New Leaf’s Warranty Game Plan
With a smorgasbord of warranty company choices in the market and service plans to offer customers to boost the profitability of a lower-priced TV sale, why would dealers consider hopping aboard the bandwagon of startup New Leaf Service Contracts? The company’s founders, industry veterans Sean Hicks, CEO, and Rick Gavino, president and COO, said they can offer a compelling reason: the ability to respond quickly to dealers’ needs.
“Insurance companies tend to be battleships,” said Gavino. “They move very, very slowly and even more slowly when they are vertically integrated” and performing both underwriting and third-party administrator functions. “At New Leaf, our whole new approach is having multiple underwriters,” he said, citing the company’s partnerships with A-rated Dealers Assurance and Starr Indemnity and Liability, and ongoing discussions with a third. “By having multiple underwriters, it allows us to understand and listen to what the retailers’ needs are, and then put together proposals based on the various underwriters we do business with to come up with what we feel is the best business model for that retailer. When we go to our underwriters,” Gavino said, “we are getting responses, and probably within seven days. A new product comes out on the market and a retailer has a new idea for a plan, and we are the PT boat; we will get back to them immediately.”
“Basically, we try to take the ‘no’ out of the equation,” said Hicks. “We’re able to work with a retailer who has an innovative idea and find an insurance company that will actually underwrite it. Over time, retailers have been forced into the ‘round hole’ of the insurance company. What we’re trying to do now is, instead of forcing the retailer to take the cookie-cutter approach, to do something that’s unique for them.”
For example, for CE products, Hicks said some ideas New Leaf can execute because of its market approach and the way it is structured include things like creating replacement plans for non-repairable CE products up to $1,000, or creating buyback plans embedded into service contracts.