May 2022 Edition

 

Thank You for Visiting With Us at Agent Summit!

On behalf of the entire iA American Sales Team, we would like to extend our sincere thanks to everyone who took time out of their busy schedule to meet with us during Agent Summit! Although we missed it last year due to COVID concerns, we were more than thrilled to attend this year's event.

 

This time around, iA American's new booth was dominated by photos of our company's powerful "helpful elephant" corporate symbol. Many agents noticed how the booth's two elephant images appeared to merge into one depending on where you stood. The words "very cool!" were shared more than once!

 

All work and no play would make for a very dull and dry Agent Summit. That's why we made this really fun video for you, starring some of your favorite Sales Reps! We think you're really going to enjoy it, so let us know what you think!

 

During the Summit, we also treated agents to private tours of our brand new  training facility, located right down the strip from Caesars Palace (see separate story, below). 

 

Thank you, again! Providing you, your dealers, and every contract holder with a superior client experience is iA American's top priority. We look forward to seeing all of you again soon!

 

Video Tour of Our New Las Vegas Training Facility!

If you and your dealers are looking for the best F&I curriculum in the industry, hosted by the best trainers in the industry, in the best training facility in the industry, you don't need to look any further than iA American Training Institute's (iAATI) incredible, brand new, state-of-the-art Las Vegas National Training Center!

 

"We had approximately 20 of our agents tour our new National Training Center during Agent Summit, and the response was outstanding," said Tony Dupaquier, North American Training Director.

 

"There was a buzz in the air from the Automotive News article about our new 15 minute F&I turn. We had several agents inquire about it, and we're excited to send their F&I managers to school to improve the production in the dealerships," Tony said.

 

"That same article prompted three F&I trainers from our competitors to ask me about how our process works. I somehow forgot to get back with them to explain it!" 

 

For a taste of everything our National Training Center has in store, click here for a short video tour. If you'd like to see it for yourself, that can be arranged! Just call Tony at 512.542.1669, or email him at [email protected]. 

 

This Friday! Join Us for Our Next Agent Spotlight: PowerRev Powersports Protection!

Your Choice of Two Meeting Times on Friday, May 27^th

This time, we’ll be sharing details about another great legacy SouthwestRe product: PowerRev powersports protection! The PowerRev brand is a proven profit-driver, offering a complete array of coverage for sports bikes, cruisers, scooters, ATVs, UTVs, snowmobiles, personal watercraft, and jetboats.

 

We’ll share in-depth details about our complete PowerRev product line, including:

• Powersports VSC
• Motorcycle VSC
• Limited Warranty
• Motorcycle Tire & Wheel
• Motorcycle Appearance Protection
• Guaranteed Asset Protection (GAP)

Mark your calendar! This is one you definitely don’t want to miss!

 

Meeting times: 8:30 a.m. CST / 9:30 a.m. EST, or 11:30 a.m. CST / 12:30 p.m. EST.

 

Thank you in advance for your participation. Please contact Glenn or Matt and let them know if you have any questions or need assistance joining in. 

 

Glenn Nielsen: [email protected]. 512.799.8697
Matt Romanowski: [email protected]. 443.880.0918

 

Upcoming iA American Training Institute (iAATI) In-Person Training Opportunities

Balancing the importance of profitability in the dealership with today’s increasingly stringent legal climate requires having the right training and processes for successful product sales. Let iA American Training Institute assist your dealerships with training opportunities that fit their needs and their schedules:

 

T.U.S.K. F&I School

 

Course description: This class introduces a progressive and innovative curriculum that is designed for business managers at every level. It teaches our customer-centric F&I process, designed by our trainers and intended for today’s more informed, better educated customers. Consistent role-play is implemented to ensure full understanding of the material covered.

 

 

iAATI Training in Las Vegas

 

When: Monday, June 6 through Thursday, June 9

 

To Register: Please click here

 

 

iAATI Training in OKC

 

When: Tuesday, June 14 through Friday, June 17

 

To Register: Please click here

 

 

iAATI Training in Las Vegas

 

When: Monday, July 11 through Thursday, July 14

 

To Register: Please click here

 

 

iAATI Training in Farmington Hills, MI

 

When: Tuesday, July 12 through Friday, July 15

 

To Register: Please click here

 

 

iAATI Training in Austin

 

When: Tuesday, July 19 through Friday, July 22

 

To Register: Please click here

 

 

For more information about iAATI training opportunities, please call or email your sales rep, or contact:

 

Tony Dupaquier | North American Training Director

[email protected] | 512.542.1669

 

Mike Holliman | National Director of Training
[email protected] | 918.361.4524

 

Demystifying Reinsurance

By Kirk Borchardt, Executive Vice President and Chief Legal Counsel

Before there was Ben & Jerry’s Ice Cream, and even before Neil Armstrong put his foot on the moon, automobile dealers have participated in reinsurance arrangements. Reinsurance is not a new or random concept created by F&I providers to take advantage of tax loopholes. It is simply a tool by which an insurance company can lawfully transfer underwriting profits to another company, the reinsurer.

 

The reinsurer’s quid pro quo for receiving the potential profits is the assumption of the insurer’s liabilities on the reinsured business. For underwriting profits to emerge, the reinsurance premiums paid by the insurer as the direct writer must exceed the claims paid by the reinsurer. Underwriting profits are not guaranteed to the reinsurer. 

 

Reinsurance is a fairly simple secondary market transaction that is used throughout the commercial insurance industry, and it dates back to the days when Edward Lloyd first opened his coffee shop on the River Thames. What makes today’s F&I reinsurance somewhat obtuse is the apparent minefield of federal income tax provisions a reinsurer must navigate.

 

If one was to mark the date when matters became complicated, one can look to the Tax Reform Act of 1986. Prior to 1986, most F&I reinsurance companies were organized in that arid state of Arizona, which had become the domicile of choice for banks, finance companies and automobile dealers to organize credit life and credit disability reinsurers.

 

Not only had reinsurance of vehicle service contracts and ancillary products not yet taken off, but also the business constituted casualty insurance that could not be ceded into a credit life reinsurer. F&I reinsurance companies simply did not exist. The 1986 Tax Act changed that with several important provisions. 

 

First, the 1986 Tax Act created a draconian tax called the branch profits tax. The branch profits tax imposes a layer of tax on the income of any foreign corporation that engages in a U.S. trade or business, including those that might qualify as a controlled foreign corporation (CFC). The basic CFC rules had been part of the Internal Revenue Code since 1962.

 

Realizing the unintended application of the branch profit tax to CFCs, Congress enacted a corrective measure in 1988 that allowed qualifying CFCs to make an election to be treated like a domestic corporation for all purposes and thereby avoid the branch profits tax. Voila! – the Section 953(d) election was born. 

 

Second, for reasons similar to those that led to the adoption of the Risk Retention Act of 1986, through the adoption of the Tax Reform Act of 1986 Congress used the Internal Revenue Code to establish an additional pathway for commercial insureds to more easily create alternative insurance markets in response to the historically hard market that existed since 1982. By making an election under newly adopted Section 831(b), a small casualty insurer or reinsurer could be taxed only on its investment income, not its underwriting gains.

 

A small insurer, as defined in the 1986 version of Section 831(b), was a company with net premiums between $350,000 and $1,200,000. Viewed as a measure to reduce the initial capital outlay to forming a small insurance company and still allow the company to thrive, the adoption of Section 831(b), together with the Section 953(d) election, fueled the growth of dealer-owned reinsurance companies for F&I products and put a number of exotic jurisdictions on the map to serve as suitable places to organize the companies. We avail ourselves of these jurisdictions to minimize the regulatory burdens of forming and maintaining a reinsurance company, not to avoid taxes.

 

Some 36 years later, not much has changed, although a small casualty insurance company can now write up to $2,450,000 in annual premiums. And we now have the option of growing Indian tribal jurisdictions closer to home that can serve as the place of domicile for dealer-owned reinsurance companies, eliminating the need to make a Section 953(d) election.

 

The reinsurance model for dealer profit participation has endured changing market conditions, economic cycles, and a pandemic, and it surely will continue, even as new ideas emerge. 

 

iA American Claims Performance for April 2022

 

Memorial Day Holiday

Please be aware that our offices will be closed on Monday, May 30^th for Memorial Day. We will resume normal operating hours on Tuesday, May 31^st.