Steering Through Volatility: GAP Reinsurance
In his latest blog entry, Vanguard Dealer Services’ Dylan Doran shares advice for dealers who are considering whether to reinsure their GAP following years of instability in the auto finance market and the wider economic landscape.
Post-pandemic prices remain high, particularly for used vehicles, Doran notes, as do interest rates, a toxic combination for underwriting profits tied to GAP sales.
“The fallout from this is evident when a car is totaled or stolen; the primary insurance company often falls short of paying off the entire loan,” he writes. “Dealers participating in underwriting products, GAP being one of them, could be at risk of handling claims several times larger than in previous years.”
