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Strategies & Market Trends : Three Amigos Stock Thread
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To: Amigo Mike who wrote (1619)3/11/1998 2:26:00 AM
From: Cary C   of 29382
 
APCO clarification.....

It was as I had expected. The post regarding how APCO handles the money from the warranties is way off.

I called the company today to verify. I was referred to someone who was definitely in the know in regards to how it is handled. The following is a summary of what goes on.

1. Obviously the person purchasing the warranty can either pay cash for it or finance it. The dealership then writes the check payable to the insurer (not APCO) and sends it to the insurers lock box (not APCO).

2. APCO is notified and accounts for the money both as a cash amount and a liability on their balance sheet.

3. Approximately once a month the insurer and APCO verify and agree on the warranties and the amounts that have been received since the last time they reviewed them (approximately one month).
At that time the insurer takes their premium and APCO takes the balance for administration, marketing and profit.

4. After the insurers take their money, they give APCO a certain % in a trust account to pay for claims that may be issued for the policies that they are covering. When a claim is processed, APCO pays both the amount of the claim and their processing fee from the monies in the trust account.

5. The insurance companies do an audit twice a year.

6. This is the important part..... APCO bares NO CLAIM RISK at all.

Hope this helps.

Cary
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