CFR, Incorporated -
Complete Finance Resource, Colorado

Warranty & Insurance

How to choose a provider?

At CFR we encourage dealers to make informed decisions regarding the products they choose to represent. Unfortunately, the agent selling the product is often the only, and not necessarily the best, source of information readily available. Please consider this a starting point for learning more about the products available within our industry.

As an independent agency, CFR is free to represent the products and services it chooses. It is not our intention to offer the cheapest product available; instead we focus on delivering the best value available.

Our screening process is straight forward:

1. Who backs the product?

The buck stops here. We represent only Admitted Insurance backed programs. We believe additional cost, if any, is more than out weighed by the additional regulatory and audit oversight placed on Admitted Insurance programs relative to Risk Retention Groups.

2. Who administers the program?

We work with Administrators that have demonstrated specific knowledge regarding your products, and staff dedicated to your customers needs. (Hundreds of millions of dollars worth of experience with automobiles matters little when it’s not an automobile problem.)

3. What is the cost?

At CFR we’re certainly cost conscious. We also understand that cheap won’t matter if the policy fails when your customer needs it most. Finance related products while increasing profitability should also serve to increase both customer satisfaction and customer retention. We focus on delivering the best value product possible only after evaluating numbers 1 and 2 above.

Important Terms

Producer:

In most States this is the term associated with you, the dealer or dealership employee, when engaged in representing extended service contracts or credit insurance related products to the public.

Agent:

Normally the person responsible for sales and maintenance of your dealer account, your “Rep”. Agents may be employees of a specific company or independent, representing multiple companies.

Agency:

A business entity, often with multiple agents, engaged in activities similar to an agent.
(CFR is an independent agency representing a number of companies.)

Administrator:

This is the company that handles day to day administration of a product or program. Administrator responsibilities include producing and distributing documents such as contracts and registration forms, accepting monthly remittance, and processing customer claims. Most often this is the name of the company most prominent on product literature.

Obligor:

Identifies the entity responsible to perform under the conditions of the contract. Extended Service Contracts for example are normally either “Dealer Obligor” or “Administrator Obligor.” (CFR generally recommends only “Administrator Obligor” programs to limit dealer liability.)

Underwriter:

This is the company ultimately responsible for the payment of claims. The underwriter guarantees the administrator’s performance under the terms of the contract. For this reason, the strength of the underwriter is extremely important. Underwriters are typically Admitted Insurance Companies, or in some cases Risk Retention Groups.

Re-Insurance:

Re-insurance allows an administrator or underwriter to transfer all or part of their underwriting responsibility to another underwriting entity. (Be aware that not all forms of re-insurance, regardless of the rating or financial strength of the re-insurance company, guarantee performance under the terms of the contract. Many, including some claiming to be “fully re-insured” are limited in scope of responsibility.)

Risk Retention Group (RRG)

A Risk Retention group is a group of individuals or business entities engaged in the same type of business that pool resources to offset risk in place of traditional insurance. (The manufacturers of golf carts, for example, might join together to self insure against product liability arising from claims associated with the production and use their golf carts.)

With many large manufacturing concerns facing sky-rocketing product liability insurance premiums, Congress enacted the Product Liability Risk Retention Act in 1981. The intent was to allow manufacturing business entities engaged in the same type of business to self insure by pooling resources to offset liability risk in place of traditional insurance. In 1986 Congress amended the act, expanding the scope of the legislation, known as the Federal Liability Risk Retention Act of 1986.

By federal mandate RRG’s are domiciled in a single State, but they may operate in any state. The net effect is that States are required by federal law to allow the RRG to operate, but are restricted in their ability to regulate the activities of the RRG.

While this type of “risk retention” in place of traditional insurance may be acceptable to a business entity or professional that knowingly accepts the inherent potential exposure associated with self insuring through a RRG, it is our opinion that it was not the intent of Congress to promote the sale of products such as service contracts to third party customers. Customers such as the typical consumer (and some dealers) that are unknowingly pooling their risk and leaving the oversight of concerns such as maintaining adequate loss reserves to cover claims to those earning commissions selling the service contracts.

For more information click on the following links:

Admitted Insurance:

An insurance company examined, regulated, and admitted (authorized) to conduct business within a specific State by the State. Admitted insurance companies are subject to acceptance, regulation, and audit by the Department of Insurance / Insurance Commissioner in each State in which they conduct business for the specific lines of business that they conduct within the State.
(CFR recommends only programs underwritten by Admitted Insurance Companies.)

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“Fill your head with knowledge, and your head will fill your purse.”

~Benjamin Franklin - America’s first self made millionaire~

Questions?

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