Archived Copies of Warranty Week

December 2002 to Today

Extended Warranty Revenue Trends: Because so many extended warranty programs are run by small private companies or by huge companies that don't break out their service contract revenue, it's almost impossible to size the business accurately. But four companies reveal just enough financial data to suggest that 2020 and 2021 have been really good years for the product protection industry.
November 11, 2021
Detroit Auto Warranty Update: It was supposed to be a down year, with car sales down and warranty expenses down also. The first part came true, and warranty work was way down last spring, but the latest financial data from the top U.S.-based automakers has warranty costs soaring late last year.
February 18, 2021
Apple's Warranties & Service Contracts: In its brand new annual report, the company details its declining product warranty expenses while providing financial clues that suggest its market-leading extended warranty program had a really good year.
November 5, 2020
U.S. Commercial Vehicle Makers: The warranty expense data in their latest financial reports suggest that the top U.S.-based truck, bus, construction equipment, and agricultural vehicle makers are doing just fine, with relatively stable amounts of claims and accruals, after several reported noticeable expense spikes in previous years.
December 19, 2019
U.S. Consumer Vehicle Makers: The nine-month financial reports suggest that the top U.S.-based passenger car, motorcycle and recreational vehicle makers have seen a slight increase in their warranty costs and a slight decrease in sales, resulting in an upturn in their claims rates. But it's nothing like what happened to them a decade ago, when sales plunged by unprecedented amounts and claims costs didn't.
December 5, 2019
Apple & Tesla Warranty Accounting: The third quarter numbers are coming in fast and furious now, and some investors and stock analysts are treating the warranty expense data as a leading indicator of a company's financial health. But there are limits to how quickly some bad numbers can turn into a trend or a scandal.
November 7, 2019
U.S. Auto OEM Warranty Expenses: Now that the second-quarter financial reports are all in, we take a look at the warranty metrics of the U.S.-based industry that manufactures cars, trucks, buses, and all sorts of other vehicles, both large and small. And while the overall totals and averages didn't shift much, some companies saw big changes in their warranty costs.
September 5, 2019
PCMI Signs AmTrust for Reinsurance Software: As AmTrust looks for ways to boost its core insurance underwriting business, making it easier for clients to see the financial metrics of their reinsurance investments becomes a priority. And PCMI's modular approach to reinsurance reporting software makes it easier for AmTrust to implement.
January 31, 2019
Worldwide Automobile Warranties: Manufacturers representing well over 90% of the world's car sales now reveal their warranty expenses in their financial statements. So we've fashioned estimates for the remainder to create some benchmarks for the industry's warranty expense rates: 2.6% of revenue and $577 per vehicle.
August 16, 2018
Construction Equipment Warranties: While most of the top industry players are diverse manufacturers of a wide variety of products, some make little besides construction and mining equipment. And these "pure plays" can provide us with clues about the typical warranty expenses of those manufacturers that don't include any details about their claims and accruals in their financial statements.
August 17, 2017
Legal Opinions: Two attorneys from Locke Lord explain how third-party billing for service contracts may open the door for cellphone carriers to be regulated by the Consumer Financial Protection Bureau. And the executive director of the Service Contract Industry Council explains how his group works with regulators to fight against deceptive marketing practices.
December 29, 2016
Retail Product Warranties: Though it's not common, there are some retailers, primarily in the auto parts business, that provide their own product warranties above and beyond what the manufacturers offer, and report those expenses in their financial statements. But it's likely to become more common in other lines of business, as more manufacturers open their own retail outlets or sell directly to consumers online, and more retailers begin to sell their own brands.
August 18, 2016
FAST Act Lightens Delivery of Privacy Notices Burden for Service Contract Industry: Service contract providers, already entangled by a web of state and federal insurance laws, must now navigate the ramifications of new privacy regulations. But if they call themselves financial institutions and follow some other rules, they could also free themselves of the need to send out annual privacy notices to their customers.
January 14, 2016
Service Contract Underwriters: Well over half the service contracts sold each year to consumers are backed by publicly-traded insurance companies based in the U.S. What follows is a list of their financial strength ratings and a look at their stock market track record since 2008.
February 5, 2015
Addressing Common Business Challenges Associated with Manufacturer Warranties: Proper estimation and accounting of warranty costs isn't easy, but the benefit of doing so is enormous. Actuaries in pursuit of precise and accurate forecasts can employ techniques similar to those used in estimating the financial impact of insurance coverage, and can help a company avoid restatements and other adverse impacts that could threaten its profitability.
January 31, 2013
Appliance & HVAC System Warranties: While they haven't made much progress with warranty cost-cutting, they also haven't seen much increase. And given all the financial problems reported by builders lately, merely staying the same looks good in comparison.
May 17, 2012
Warranty Adjustments, Part 1: When a company discovers it has more in its warranty reserve than is needed, it can withdraw the excess funds and add them to profits. Some of these financial adjustments can be huge, and can help dress up an otherwise disappointing financial report.
October 27, 2011
Toyota's Warranties & Recalls: For the first time ever, the automaker's worldwide recall costs have exceeded its warranty costs. And that has changed both what Toyota reports and how it gets reported in the company's financial statements.
June 30, 2011
Appliance Service Contracts: While hard data is difficult to find, one retailer discloses lots of details about extended warranty sales in its financial statements. But as detailed as these metrics are, they may not apply to other less forthcoming retailers.
January 6, 2011
Vehicle Service Contract Administrators: As we conclude our VSC industry tour, we take a look at the financial strength ratings of the underwriters, the end user revenue of the administrators, and the myriad of links they have with each other, with auto dealers, and with the vehicle manufacturers.
September 9, 2010
Service Contract Underwriters: The insurance companies that back service contracts are graded on their financial stability. And while the Detroit Three automakers and some of the other recipients of the TARP bailout billions get relatively low grades, most of the majors remain on the honor roll with an A- or better.
February 11, 2010
Top 100 Warranty Providers at Midyear: Was that the sound of the bottom of the recession? If so, financial data from the first half of 2009 provides a detailed record of how warranty providers reacted to a collapse in sales and a jump in claims. Though some of the largest warranty providers didn't make it, those that did are enjoying the benefits of recent claims processing automation projects and other cost-cutting efforts.
September 3, 2009
Warranty in Financial Statements: Because warranty disclosures began appearing in annual reports less than seven years ago, it takes a bit of skill to hunt down the right data and turn it into meaningful percentages and ratios. So until the procedures are old enough to make it into the accounting textbooks, here's a step-by-step guide to how it's done, using one company's most recent disclosures as an example.
July 30, 2009
Early Warranty Data: While only a few dozen of the hundreds of warranty reporting manufacturers have filed their year end 2008 financial reports so far, very few of these early filings reflect the turmoil one would expect, given the gloom of recent headlines. Are these early filers the exceptions? Or are things really not as bad as they seem?
January 29, 2009
Warranty Trends in 2008: With the filing of the last few financial reports of this cycle, it's time to look at warranty costs by industry. The big story in 2008 is how falling sales have made warranty claims less affordable for some companies. Warranty reserves peaked at the end of 2007, but claims are still rising. And for hard-hit sectors such as autos and homebuilding, the worst may still be ahead.
December 18, 2008
Circuit City's Extended Warranties: Are the financial losses and sales declines self-inflicted? Or is this the bleeding edge of an industry downturn that will eventually strip other retailers of their profitability? Circuit City blames both.
January 16, 2008
Dell's Warranty Accounting: While it came up short in terms of scandal and financial impact, Dell's accounting investigation did produce one benefit. At long last, the company separated its basic and extended warranty programs. And it turns out that extended warranty was even bigger than we thought.
November 7, 2007
Warranty Financial Management: Part 2: Optimizing Warranty Reserves. Rightsizing a $100 billion dollar worldwide warranty reserve by turning lazy capital into working capital.
January 23, 2007
Dell's Warranty Accounting: Dell is now seriously late with its quarterly financial reports because of investigations some say were prompted by its peculiar warranty accounting methods. Meanwhile, Apple's seems to have turned a corner regarding its recent iPod warranty problems.
January 9, 2007
Product Warranty Spending: With most of the third quarter financial reports behind us, it's looking like warranty spending is up only slightly in 2006. But the changes at some of the top warranty providers are very large, in both dollar and percentage terms.
December 12, 2006
Warranty Financial Management: Part 1: Defining Warranty Expense Management.
September 12, 2006
Automotive Warranties: As seen by its third quarter financial statements, Ford is catching up to GM, both in terms of revenue and warranty spending. Ford has now become only the second American manufacturer to ever pay out $1 billion or more in warranty claims per quarter. Meanwhile, other U.S.-based vehicle manufacturers have their own warranty ups and downs to report.
November 15, 2005
Aftermarket Financial Products: Auto dealers who reinsure their vehicle service contracts are pleased by a recent IRS ruling.
July 6, 2005
Warranty Conference,
Part One: During the kickoff keynotes by HP and IBM at last week's Warranty Chain Management conference, the need to involve people in warranty transformation projects outranked all technical and financial challenges.
March 8, 2005
Extended Warranty Profits: For many manufacturers, the sale of extended warranties contributes heavily to net income. But only a handful of companies have made the financial disclosures needed to figure out how important it really is to them.
October 26, 2004
Warranty Claims & Accruals: While some U.S. manufacturers are still preparing their latest financial statements, most of the largest warranty providers have already announced their second quarter claims and accruals. While some of the top 50 are spending more on warranty than a year ago, most are spending less, and a few are spending a lot less.
August 17, 2004
Warranty Claims: While some U.S. manufacturers are still preparing their latest financial statements, most of the largest warranty providers have already announced their first quarter claims and accruals. Half of the top 50 are spending more on warranty than a year ago while half are spending less.
May 18, 2004
Warranty Claims: While hundreds of manufacturers have now filed financial reports detailing their warranty activity during the third quarter, it remains unclear why claims rose by more than five percent. Is it a seasonal fluctuation? Or is it proof that the recession is finally behind us? Here's a down payment on the answer, highlighting trends among the top 50 warranty providers.
December 8, 2003
Warranties in the HVAC/R Industry: As temperatures climb, so does the need for air conditioner and refrigerator repairs. But even in the cold winter months, HVAC/R vendors spent an average of 1.9% of product sales to satisfy warranty claims, according to recently filed financial statements.
June 30, 2003