companies, including The Warranty Group and Virginia Surety, Resource is a great go-to source regarding thoughts about what the future holds in 2011 and what qualities and strategies an independent agent should have so that he or she can overcome any hurdles that come their way.

Tell us a little about your company and what you do to add value to the agent entrepreneur.

Robinson: Resource Automotive is a subsidiary of The Warranty Group, and we’ve been around since 1964. Our greatest value-add for agents, first and foremost, is the reputation and security we provide through Virginia Surety, our wholly-owned insurance company. Virginia Surety backs all of our products, so our agents never worry about the financial stability of the underwriter. Their clients appreciate this, as well.

Also, we provide a one-source solution. We supply administration, underwriting, product pricing and compliance support. We provide the complete package, and agents are free to configure whatever program works best for themselves and their clients.

To understand our company, however, you must know that we approach the business very strategically. We look for every method to increase profit per unit. We utilize automation and technology at every opportunity, and we look at each department to identify profit leaks and develop new processes to assure maximum efficiency and leverage every customer touch point. Good examples are our pre-paid maintenance program, DriverPlus, which we configure and implement for our clients as well as our online claims system, TWGConnect, which gives our dealers an edge in claims submission and warranty management.

But we’re about much more than products. We’re about an operating methodology and systems that are proven to be successful in driving customer acquisition, retention and loyalty. That’s why we’re the world’s largest provider of independent service contracts across a wide range of consumer products in 33 countries.

You headed up F&I for Asbury Automotive Group for four years. How does the knowledge you gained on the public side impact your position as the president and COO of Resource Automotive?

Robinson: This is my second term with retail. I started out in the ’70s, and I learned that when you are dealing with automobile dealers, you absolutely have to be able to see things through their eyes. If you can fully understand their needs, you are in a much better position to anticipate their needs and create a win/win for them and us.

The world of public ownership has given me additional tools to measure our success and develop and implement winning strategies. The accounting requirements for a public company require a creative approach to program design and development to allow the client to achieve their financial objectives.

I know that one of the differentiators of Resource is the ability to offer dealers a wide range of service contract models. Can you describe these models and explain the advantages of each? Also, how long has Resource Automotive been offering these different options?

Robinson: Resource Automotive has been in the service contract business since the mid ’70s. There are two basic approaches to the service contract business: programs that allow the dealer, in addition to collecting an upfront commission, to participate in the underwriting results, or a program that is direct from the underwriter and the dealer earns an upfront fee. Within the participation side there are a few different approaches. Among the models that dealers can choose are the controlled foreign corporation (CFC), non-controlled foreign corporation (NCFC), retrospective or a dealer obligor program. We are the industry’s largest provider offering all these solutions allowing us to structure a program to address what the client wants when they want it.

When you look at these different models, on the participation side, a retro is something that might be appropriate for a public company, as choosing this option would get you as much revenue in the calendar year as possible, without contingent liabilities. An NCFC is a long-term investment, and while we do not give tax advice or accounting advice, in some cases it may give the dealer certain tax advantages. A controlled foreign corporation would be most similar to NCFC, except the dealer wholly owns it himself, without the involvement of any other dealers.

Resource is one – if not the only – company that has been highly successful in marketing the self-funded product. Why is that, and do you think that will change in the future?

Robinson: Through its acquisition and integration of First Extended Service Corp., Resource has embedded the dealer obligor program as a core component of its solution portfolio. This program, backed by the financial and regulatory strength of Virginia Surety, delivers an industry-leading solution that is hard to copy. The fact that we’ve been conducting business for such a long time with a solid foundation and a good reputation is definitely a competitive advantage for us.

What are some of the unique selling propositions of self-funded versus other dealer participations like NCFC, CFC or retro?

Robinson: Primarily, the immediate use of a much larger percentage of the selling price is available through the self-funded program. It generates quite a bit of capital. Typically, our dealer obligor client is someone who wants to buy additional dealerships and is interested in raising capital. Access to capital is the main attraction of this approach.

As a true veteran of the F&I industry, what advice would you give agent entrepreneurs to position themselves to stand out from their competitors?

Robinson: Your ability to deliver high impact, innovative products and enhanced revenues for your client is the core of your differentiation. Partnering with the right administrator and underwriter is central to achieving these goals.

Do you think an agent should sell products for all departments in a dealership (i.e., F&I, sales, service), or should the agent focus on F&I? Why?

Robinson: The agent focus should be on their specific field of expertise where they can drive results. The more competencies you bring to the client, the more you can expand your menu of services and products.

What products do you think will be hot for 2011 and why?

Robinson: We’re seeing double-digit growth in our certified used program, QCertified. Certified is a buzzword that consumers have caught on to. The average certified used car is selling for $1,000 more for a dealer, and it’s turning on the lot seven to 10 days faster. So, we’ve had an awful lot of dealers come to us and say, “I want to differentiate myself in my marketplace. I want to certify all my used cars. I want to cover them all for up to 100,000 miles.” This product is getting great traction and growing very quickly.

Do you know of, or can you foresee, any technology changes on the horizon?

Robinson: I think electronic desking of deals is the next big wave. It’s comparable to when the menu was introduced five or six years ago. If dealers can get their sales operations to negotiate every deal the right way, the same way, as we’ve demonstrated for years in the F&I department, then they’ll see a significant impact on their front-end process and results.

Looking to the future, what are some of the major hurdles an agent will need to overcome?

Robinson: I think that they are going to need to deliver consistent value, because the competition increases every year. Many of the current group of agents have been around since almost the beginning of F&I, and they see the critical role that the department plays in overall dealership profitability. Many began working in the dealership or as a vendor, and they saw the opportunity in becoming an entrepreneur and creating and implementing a business strategy. They see the need to always bring more value to the relationship. So, I think consistent value is something the agent needs to incorporate into their approach because the competition will continue to increase, and the market tends to drive down pricing. So, as an agent, you are going to have to circle back to what you deliver, because there are going to be more people knocking on dealers’ doors to get their business.

Over the years, you have worked with many agent entrepreneurs. What are the characteristics of the best ones?

Robinson: Professionalism, attitude, work ethic.

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