ISE insurrance contract

[derbyhoppy]

Hi Guys,

In a couple of weeks I am going to start provisional negociations with underwriters to cover the ISE 5 year parts and labour warantee.

Before I start I need a steer from you on the perameters I give them to quote against.

As it is my intention (as stated in the parts strategy document I sent to you all) to pass the managing of parts supply to UKW at the point of ‘layoff’, there are some key questions that I need a consensus on prior to my meetings next week & the week after.

1. Labour will be at £60 do we add an administration fee to this?
2. What prices do we give them for parts supply?actual cost? trade price or some other figure?
3. Do we add the cost of parts distribution to the quote?
4. If we do add parts distribution, do we add distribution to the cost of each part individually? Do we quote an average figure per or does is come out of the margin UKW make on the parts supply?
5. Do we replace new for old on BER?

A word of caution.

It is tempting to try to take the insurrance company for as much as we can, but they are not stupid. The more we ask for the higher the premium.

The higher the premium the more ISE has to pay up front against profits the UKW will make 2 to 5 years down the line.

Your thoughts are appreciated

Cheers

john

[Dave_Conway]

Re: ISE insurrance contract

derbyhoppy wrote:
1. Labour will be at £60 do we add an administration fee to this?
2. What prices do we give them for parts supply?actual cost? trade price or some other figure?
3. Do we add the cost of parts distribution to the quote?
4. If we do add parts distribution, do we add distribution to the cost of each part individually? Do we quote an average figure per or does is come out of the margin UKW make on the parts supply?
5. Do we replace new for old on BER?

1. Not sure on that one, how much admin is involved, how much did Indy cost to be developed and who has paid for it’s development so far ?

2. Trade price I think, that way we have a 15{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d} margin built in and the underwriters can easily check the Beko trade prices if they wish.

3. Yes, already discussed today, go with £6.50 as an initial figure across the board, in reality it will be far less, £4.50 which is Interlink’s cheapest rate for up to 1kg which is by far the most used. We can also use Special Delivery via Royal Mail to keep our 24 hour promise which is half that.

4. As above 🙂

5. Hmm, in theory there shouldn’t be any BER, we will need to beat the undewriters up on this I think, it depends what they quote as a BER limit I guess.

My initial thoughts…

Dave.

[admin]

Re: ISE insurrance contract

UKW paid for indy, and in the region of £7,000 plus vat.

[kwatt]

Re: ISE insurrance contract

derbyhoppy wrote:1. Labour will be at £60 do we add an administration fee to this?

I think we have to, at least to cover our costs.

derbyhoppy wrote:2. What prices do we give them for parts supply?actual cost? trade price or some other figure?

List less XX{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d} as that’s the usual way of dealing, hence inflated spares RRPs. But they’ll understand it if you do it that way, any other and you’ll get that look… you know the one where you think that they reckon you’re from Mars or summat.

derbyhoppy wrote:3. Do we add the cost of parts distribution to the quote?

Using list less and leaving some margin there negates the need. It also mens that should the spares prices change then they win or lose dependent on the shift, it also covers us for currency fluctuation should we source direct and something whacky happens in the money market.

In other words we build in our own safety net.

derbyhoppy wrote:4. If we do add parts distribution, do we add distribution to the cost of each part individually? Do we quote an average figure per or does is come out of the margin UKW make on the parts supply?

See Dave’s bit.

derbyhoppy wrote:5. Do we replace new for old on BER?

I think that’s a seperate discussion in some ways. I’d prefer to go down the route of concessionary replacement sales where the insurer picks up the “difference” based on the age of the product, devalue it over time in effect. Reduces the premium if they are prepared to do that as some have done as they never stand the full cost. It also means that we at least get something out the deal, hopefully the actual cost of a machine, whislt keeping costs down.

derbyhoppy wrote:It is tempting to try to take the insurrance company for as much as we can, but they are not stupid. The more we ask for the higher the premium.

Insurers are not stupid, I think we know that one. 😉

But like anyone else they’re playing a numbers game, hoping it comes out in their favour just as we are. The trick is to get the correct balance of costs vs risk and also the correct chargeback on spares. We’re in a slightly different position as it is our intent not to make the spares payback bigtime from third party insurers and repairers, but instead we want to keep the costs down whilst still recovering the costs.

That probably doesn’t read to well but I hope you get where I’m going.

K.

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