Welcome to 101 Advantages of A RAP Reinsurance Program

THREE TYPES OF PROTECTION PROGRAMS 

There are three types of protection programs, Reinsurance Service Contract programs (a/k/a Captive or Dealer owned), Standard Service Contract programs, and Kit Product Warranty programs.  Each offer similar coverage, each are sold to retail customers in roughly the same way, but the financial benefits and risk that accompany each are substantially different. 

We have been selling and servicing Reinsurance and Standard Service Contract programs for a decade. Because we believe selling Kits with Product Warranties expose Dealers to regulatory and litigation risk, we do not sell Product Warranty programs.

Reinsurance & Standard Service Contract Programs.  Service Contract programs are sold to retail customers as "add-on sales," such as with the purchase of a sofa.  Service Contracts are essentially a promise to repair or replace items (i.e., sofa) in the event of damage or failure.  Customers buying Service Contracts are paying for the promises in the Contracts.  Service Contracts are regulated at the state level - normally by departments of insurance, and require two types of licenses, one to act as a "guarantor" and one to act as an "administrator" (third party administrator or TPA).   A "guarantor" is the entity that assume financial liability for the repair or replace promises made in Service Contracts.  An "administrator" is the entity that is responsible for receiving and processing claims and performing other related services. 

Kits with Product Warranties.  Commonly known as Kit programs, Product Warranty programs require the purchase of Kits (i.e., 4 (8) oz bottles of cleaner and protection sprays) before customers receive any Warranty coverage.  Customers are not able to buy the Warranties separate from the Kits in the same way that customers are not able to buy a manufacturer's warranty for a sofa.

Kit Warranties are often written so that they only cover the performance of the cleaner and protection sprays included in the Kits.  Confusingly, the Warranties include damage coverage for motors, mechanisms, frame breakage, rips, tears and burns -  all damages that the sprays cannot prevent or repair.  Compounding the confusion, many programs include language specifically stating they are not Service Contracts, but vendors encourage retailers to sell the Kits as if they are Service Contracts.  

Kit Product Warranties, like all manufacturer warranties, are regulated under federal law by the FTC the Magnuson-Moss Warranty Act.  The FTC imposes penalties on companies that misrepresent or fraudulently distribute/service product warranties.  Where deceptive trade practices claims, or fraud in the inducement claims, can be successfully litigated, class action litigation risk attaches.   

REINSURANCE PROGRAMS

Reinsurance Defined.  Reinsurance refers to a technique to manage and monetize risk.  In the context of protection programs, loss risk is created when customers purchase Protection Programs (i.e., some customers will file claims and those claims will cause claim losses by replacing parts, repairing furniture or replacing furniture).  In this sense, Protection Programs are like insurance policies, i.e., purchase of a policy generates potential for a claim loss - the potential for loss is "risk."

Loss Reserves.  Also, like insurance, Protection Programs create "Loss Reserves," which are essentially pools of cash and assets deposited in reserve accounts that are used to pay claim losses, if and when those losses occur.  Unused loss Reserves are retained as profits and are at times substantial.  For example, over a number of years some retailers selling RAP's programs have earned millions of dollars in Unused Reserve Profits.  More about Unused Reserve Profits below.

Reinsurance Profits - The Hidden Profits.  The term "Reinsurance" comes from an arrangement where RAP purchases an insurance policy from an insurance company, in this case our underwriter, to insure its Service Contract obligations, and then reinsures the underwriter with a reinsurance policy issued by a dealer owned reinsurance companies.  Loss Reserves are held in reinsurance companies with unused losses retained by dealers as Unused Reserve Profits.  Reinsurance profits are said to be "hidden" because most Protection Program vendors retain these profits, hiding them from dealers.      

RECAPTURE HIDDEN PROFITS

Before the arrival of RAP's Reinsurance programs, many retailers unknowingly allowed their protection vendors to retain Unused Reserve Profits.  For decades, some protection vendors have made out like bandits, earning an initial profit when retailers pay the wholesale cost of protection programs, and then a hidden windfall profit through secretly retaining Unused Reserve Profits.

 1. RAP programs use state licensed Service contracts rather than lawsuit-prone unlicensed product warranties.
2. RAP programs are licensed and compliant in all 50 states.
3. Legal and financial liability rest solely on A+ underwriting rather than on the selling store.
4. Program structures have a severed-liability, impenetrable firewall between the retail store and the reinsurance Trust.
5. Programs don't offshore risk back to the store by including a store's brand name or logo on program docs or point-of-sale material.
6. RAP Trust structures are 100% creditor protected and not subject to legal action or lean.
7. Underwriter and the States both perform arduous annual licensing renewal audits on our programs.
8. We possess legal opinion letters attesting to our program’s legal compliance and financial security.
9. RAP never co-mingles a dealer's program assets with any other dealer's program, claims, or financials.  
10. Programs are self-owned by each dealer so program structures have never experienced a price increase. 

11. Take chips off the table by transferring business income into a tax-exempt Trust.
12. Accessed Trust funds even in the first year.
13. Trust account ownership is kept confidential from store sales associates, mid managers, and non Trust owners.
14. Vertical service tech network with the highest first attempt fix rate.
15. 75 years of key management furniture protection experience.
16. A decade's experience exclusively in furniture reinsurance.
17. Millions of active Reinsurance plans in force from New York to California, Alaska to Florida, and Minnesota to Louisiana.
18. Peers you know from hundreds of Ashley Homestores, numerous top 100's, dozens of independents, LA-Z-Boys, Bassett's, etc., use RAP programs.
19. Preferred Reinsurance vender of the Furniture 1st Buying Group providing members a secondary program rebate.
20. Sweep Trust funds out multiple times annually for more aggressive investment options.
21. Up or down plan flex pricing to meet the owner's cash flow or nest-egg/wealth building goal.
22. Plans are 3, 4, or 5-year terms to best align to your store, outlet or product mix preference.
23. Flexible bell and whistle coverage that customizes to your preference.
24. Generous 30-day furniture damage reporting window from NOTICED rather than OCCURRENCE.
25.  Program Trust is exempt from a Federal tax.
26. Guest re-selections are not limited to like-kind items.
27. Trust shareholders can be anyone and needn't mirror the ownership of the furniture store.
28. No reinsurance account have ever switched back to a tradition plan provider.

29. Trust owners take first possession of all program dollars before any claims expense then keep all unspent claim profits.
30. Typically protection plans cost 60% lower net than competitor plans.
31. RAP programs are 100% IRS compliant and not subject to the recent IRS notices or Oklahoma State's Supreme court ruling many competitor programs are.
32. Budget neutral cost + Trust rebate pricing.
33. Park non-taxed Trust funds indefinitely or just during times of uncertainty.
34. Borrow from reinsurance Trust without creating a capital gain tax.
35. Trust profits never leave the USA.
36. Trust funds deposit into the owners U.S.A. based account.
37. Trust profits can be used for ANY personal or any business uses.
38. Wells Fargo serves as a Reinsurance Trust portfolio partner or you can use your own advisor.
39. RAP does not profit a single dime through claim denials, rather we are compensated through program growth.
40. Monthly cession and bank statement "report cards" are generated to Trust owners through independent program partners.
41.Trust nest eggs earn shareholders compound investment income.
42. Impact shield from Black swan COVID, housing bubble, stock market collapse, upcoming inventory shortage crisis.
43. Program creates three new revenue streams: claims profits, tax exempt savings, and compound investment income .
44. By way of example Trust funds could be used for weddings, college, store expansion or mad money.

45. Company-owned and operated furniture-exclusive service center located in Delray Beach Florida.
46. Long-tenured, low turnover women and minority company employee base.
47. 24/7 text claim App featuring interactive guest claim status alerts.
48. Proactive outbound calls confirm tech appointments, part ETA's, and guest satisfaction before closing a claim.    
49.  Propriety technology increases ease of use, data access, accuracy, transparency, and   seamless party interactions.
50. Recorded claim calls promote politeness and eliminate he said, she said, discrepancies.
51. Escalation dashboard access to view and interact on high noise claims.
52. Dealer dashboard features 3-permission levels owners grant access to.
53. Auto distribution of service plan documents to guests via email or mail when the furniture is delivered or picked up.
54. Guest plan documents can be viewed or auto-reprinted directly from the dealer dashboard.
55. Claim coverage on a part continues for the duration of the plan's life even when a part was replaced.
56. RAP has tech services in all 50 states.
57. No guest claim forms to submit.
58. No proof of purchase plan registrations.
59. Plans are auto-registered without manual input by the stores.
60. Unknown stains the #1 claim denial issue of most plan providers is covered.

61. Trust owners keep all unspent claim dollars promoting higher plan attachment rates.
62.  Plan sale opportunities include in-store, Internet, website, outlet, closeout, as-is, non-warranty, and residential-rental purchases.
63.  Protection Plan sales can be added up to 3 days after the furniture was delivered or pickup.
64. Low cancelation rate keeps protection plans sold.
65. Actionable Business Intelligence (BI) reporting helps recoup manufacture failure accommodation credits.
66. Programs are structurally sustainable never having had a price increase or dropped plan coverage.
67. RAP partners with stores during special company events or sponsorships.
68.  In-store sales training.
69. Business Intelligence specialized sales training by SKU, store, and store associate.
70. Go at your own pace sales training video library.
71. New hire and low performer one-on-one sales training.
72. Top-of-the-mind interactive gamification app and prize board.
73. Best practices include selling the sales associate first, overcoming objections, and the value proposition.
 

74. RAP Reinsurance are state-licensed service contracts, not bottled product guarantees.
75. RAP does not rely on guests using kits to do the work the protection provider is supposed to do.
76. No kits or associated kit costs.
77. Quick start-up turnkey program.
78. We only exist by through your success.
79. 16 of the top 20 Ashley Homestore doors, including stores 1, 2,and 3 sold our reinsurance programs.     
80. Join your peers in the reinsurance millionaire's Trust club.
81. Alternative off the invoice instant cash rebate dealer buying option.
82. The store's furniture protection program becomes the store's very best service.
83. Vertical In store sales to in-the-home tech service integration.
84. Replacement and re-selection credits increase the original selling store's profit.
85. Unlike product warranty programs we have no history of class action or legal lawsuit.
86. Plans are available on all furniture, outdoor, rugs, adjustable bed base, and mattress product categories.
87.  Plans go live at delivery rather than at sale so neither cash flow nor the plan's length are diminished.
88. Guests receive more coverage time with parts AND labor benefits on the structural, motor, mechanism, and electrical issues.
89. Programs are exempt from state tax.
90. Reinsurance programs are authorized and structured by U.S. Congress.
91. By way of example Trust can be used for any purpose including retirement, assisted living, philanthropy, or a second home.
92. Plans provide non-prorated replacement or re-selections even when guests had full use of the furniture long into the plan's life.  
93. Programs are exempt from local tax.
94. Amongst competitors we have by far the fewest BBB or social media complaints posted against us.
95. Programs are easy to transition to because they have the same familiar look and feel as traditional programs without limitations.
96. Programs require full legal claims and financial transparency and accountability.     
97. HFA member with program benefits.
98. Nimble programs that can quickly pivot and adapt to the interest and demands.   
99.  Regular dealer program reviews including full itemized ledger and worksheet.
100. Sound actuary data and experience have programs outperforming proposal Proformas.
101. All data is encrypted and triple backed up on off-site and in the cloud.