New Car Leasing Insurance Product Offering Rapid and Full ROI

Opportunity Snapshot

Investment Opportunity

This revolutionary Lease Insurance prevents those painful end of lease invoicing surprises which are becoming more and more common as car leasing grows.

We have developed a new and unique automotive insurance policy, which insures against the refurbishment costs incurred when returning a leased vehicle at the end of its contract term.

It not only insures companies involved in the hire, lease or operation of leased vehicles against refurbishment costs, but also removes any client conflict over the costs incurred, allowing for greater client retention.

It removes the risk from the end-user by providing cover at the start of the contractual lease, which offers the client peace of mind when the vehicle is returned. This policy is underpinned at lease-end by securing competitively fixed priced rectification contracts with service providers.
Quite simply, our policy ensures that the clients’ vehicles are returned in an acceptable condition ready for re-sale, eliminating any risk of additional costs or charges. Whilst our product does not guarantee residual value, by using an authorized refurbishment network and by having audited quality control procedures, it does however, enhance vehicle potential.
The policy provides a mechanism for managing the lease end process, whilst retaining the flexibility to satisfy all requirements and making the business process of supplying the customer with a new vehicle seamless.
Once our clients have agreed what the return condition should be, the refurb process is followed with the asset being returned to the liability holder in the agreed condition first time and on time.

This process completely negates the current end-of-lease conflicts that arise and also removes the end-users discomfort regarding variable costs. This is achieved in a timely and expedient manner, allowing clients a faster realization of sales and recovery of consolidated liabilities.

In addition to the obvious benefits of smoother business relationships and fixed price returns,The Product also offers, where applicable, the opportunity for clients to maximize their aftermarket activity by ensuring that all lease-end repairs are conducted through their own workshop facilities. Not only does this keep refurbishment in-house, but it also ensures the quality of the repair with the use of genuine parts.
Furthermore, the policy can be offered in a suite of options at vehicle point-of-sale, so the contract or lease agreement can be included in the total finance package of the vehicle. As the policy can be sold business-to-business or wholesale, the selling agent is free to add a competitive margin, designed to optimize the sales potential of the product.

Our Company is intending to launch in the US first as this is the largest single leasing market in the world with 4,3 million car and light truck leases written in 2016. With this in mind we plan to undertake a brisk 3-month Start-Up Cycle to position the product for a Q1 2018 launch in the US.

Competitive Advantage

Ours is the first policy to be designed with the specific purpose of smoothing out the potential for hassles at the termination of a lease. Looking at the threat of new entrants and threat of substitutes there is the simple matter of other companies not knowing what details our company base the underwriting margins on.

It will take at least until first year figures are published for forensic accounting to work out the cost of the risk which means more than two years down the line in real terms. Realistically we can mask these figures for a couple of annual reports at least and then the likelihood is that it will be approximately four years before the required underwriting risk can be understood fully.

On this basis competitive advantage is maintained over all other likely entrants for a considerable period.

Nowithstanding the foregoing, the partners of our company have three decades of fleet management experience upon which to have worked out the requirement for our product and to build it to suit the market from at all points of contact – the insurer, the lessor, the supplying dealer, the manufacturer and the end user.

Rationale for the deal

The Product appeals on 3 separate levels:

1. The insurance industry is clamouring for new risk and our product is exactly this. When new risk products are devised the industry throws the strength of its sales channels behind the concept. From Day One of launch, our policy will have thousands of sales agents actively promoting it.

2. Dealers, manufacturers and leasing companies face problems of loyalty from customers. This is in no way helped by the rising tide of scare stories of end-of-lease invoices received by customers upon termination. Anecdotally the rate of customer dissatisfaction can be over 60% to some industry estimates although published figures tend to settle somewhere nearer to 40%. Regardless of the actual figure, this is still a massive obstacle to maintaining loyalty of customers.

3. Following on from the previous point, customers are looking for painless usership options and if a nasty end-of-lease scenario can be avoided then this offers the vehicle user increased equity and wider choices at exactly the point of exchanging leases.

The Policy creates a platform offering an easy switching process for the whole leasing procedure and reinforces "usership" over "ownership" in the contemporary vehicle acquisition paradigm.

Use of financing

The funds shall be used to undertake the Start-Up Cycle for the US market launch. This is a 3-month cycle to market readiness.

The majority of work has already been completed with the product and risks calculated. The main tasks in the Start-Up Cycle are to:

1. Stress test the figures with a US automotive market actuary
2. Identify and appoint the Preferred Insurer

The actuarial stress test will use the same industry numbers as we have done in building the model and we know that these figures are accurate. It is simply a case of differentiating between specific vehicle marques and models to calculate how industry averages are arrived at.

The appointment of the Preferred Insurer will include approving a US-specific universal master policy document, appointing a major insurance underwriter in the US to cover all our policies written and assembling a national service network to undertake lease termination refurbishment through that Preferred Insurer.

The engagement of this expertise shall ensure that the policy always remains ahead of the curve in terms of value to the industry. This cycle will commence as soon as the Investor comes onboard with a view to completion in Q4 2017.

Opportunity for the investor

The investment requirement for this Start-Up Cycle is $400 000. This will meet the costs associated with the main tasks for a timeframe of 3 months. At the end of the Start-Up Cycle the US version of our policy will be ready for market and we can anticipate presence on the active leasing market from the beginning of 2018. The strategies to make our product a success directly from launch have been planned in advance so that the product will be able to make a splash on the market from Day 1 onwards.

Correspondingly the Investor will see a return on investment inside 12 months.

There are a number of scenarios for taking our product to market to be considered after the Start-Up Cycle and this can impact on the model of returns enjoyed by the Investor from the point of view of how we jointly wish to proceed. However, this is more about whether the Investor wants to stay in for the long-haul or divest quickly. These scenarios are discussed in the Business Plan.

In return for the investment sum of $400 000 the Investor will receive 30% of the equity in the US market product.

Alternatively, if debt is the preferred route, the loan would be for a period of 2 to 3 years, interest rate negotiable, with equity held as collateral for the term of the loan.

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