Dealer Reinsurance and Participation Programs: How to Choose the Right Structure

There is no single best dealer participation program. The right structure depends on what the dealer wants the money to do and when. In this Training Camp episode, Adam Marburger talks with James Mercer, Executive Vice President at Ascent Dealer Services, about how to choose a program, what to review once you are in one, and why front-end F&I performance matters as much as the back-end structure.

James spent almost 20 years at Protective after six years in dealership retail as a finance manager, sales manager and general sales manager. Read more about him on our leadership team page.

The participation options

When James sits down with a dealer, he walks through each structure and the situation it fits:

Retro (retrospective commission)
Reverse retro
Reinsurance
NCFC reinsurance
DOWC (dealer-owned warranty company)
Dealer obligor, for dealers who want to hold all of the money themselves

Definitions for these terms are in our F&I glossary, and Ascent’s reinsurance programs page explains the structures we support.

Start with the dealer’s goals

James’s approach began when a dealer asked him, “Why don’t you just do what you’d do if you were me?” Since then he starts every recommendation from the dealer’s goals:

Doubling in size or making acquisitions?
Building a legacy and long-term family wealth?
Planning to retire in a few years and wanting income sooner?

He describes a recent first meeting where a dealer had assumed reinsurance was the only option. Hearing five or six options changed the conversation. That dealer planned to retire within five years, wanted money now and wanted to raise the store’s profitability, so a standard reinsurance program was not the best fit. James compares a DOWC to a 401(k): widely seen as the most efficient participation model, but built for long-term money. If a client needs income next year, you look at other options.

Know the fees you are paying

James says a review of an existing program almost always finds something the dealer didn’t know they were paying for, or something they could do better. Common fees include:

Premium tax
Claims fees
Cession and ceding fees
Provider-specific fees, some of which are hard to explain

Every participation program has fees. The goal is to know what they are and to question anything beyond normal. It has to be fair for the provider and fair for the dealer.

Managing the loss ratio

Adam asks what a dealer running around an 80% loss ratio should look at. James points to two levers:

How you reimburse your own claims. If your door labor rate is high and you pay warranty claims at full retail, you can choose to reimburse yourself at a discount to improve your reinsurance position.
Keeping rates current. Since COVID, labor rates rose and many parts costs climbed sharply, but many dealers did not adjust their F&I product rates. Going several years without increases can force a very large catch-up later. Small, regular increases are easier to manage.

How often to review your program

James recommends a high-level review of your reinsurance, DOWC, retro or other program at least every quarter, and a deep dive once a year. The annual review asks whether you are selling the right products and whether each product is performing. He describes a dealer with a high-mileage product that could not be priced under a 100% loss ratio, so they removed it from their position entirely.

The back end depends on the front end

A program with low fees and an aggressive structure cannot make up for weak F&I performance. If you are missing meaningful service contract penetration, investment income and fee savings will not close that gap. Every contract written into a well-run program adds to it. As James puts it, coaching on the front and a strong program on the back are “a married family.” Read more on how F&I execution affects reinsurance performance and what dealer principals need to know about reinsurance.

This article is general information, not tax, legal or investment advice. Talk to your own advisors before changing a participation structure.

Adapted from Training Camp with Adam Marburger, first aired December 2, 2025. Watch this episode on CBT News or browse every Training Camp episode. Have a question about your F&I department? Talk to the Ascent team.