Insurance regulators are turning their attention to service contracts and raising concerns about how they are regulated and whether these products should be categorized as insurance.
Recent changes in the political landscape have landed us in an era of increased scrutiny of the F&I industry.
Early concerns about the Consumer Financial Protection Bureau overstepping its regulatory authority are somewhat curbed at this point, but a new challenge is looming. Insurance regulators are turning their attention to service contracts and, once again, raising concerns about how they are regulated and whether consideration should be given to recategorizing these products as insurance.
The National Council of Insurance Legislators Property and Casualty committee convened this summer and explored the topic of service contracts. Understanding the general differences between warranties, service contracts and insurance was discussed, as was the size of the warranty market. A point was raised about the importance of claims and loss history, followed by a state representative’s remark that states should perhaps be collecting this data on service contracts.