Tag Archives: warranty

Smoke & Mirrors: Warranty Burn Rates

Car Dealers: What’s your Burn Rate? Do you know? Is it something your warranty company keeps you informed of?

Probably not! Unless, of course, they are about to increase the premium you pay for your warranties at which time you will be told what your burn rate is – and it will generally be high!

So what is your burn rate?
Simply put, it is the amount of claims you have had on your warranties against the amount of premium that has been set aside to meet those claims in a financial year, it is expressed as a percentage.

So you may be told that your burn rate is 85%
Sounds high, and probably justifies a price increase, but it is a meaningless figure unless you know the amount that has been set aside by the warranty company to cover claims.

Your initial thoughts may be that your burn rate is 85% of the amount you are paying for your warranties. So if you are paying £180 for 12 months cover you may believe that your claims are costing £153 per vehicle (£180*85%). But trust me, if your claims per vehicle was anything like that figure your warranty company would have dropped you a long time ago.

So how do you make sense of this burn rate?
Well, first of all the amount that you pay for your warranties has nothing to do with the amount that goes into the pot to pay claims. Generally there are a lot of mouths to feed from your purchase of a warranty, the administrator, an underwriter and a broker to name a few.

As a general rule of thumb about 45% of what you pay for your warranties is taken out to feed these people. This equates to £81 using your £180 cost example (£180*45%).

The £99 that is left is the bit that goes towards paying claims. So your 85% burn rate now equates to £84.15 per vehicle (£99*85%)
Still a bit high… and that is because there are often other mouths to feed every time a claim is made. Some administrators charge a claims handling fee of as much as £45 to process a claim, and if an engineer is called in at about £120 a time to verify the cause of the fault his costs are added to the claim.

Now if we work on a claims ratio of 1:3 the claims handling fee is costing £15 per vehicle (£45/3), and if an engineer is called out to investigate 1:20 claims that will cost about £6 per vehicle (£120/20).
If we remove this £21 of costs from your £84.15 per vehicle we are now down to £63.15.

So from your possible initial thought that your claims cost were £153 per vehicle (£180*85%) when we remove the smoke and mirrors we find your actual repair costs are only £63.15 per vehicle which gives a true claims burn rate of just 35.08% (63.15/180*100)
All of a sudden a price rise seems unjustifiable.

So if you are ever quoted a burn rate as the reason for an increase in warranty costs – ask questions.

Thank you for reading and I hope the contents will serve you well at some time. Next month lets ask the question “Whose customer is it anyway?” Nothing to do with GDPR but a lot to do with your relationship with your customers.

Thanks for reading,
Alan Davison

Crystal Clear Warranty Video 2: “Child’s Play”

Today we launch the second Crystal Clear Warranty video in our series! We also pledge to turn your views into a donation to BEN which last time helped us raise £1,000 for those in the motor trade falling on hard times!

Greetings everyone! Firstly before I begin, everyone at Warranty Administration Services Ltd would like to say THANK YOU! By watching our first video, you helped raise £1,000 for BEN to support those falling on hard times in the motor trade. Thank you so much!

We’re now back with our second Crystal Clear Warranty video! After the first video received critical acclaim and rumors of a Hollywood spin-off series already starting to spread (in our dreams), we are here to give you the link to our next episode!

BEN Logo

Remember that this is more than just our way of presenting our Crystal Clear Warranty. We are  proud to back our friends at BEN, and we pledge to turn your video views into a donation to help them support many of our motor trade colleagues during difficult times. So why not grab yourself a drink and spend 2 minutes with our new on-screen characters! Click the link below!

Crystal Clear Warranty Video Series

Crystal Clear Warranty Video Series

Video link! warrantyadmin.co.uk/ben

If our contribution helps make a difference in someones life supported by BEN, then it’s a job well done!

Video Series Launch – Smiles For BEN

Today we launch our first video in a new series aimed at the motor trade! We have also pledged to turn your views into a donation to BEN, to help those in the trade falling on hard times. So grab a hot drink, and take 2 minutes to giggle at our first step into the silver screen!

Greetings everyone! You may have already heard around the web that we release our very first video today! The first in a brand new series aimed at making light of the motor trade through the adventures of our characters – the eccentric car dealership manager, and his plucky sidekick Tim! This first video is entitled “Frustration”, so click the link below to watch how Tim steps-up and saves the day!

Crystal Clear Warranty Video

Watch the video here! warrantyadmin.co.uk/ben


BEN Logo

We have also pledged to turn your views into a donation to BEN, to help those in the motor trade falling under hard times. Watch, laugh, smile, and most importantly share it with your friends.

Crystal Clear Warranty Video

Every view will help to raise money for BEN; the not-for-profit team who support many of our Motor Trade colleagues during difficult times.

Video link! warrantyadmin.co.uk/ben

If our small contribution helps put a smile on the face of someone being supported by BEN, then it’s a job well done!

Mitsubishi To Offer Five-Year Warranty

Mitsubishi joins Hyundai, Toyota, Subaru, SsangYong as one of the select few car manufacturers to offer customers a five-year warranty on it’s vehicles.

Mitsubishi in the UK has recently introduced a comprehensive five year warranty as standard across its model line up. From January 1 2015, all their cars and commercial vehicles will come as standard with a fully comprehensive five-year warranty package.

By comparison, Renault presently offers a four year warranty, and Kia stands alone in offering its cars with seven year or 100,000 miles cover. Vauxhall did launch a Lifetime Warranty programme in August 2010 but as we recently reported, they decided to reduce it down to a three year/60,000 mile warranty.

Lance Bradley, the managing director of Mitsubishi Motors in the UK said “the move to a 5-year warranty reflected the brand’s confidence in the quality and reliability of its vehicles”.

On the back of an improved model line-up, Mitsubishi has been improving its sales while recruiting dealers. New car registrations in the year to November 2014 rose 74.4% to 14,443 units giving it a market share of 0.39%.

Thank you for reading this motoring news post on the WAS Blog! Image credit Brandon McCormack via Flickr.

Vauxhall No Longer Offer Lifetime Warranty

Car manufacturer Vauxhall will no longer offer a “lifetime 100,000 mile” warranty. From January 2015 all new cars and vans will instead only be covered for 3 years or 60,000 miles.

This news comes only four years after the manufacturer launched the lifetime / 100,000 mile warranty scheme back in 2010,  and only a matter of days after Vauxhall’s announced that some new Vauxhall Corsa and Vauxhall Adam owners should not drive their cars due to a steering wheel fault.

Vauxhall’s chairman and managing director Tim Tozer has credited this to the changing ownership landscape and significant investment in new technology as key drivers for the change.

Mr Tozer said: ‘In today’s market, 65 per cent of retail sales are supported by a finance package and within that, over 60 per cent are PCPs. This has dramatically changed ownership patterns resulting in fewer customers retaining their cars beyond three years.

‘Couple this with a €4 billion investment in high technology powertrains and state of the art new products and it no longer makes business sense to invest in 100,000 mile warranty cover. We will continue to focus our investment on providing our customers with a high quality and satisfying experience, both at dealer and company level, throughout their purchase and ownership period.’

Existing vehicles with a Lifetime Warranty will still be covered for up to 100,000 miles whilst the vehicle remains with the first owner, subject to annual validation and servicing. Vauxhall has said that the new 3 year / 60,000 mile warranty will be transferable though.

Car Warranty Code Announced by Motor Codes

The regulatory body Motor Codes has launched the Vehicle Warranty Products code of practice. A set of customer service guidelines for buyers of car warranties approved by the Trading Standards Institute.

This announcement comes after an original car warranty code of practice was suspended by Motor Codes in 2011 when online retailer Autoquake  went into administration, and Motor Codes failed to protect consumers.

The new code:

  • Regulates the advertising and sale of warranty policies.
  • Ensures car warranty code subscribers produce policy documentation written in plain English.
  • Details exactly what customers should expect from the claims process.
  • Ensures that no high-pressure selling is endured by customers of approved car warranty code subscribers.

The voluntary code of practice launches with over half the UK’s warranty providers signed up. Motor Codes said the new car warranty code brings protection to around 3 million policy holders of products such as MoT test insurance, roadside assistance and extended warranties.

“It is worth mentioning that our very own self funded warranty agreement wording, used by some of the UK’s largest used car dealers, has been awarded the Crystal Mark for Clarity by the Plain English Campaign.”

Our dealers can be assured that the warranty they provide to their customers, has been tried and tested for over 30 years. Our self funded warranty also comes with an experienced Claims Handling team who work on your behalf, to your precise instructions.

Our self funded warranty, becomes “your” warranty. Tailored to meet your requirements and satisfy those of your customers.

Find out more about our self funded warranty.

Listening To The Dealers

Old Warranty BooksWe like to think that the name Warranty Administration Services Ltd, has been synonymous with delivering innovative solutions to the motor trade. Way back in 1984, we pioneered the self-funded warranty, and the product has never looked back.

Fast forward to 2013, and this year we introduce a new and exciting car dealer warranty. One designed for small used car dealers and home traders as an affordable, straight-talking warranty solution.


DriveLine+ Logo

The new warranty called Driveline+ or “Driveline Plus” as you would say it, is the result of listening to the views of many small dealers and home traders. We noticed two recurring common problems.

One. Many small dealers and home traders find that “a lack of providing a warranty” holds their business back. Customers expect a warranty when buying a car from a dealer it seems.

And two. Small dealers and traders are frustrated by the inflexibility of warranty providers to meet their needs, because of the presumed high risk attached to the small number of cars they sell. Driveline+ is our answer to these problems!

Driveline+ is a used car warranty with no risk, and is not bound or restricted by the FCA. The cover level is “drive line” focussed, so it covers the important items on the car, and also covers a few extra components. That’s the “plus” part! In order to keep the costs as competitive as possible, we have excluded the “bells and whistles” that more comprehensive, and in-turn, more expensive warranties include.

Warranty Administration Services LtdPolicy registration is completed online, and only takes a minute to create and print your agreement paperwork, ready to hand over to the customer during the sale.

This is why Driveline+ is a fantastic warranty solution for small used car dealers, and newly established home traders. It is a straight talking competitively priced level of cover, easy to understand, and easy to sell. Also, unlike more expensive warranties, there are no “minimum orders” with Driveline+.

If you’re a small used car dealer or a home trader looking for a straight-talking no risk warranty, backed by a motor trade service provider with over 30 years experience, then Driveline+ could be the answer for you.

To find our more, give us a call on 01522 515600, or click here to download an information pack.