SoulMete - Informative Stories from Heart. Read the informative collection of real stories about Lifestyle, Business, Technology, Fashion, and Health.

F&I providers balancing parts, labor inflation with product pricing

Product providers indicated that existing pricing might be enough to manage the inflation of claims costs. But vendors also showed confidence in their ability to raise rates further if needed.

JM&A Group’s statistics tell a tale similar to the bureau’s data.

The product provider’s family of service contracts typically see claims costs rise 3 to 6 percent annually, according to Gunnell. But during the first quarter of 2022, JM&A’s bills increased about 17 percent from a year earlier, he said.

The company saw parts costs rise a little less than 20 percent and labor bills increase slightly less than 15 percent during the quarter, Gunnell said.

However, “it’s not a huge cause for alarm,” he added. JM&A makes conservative pricing predictions about the market, erring on the side of anticipating higher severity.

By making modest price increases annually, JM&A has a buffer against an anomaly. “We don’t have to react and make drastic changes to the business,” Gunnell said.

Vince Santivasi, North America head of direct markets at Zurich, said he didn’t anticipate a major increase in pricing. He said Zurich regularly tracks trends and adjusts accordingly, not just when a major issue is imminent.

Santivasi also noted that labor rates have increased steadily for years.

According to the statistics bureau, the price of vehicle maintenance and service rose 26 percent and vehicle repair rose 24 percent between 2011 and 2021, compared with an overall inflation rate of 20 percent.

“If we see that there’s an uptick, then we’ll make adjustments on the premium,” Santivasi said.

AUL Senior Vice President Paul McCarthy acknowledged inflation as a reality but also didn’t anticipate needing to increase the costs of his company’s F&I products.

“We’ve thankfully built obviously a lot of good relationships with suppliers over the years,” he said in March, prior to his company’s Monday, May 2, purchase by Protective Asset Protection. “So we don’t envisage any price increases in the short or near term.”

As for Protective Asset Protection, Karchunas told Automotive News that it saw inflation on F&I product claim costs mitigated by fewer claims.

“Frequency is going down,” Karchunas said. “The frequency has kind of counteracted the severity.”

But as the world sees more inflation, “pricing will need to respond,” he said.

Karchunas said the property and casualty insurance industry serves as a harbinger for the F&I products industry.

“They can’t raise their prices fast enough right now,” he said.

The trend would spread to other items, including service contracts, he said. “We definitely see that coming,” he said.


Source link
Leave A Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

buy levitra buy levitra online