With roughly $25 billion spent on warranty claims each year, U.S.-based OEMs have a lot to manage when it comes to the warranties they provide. So what’s the best way to handle those claims? As an OEM, should you manage them in-house, or ask a third-party warranty provider to handle reimbursement for a faulty phone, case, screen protector or whatever else slipped past quality check?
There are a number of issues that come with running an in-house warranty program. By partnering with a third-party provider, those issues can be eliminated — and you could enjoy a number of added benefits that improve your bottom line. Let’s take a look at some specific ways aligning with a third-party warranty provider can simplify and enhance your business.
1. Top-notch claims administration and customer service
The first value-adds to consider when partnering with an OEM warranty provider are claims administration and customer service processes. What do they already have in place? Will you be set up with contact centers, databases and supply-chain flow for timely claims fulfillment right out of the gate? If so, you’ll be able to focus on the areas of your business that require the most attention, while your partner is taking care of the claims-fulfillment process.
2. Worry-free risk management
At the end of 2016, U.S.-based manufacturers had set aside $4.3 billion in warranty reserves to fund potential claims. That’s a lot of money to manage, and that kind of cash can skew your balance sheets in a negative way. Rather than putting money in reserves to help cover warranty issues, let a third-party provider plan for potential claims. Working with the right OEM warranty partner means you’ll have clean balance sheets, every time.
3. Forward-thinking product innovation
Rather than the limited coverage you’re likely able to offer as an OEM, a third-party provider brings greater flexibility to expand coverage — and they can do so in a way that remains compliant.
4. Relationship-driven underwriting
Underwriting is a necessary step in the insurance process. Rather than having to search high and low for a trusted underwriter, your warranty provider will likely already have a relationship with one (or may even be one).
When it comes down to it, working with the right third-party warranty provider is all about partnership. You can let them work hard on your behalf so you can get down to business doing what you do best.
Steve Davidson is warranty VP for Fortegra Financial Corporation (a Tiptree Inc. company). Fortegra and its subsidiaries comprise a single-source insurance services provider that offers a range of consumer protection options, including warranty solutions, credit insurance and specialty underwriting programs.