Allstate Dealer Services (ADS)

How did you become involved in the Lease Return/Excess Wear & Tear category?

ADS launched the Excess Wear and Tear (EWT) program in July 2011, in response to the ADS Agent Advisory Council requesting a full suite of F&I products. Since the initial launch, the product was refreshed in July 2012, to simplify the offering to the consumer (i.e., one option for coverage that has a $0 deductible, coverage for tires, missing parts and electronics). Additionally, ADS has invested in our product management team, bringing on talented individuals with over a decade of experience in EWT underwriting and risk management of OEM and TPA programs. Recognizing that the product may perform differently based on the sales channel, this team provides the oversight to ensure the products are not only tailored to the needs of the client, but that processes and reserves are adequately considered in the development and management of the program.

Generally, leasing companies may prefer to include their own EWT product in the capitalized cost of the lease. In this regard, the ability to offer a third party product is limited in terms of volume, and F&I providers may have chosen not to make the investment in the product offering. With respect to positioning the ADS Excess Wear & Tear product to be successful, as noted earlier, the offering was refreshed in July of 2012 with one level of coverage for the consumer. The simplified coverage included a $0 dollar deductible, combined with automatic coverage options in the core product such as tires, missing parts and electronics. This packaging helps to ensure the customer is being provided with a level of coverage they expect from an Allstate product.

The ADS offering is designed to be simple for the customer to understand. This includes $0 dollar deductible, and coverage for tires, missing parts and electronics. From the dealer’s view the ADS product offering can be reinsured to a dealer owned reinsurance-company, which may provide dealers with additional profit opportunities.

ADS offers the EWT product through three distribution channels 1) independent agents; 2) third party administrators; and 3) OEMs. The ADS offering is backed by Allstate, which is available to our independent agents, while our OEM and third party administrator partners can offer their own banded product that is insured by First Colonial Insurance Co.

With the increased content of electronics in vehicles today such as video equipment and navigation systems, there is risk of a failure to the equipment beyond the manufacturer’s limited warranty. The ADS Excess Wear and Tear product affords a level of coverage to respond at the time of lease turn-in for non-functioning electronic equipment that does not contribute to the mechanical processes of the vehicle. It is anticipated that the electronic content of vehicles will continue to increase whereby there is an exposure for the consumer, which in turn may create additional selling opportunities.

With the increase in leasing as a percent of vehicle sales over the last two years, the opportunity exists for F&I providers to demonstrate to dealers the value of the product at the time of lease turn-in for the consumer. In addition, utilization of the product can make it easier for the dealer to put the customer back into a another leased vehicle at lease termination if excess wear charges are waived as a result of policy coverage.