Dealers often overlook the details in reinsurance, retro programs, and participation structures that can dramatically impact their bottom line. On today’s episode of Training Camp, Ascent Dealer Services VP of Sales, James Mercer, shares actionable strategies to help dealers increase revenue, reduce hidden costs, and make smarter program choices.
Every dealer should regularly review their programs and ensure they align with both short- and long-term goals. This process starts by asking the right questions and understanding what the dealership truly needs from a participation model.
Reinsurance models evolve constantly, and what worked 15 years ago may no longer be optimal. Dealers planning for growth, acquisitions, or wealth building for their families need programs tailored to those goals. Mercer advises conducting a detailed analysis of any reinsurance or participation program. This review often uncovers hidden fees or missed opportunities that can increase profitability. Commonly overlooked fees include premium taxes, claims fees, session fees, and specialized charges, sometimes even for rental cars in certain regions.
Loss ratio management is critical to profitability. Dealers operating at an 80% loss ratio still have room for improvement. Adjusting labor rates, reimbursing for retail parts, and implementing incremental increases over time help maintain lower loss ratios. Post-COVID inflation, tariffs, and rising costs have forced many dealers to update pricing strategies to protect margins. Without consistent adjustments, a dealer could face drastic increases later to keep up. Mercer recommends a high-level review of financials every quarter and a deep-dive analysis at least once a year to ensure programs are performing efficiently.
"You've got to have good programs on the back end, and you have to have the right training and development and coaching on the front."
Revenue growth also depends on the support structure behind participation programs. Even the best reinsurance or DOC programs can underperform if dealers fail to invest in training, development, and coaching. Backend programs and proper front-end execution are inseparable. Dealers who pair strong program offerings with well-trained staff can optimize performance and maximize profit.
Participation programs should match a dealer’s specific goals and time horizon. Mercer shares examples where standard reinsurance programs were not the best fit. Some dealers focused on short-term income and growth instead of long-term wealth accumulation. By assessing objectives, Mercer helps dealers choose the right program, whether it’s a reinsurance model, retro program, or a DOWC participation structure. This tailored approach ensures dealers meet their financial goals while maximizing profitability today.
Understanding the nuances of profit-sharing, reinsurance, and participation programs gives dealers a competitive advantage. Regular reviews, strategic program selection, and continuous support enable dealerships to optimize F&I performance, reduce unnecessary costs, and sustain profitable growth.
