Despite ongoing drubbings by Consumer Reports, which last month launched an education campaign advising shoppers against buying extended service plans (see TWICE, Dec. 4, p. 28), warranty providers say demand for their products remains high as CE shoppers seek to protect their high-tech investments.
TWICE recently surveyed the industry's leading warranty companies to get their take on the business climate and learn about their latest programs and value-added services. Here's what they had to say.
Matt Frankel, president, AIG Warranty: Business is great, retail has been very strong, and we're going to have a very good year.
We're positioned to make sure attachment rates are up. We're maximizing the customer experience through dynamic pricing, which matches the price that consumers pay for a plan to the value of the product they buy and the services they get. You can't charge the same price for services on a $300 camcorder that you did when that same camcorder sold for $1,000. So we're doing more price banding. We have five different price bands now, compared to only one before. It allows us to offer our product at a lower price and maximize attachments.
Bruce Saulnier, president, AMT Service: Business is phenomenal and our pipeline of new opportunities continues to grow daily. The greatest growth is coming from online catalog and Internet retailers, and the greatest interest is for our modular product offering. AMT offers the market a modular solutions approach, providing underwriting, software Web applications, program administration or a complete turn-key solution, based upon the customer's needs.
To support the growth, we named Mike Kelly to the position of vice president, business development, and Philip Sorrentino to the position of regional director of business development. Both sales professionals have about 20 years of sales experience, inclusive of retail, warranty sales, and warranty sales training experience, and are a great asset when consulting with current and prospective clients.
Mike Frosch, president, Aon Warranty Group North America, Non-Automotive: Business continues to be strong, particularly in video categories via increases in sales volumes for flat TVs. Acquisition of new accounts and incremental growth of existing partnerships is driving greater revenue across the board in consumer electronics as well as in our financial services and travel insurance businesses.
John Collins recently joined the company as senior vice president. John has an extensive background in the industry, most recently as a national resource expert for Marsh [a leading risk and insurance services firm]. Bill Diones joined the company earlier this year as senior vice president. Bill brings a wealth of knowledge and experience in the warranty industry. His diverse background includes serving as vice president of risk in the TPA [third-party payer] arena and in underwriting with AIG. These senior level additions as well as our strong core of industry expertise are enabling a new vision to the business as we enter an exciting new chapter in our history — more on that soon.
Keith Meier, senior VP/general manager, extended services, Assurant Solutions: Business has never been better. Gross written premium for the domestic extended service contract business was up more than 16 percent during the first half of 2006 from the year-ago period.
The big news right now is that we recently completed a strategic realignment of our business that included the addition of new talent from the service, OEM and retail industries to support our dramatic growth. This initiative has already led to Assurant Solutions winning the business of four significant new accounts this quarter.
Danny Hourigan, president, NEW service plan division: Our service plan business is strong and is being driven by higher ticket items in both electronics and appliances. Additionally, our replacement plans are gaining momentum as retailers are trying to put in better controls around return policies. We anticipated the holiday season to be good, with sales of flat-panel televisions, digital imaging and laptops driving service plan sales.
NEW has a number of initiatives underway that will drive our growth and enable us to continue to reinvent the service plan industry. One initiative that we recently announced is our acquisition of BlueRealm Solutions, a Vancouver, Canada-based provider of innovative warranty software. This acquisition greatly enhances our ability to deliver innovative, industry-leading solutions to our clients and their customers.
BlueRealm's initial product solution is designed to support computer service plan owners by providing the end user with the resources to access and manage all aspects of their service plan, including diagnostic tools and service enhancements. The solution also includes modules that advance NEW's ability to troubleshoot and administer computer claims. BlueRealm will continue to operate from its Vancouver headquarters as a wholly-owned subsidiary.
In addition to the BlueRealm acquisition, we are also developing other innovative, value-added products and services that will enhance the value that service plans provide to consumers, and we are actively pursuing opportunities in new product categories and new markets. We will be talking more about these in the near future.
Jeff Oldenburg, marketing and business development VP, Service Net, on supporting the e-commerce channel: We work with our Web-based clientele to create an environment on the Web that duplicates the floor experience as much as possible. For accounts that use a very low-key approach in the store, you want to make sure you do the same on the Web.
We also take the best practices learned over time to ensure the ESP [extended service plan] gets the right mention, in the right place, and at the appropriate time.
Kevin Rupkey, president/CEO, Bankers Warranty/VAC Service: We are extremely satisfied with how we fared in our first year as Bankers Warranty Group. Since the acquisition the management team has been working diligently to make Bankers Warranty Group the administrator of choice. This involves making significant operational improvements and investments in people and technology. We have evaluated and upgraded internal processes and service delivery in line with quality initiatives such as Six Sigma to reduce variances and increase customer satisfaction. We plan on opening additional state of the art operations centers in the near future. We have also made significant staffing changes and improvements by hiring the best and the brightest to help us create a world class organization.
Due to the efforts of our team we projected an increase of 15 percent in new business last year over 2005. The acquisition has also generated a new level of interest from many retailers, and we signed several new accounts through the first half of last year in the major appliance, home theater and electronics space. We feel that the financial strength of Bankers combined with our innovative and entrepreneurial spirit has helped us establish ourselves as a preferred provider in the industry.
We have also launched a variety of new products as well, most notably our Entertainment Media Replacement plans. These plans cover failures to disc-based media such as DVDs, CDs, and gaming and computer software. This program opens up addition revenue opportunities for retailers as well as new distribution channels for our company.
Also, our Total Care service plans offer the ultimate in convenience for consumers. They include day-one product support for increasingly complex consumer electronics such as digital cameras, camcorders, computers and PDAs. These plans help our retailers by minimizing the likelihood of returns through customer education and by addressing perceived incompatibility issues that arise during the first few weeks of ownership. We also offer a host of computer-related installation and support services.
Sean Hicks, president, Warrantech Consumer Product Services: Business has been very good for us thus far. All television categories have been strong with the new technology in the market and falling retail prices. We expect this trend will continue for the next year or so.
Organizationally, I returned last July after a five-year absence from the company. We have some of the best people in the industry and I'm excited about being part of the future. In addition, we recently added Joy Seago to our sales staff, who is our second new business development person along with Michele Gloeckler. Our team is strong and ready to make a big push into the market place.
From a client standpoint we are proud to say we renewed our MARTA agreement for another five years and have 90 percent of the MARTA dealers on the program. We also relaunched at PepBoys, added PeachDirect, and the pipeline is full. Look for some good things from Warrantech this year.
Doug Tudor, President, Warranty Corp. of America (WaCA): Complex and costly consumer electronics and computer products have had a positive impact on increased extended service plan sales. Our retail clients have experienced dramatic results and the trend is continuing.
WaCA is now part of Asurion, a leader in wireless handset insurance programs. WaCA's focus will continue to be the same as it has been in the past: to provide innovative service plan solutions and services to our retail, telecommunications and manufacturing clients and their customers.