Embracing technology isn’t just about cutting costs and staying current – it’s about gaining a competitive edge. Streamlined processes, enhanced security, and better customer experiences are just a few benefits awaiting those who dare to innovate.

Yet, despite the advantages, many hesitate to embrace change. In time, the price of stagnation outweighs the investment required to keep up with the times. Technological transformation requires mastery of new tools. I meet two types of entrepreneurs in my travels: those who embrace technology as a new tool/toy to make their jobs easier – much in the same way a technician gets excited to see the Snap on tool truck delivering the latest scan tool to help cut time and increase labor efficiency – and those on the other side of their business journey, who are completely happy repeating the process from days gone by.

The unfortunate reality of this industry is that changes are a byproduct of regulatory shifts that require adaptation. With this in mind, many of these tools should be regarded as an opportunity to win the race to embrace technology, giving one the competitive advantage, at least for a short time.

ERIC S. HURST, Chief Operating Officer at Empire Indemnity Insurance Company Risk Retention Group, Inc.

At Empire Indemnity Insurance Company RRG, we’re constantly looking ahead. We’re improving the customer experience. For a company to remain on the forefront means scaling opportunities without scaling people. Efficiency is key.

For example, our tech-enhanced program was designed with lenders in mind. By investing in scalable solutions, we ensure maximum efficiency without bloating our workforce or creating additional costs that the customer traditionally pays.

Consider, for example, our 24-hour claims process. According to a recent study by Five Sigma, 82% of companies take more than 30 days to process a claim, and only 38% support automated claim assignment. This delay hurts customer experience and risks bad faith perceptions.

Through automation and optimization, we successfully reduced processing time to under 24 hours in most cases. Faster settlements, happier customers, and improved efficiency –that’s our commitment. 

There’s a graveyard of companies that were once ikons in their industries but no longer exist due to failure to embrace technology – automotive companies, video rental companies, and photography companies are a few that come to mind.   

Now, consider your own business. Could technology help you achieve more? Are your providers keeping you current? Unlock a future of unlimited possibility by embracing innovation.

ERIC S. HURST, Chief Operating Officer at Empire Indemnity Insurance Company Risk Retention Group, Inc.

You can also read this article in the digital publication Used Car Dealer 

Don’t be locked into old data

Familiarity breeds comfort when it comes to selling cars. Yet, while experience can be a guide, clinging to outdated methods is like driving forward while fixated on the rearview mirror.

The age-old question persists: does historical data truly forecast the future?

Undeniably, history serves as a reference. But progress demands more than a glance backward. Businesses craft mission statements and analyze quarterly reports, yet these markers aren’t the compass for daily strides. They’re signposts on a road already traveled.

Entrepreneurs and leaders must break free from the shackles of past practices, as Peter Thiel advocates in “Zero to One.” Thiel urges embracing new, uncharted territories, rather than adhering to the familiar if real progress is to be made.

The used car industry mirrors this need for change. Adaptation is survival. It’s time for dealerships to shift from solely relying on historical data to adopting an agile approach that anticipates market shifts in real time. An agile approach to inventory, customer engagement, and technology could revolutionize the industry.

Would you invest in a 20-year-old vehicle, even if it had never been driven? Nostalgia may sway you, but praise for its advanced technology? Doubtful. So why do entrepreneurs and corporate leaders often begin with, “This is how we handled it before?” The truth stings: if the problem persists, the solution hasn’t been found.

Steve Job’s visionary drive turned Apple into a global force. User experience was the cornerstone of every facet of the company. Simplicity - evident across products, marketing campaigns, and retail spaces - defined Apple. The iPhone and iPad changed entire industries, shifting away from traditional keyboard-centric devices in favor of touchscreen interfaces. Apple’s stores, geared for learning and interaction, disrupted norms, reshaping consumer experiences and sales models.

Twenty years ago, the idea of an electric car dominating the market was novel. Yet, through relentless innovation and a focus on the future, Tesla Motors emerged as a leader in the electric vehicle segment. Musk’s innovations demonstrate that radical innovation can redefine an industry. His vision wasn’t bound by past conventions; it embraced cutting-edge technology and sustainability.

The essence lies in a shift - a shift away from the gravitational pull of the past toward a horizon teeming with innovation. It’s about driving energy and resources forward rather than squandering them on status quo.

Imagine used car dealers steering away from the trap of “how it’s always been done” toward uncharted territories of “how it could be done better.” Embracing change isn’t abandoning expertise - it’s the evolution of it.

The used car industry mirrors this need for change. Adaptation is survival. It’s time for dealerships to shift from solely relying on historical data to adopting an agile approach that anticipates market shifts in real time. An agile approach to inventory, customer engagement, and technology could revolutionize the industry.

Yes, there’s wisdom in experience, but brilliance lies in innovation. Just as Musk’s bold innovations transformed the automotive landscape, used car sales must break free from old business models. It’s not about the past, it’s about reshaping the future.

Let’s talk about the elephant in the room: risk. Change isn’t devoid of uncertainty. Yet, it’s the courage to embrace uncertainty that leads to breakthroughs. It’s the willingness to experiment, to pivot, to harness technology, and to align with customer demands that define success in the modern marketplace.

The future isn’t far away it’s an unwritten chapter waiting for bold pioneers. Like Jobs or Musk, used car sales beckon for those daring and visionary enough to discard the rearview mirror and drive forward into promising territories.

ERIC HURST is the Chief Operating Officer at Empire Indemnity Insurance Company Risk Retention Group, Inc.

You can also read this article in the digital publication Used Car Dealer 

By Eric S. Hurst
Chief Operating Officer
Empire Indemnity Insurance Company Risk Retention Group, Inc.

In the ever-changing landscape of Buy Here Pay Here lending, the success or failure of your dealership hinges on the choices you make. The past 18 months have seen seismic shifts in the market, with some once-thriving dealerships now bearing grim “Closed” signs, while others have resorted to Chapter 11 bankruptcy. In turbulent times, one of the most crucial decisions you can make is regarding your force-placed insurance program (also known as CPI).

As someone who’s met countless dealers facing these challenges, I’ve distilled the wisdom of experience into what I call the “Three Cs of Force-Placed Insurance”: Cost, Claims, and Compliance. Allow me to take you on a journey through these pillars, urging you to reevaluate your current approach and inspiring you to explore better options.

Cost: The Financial Lifeblood of Your Dealership

The first “C” is arguably the most critical: Cost. In the face of market upheaval, tightening budgets, and uncertain economic waters, every dollar saved counts. Many dealers I’ve spoken to have voiced their concerns about the increasing costs and fees associated with force-placed insurance programs.

It’s imperative to assess your expenditures meticulously. Consider shopping around the market. Don’t let your dealership be among the casualties of outdated, costly programs. Seek out more cost-effective alternatives and take advantage of cost-saving opportunities like buying direct.

Claims: The Need for Speed and Efficiency

The second “C” deals with Claims. Speed is essential when it comes to insurance claims. Ask yourself how quickly your insurance program pays your claims. Are you utilizing a secure portal for claims processing? These questions aren’t trivial, they can have a substantial impact on your bottom line.

Here’s some Napkin Math to illustrate the gravity of the issue (time is money as the saying goes). Say you’re dealing with a $10,000 claim. In today’s world, where the cost of capital is a minimum 10%, waiting for your insurance company to take 14 days to process your claim could cost you approximately $40 per claim. You’re bleeding significant returns all because it took too long. I have seen this scenario play out in excess of $1200 per month in undue carry costs.  

To stay ahead, leverage the latest and greatest tech-efficient programs and processes that streamline claims handling. Time is money, and the faster you can recover your funds, the more resilient your dealership becomes.

Compliance: Navigating the Regulatory Minefield

The third and final “C” is Compliance. In a world increasingly concerned with data security and regulatory compliance, you must operate with utmost diligence. A secure portal with the ability to submit claims and sensitive customer data is non-negotiable. The days of emailing claims and spreadsheets are gone.

To navigate this complex terrain successfully, you need to continually review your processes and assess your compliance risk. Failure in this regard can lead to costly repercussions and potential legal entanglements.

In summary, the Three Cs of Force-Placed Insurance -- Cost, Claims, and Compliance -- form the bedrock of a thriving BHPH dealership. The financial health of your business depends on these factors. You simply cannot afford to neglect them.

To succeed, explore cost-effective alternatives, invest in technology that expedites claims processing, and commit to stringent compliance practices. Your dealership’s future hinges on the decisions you make today. Embrace change, adapt, and position yourself as a resilient force in the BHPH market.

Remember, it’s not just about surviving; it’s about thriving. Make the Three C’s your guiding principles, and you’ll find yourself at the forefront of the industry, steering your dealership towards a prosperous future.

You can also read this article in the digital publication BHPH Dealer.

AutoRemarketing Magazine, one of the premier publications in the automotive industry recognizes the value of organizations across a broad spectrum of products and services.  Periodically they take time to recognize these companies and in their April 2023 issue they did just that. Here's their note about our organization. 

“Empire Indemnity Insurance Company Risk Retention Group, Inc. has been selected by our editorial and publishing team to be included in our annual SubPrime Auto Finance News feature, “Special Finance 175:  The Most Influential Companies”.  

Our executive team is proud to provide top-tier services for auto retailers and to be recognized for our efforts.

You can read the full Digital Edition of this publication here. 

“Be fearful when others are greedy, and greedy when others are fearful.”                                                                        -Warren Buffett

Auto dealers are facing turbulent times. Interest rate hikes combined with inflation and higher delinquencies are cutting the bottom line. The natural instinct is to hunker down, cut expenses, and weather the storm.

The first thing to go is often the advertising budget. Next, personnel cuts, reduced investment in inventory, and less borrowing follow. These actions, while instinctive, may permanently impact the long-term outlook of the dealership.

However, despite these challenges, resilient BHPH dealers continue to thrive, bringing in customers and selling more cars. Lenders are waking up to the savings potential in another area: force-placed insurance ceding fees. These fees, which are not reported on financial statements, can significantly affect a dealership’s revenue.

Don’t Stop Advertising

As lenders review their P&Ls to determine where to make cuts, they need to ask themselves: Can you cut your way to profitability or sell your way through to profitability?

The axe often falls hard on the advertising or marketing budgets. Naturally, during a recession, other expenses are prioritized - like payroll and running operations. Many stare down at the P&L and seize advertising.

Advertising is always at the top of everybody’s list. It’s a big number on the P&L. But cutting the advertising budget is dangerous. While half of all companies will do it, it rests upon a fundamental misunderstanding of the business cycle.

A great deal of evidence shows that companies that maintain or increase their advertising and marketing budgets through a recession have higher market share and sales during the recession and the three years that follow it. In other words, businesses that continue to invest in their marketing enjoy longer-term profitability, leapfrogging over competitors to emerge stronger on the other side.

As the Cost of Capital Rises…

Those under 40 came of age in a hearty economic environment. The cost of capital has been inexpensive for the past 15 years. In terms of the business cycle, they’ve enjoyed an artificially low cost of capital.

Today, some companies may have an expense problem. It happens naturally during good years. When companies are making money, it is easy to become complacent with expense management. In hard times, every item on the P&L gets scrutinized.

Banks have started to pull out and scale back from the secondary/subprime auto loan business. Some may even decide to sit this one out and avoid the delinquencies that go with it. The demise of banker support creates more customers for Buy Here Pay Here businesses. Unfortunately, the BHPH dealer faces downward pressure from the rising cost of capital and negative delinquency trends that can create covenant issues.  BHPH businesses don’t want to raise prices, so they’re caught in a dilemma and turn to their P&L to cut costs.

The Hidden Opportunity in Ceding Fees

For those fortunate enough to have a force-placed insurance program (about 20% of lenders), you already know what doesn't appear on your P&L – the ceding fee you pay in your portfolio for all your insurance products.

Your CPI/re-insurance ceding fees do not appear on your P&L. It’s an invisible expense that no one thinks about.  Since CPI and other re-insurance ceding fees don't live anywhere on a financial statement, they don't trap anyone’s attention. Few, if any, ever think about cutting that expense or how to do it.

Reducing ceding fees can build your bottom line. Now that delinquencies are rising and write-offs have escalated, lenders risk breaching bank covenants because their losses are too high. They've got to look at ceding fees and realize there’s a compelling story there.

Lenders have an opportunity to expense manage in this area and sell through to profitability. When you expense manage, you profit manage. And when you start managing profits, you’re on the road to increasing profitability.

Opportunity Lies in Adversity

Warren Buffett understands the money-making opportunity in hard times. Dealers are confronted with 2020 car prices on their books, and they're buried in those cars. But if you wanted to be a car dealer in 2020, you had to buy cars, you had to pay the market rate. If you want to buy cars in 2023, you're going to pay the market rate. All cycles come and go.

Every crisis has the potential for opportunity. Markets bounce back. Recessions create millionaires. It's easy to want to pull back when things get difficult, but those who press forward emerge on top.

View the Magazine Article Here