Archived Copies of Warranty Week

January 1, 2009 to today

Home Warranty Market Share: While American Home Shield continues to dominate, electrical and water utilities are shaking things up with the growth of their wire and pipe protection services. And despite a continuing multi-year dip in home sales, the home warranty industry set a record this year with $1.5 billion in premiums paid by consumers.
December 22, 2009
Chinese Drywall Woes: It smells bad and it ruins anything made of copper or silver. The gases given off by wallboard imported from China may also sicken homeowners and their families. Some say the affected homes will have to be gutted or bulldozed. But others say a simple solution is possible, if the focus is shifted to how the foul odor is produced.
December 10, 2009
Home Warranties & Foreclosures: As the industry looks for a way up from the bottom, home warranties may become a valuable selling tool. Buyers, worried about the damage done by departing owners, vandals, and the weather, might appreciate the coverage of a home warranty. Industry insiders, meanwhile, report that claims costs on foreclosures aren't that different from their other policies.
December 3, 2009
Home Warranty Insurance: While our American readers go on holidays to eat turkey and watch football, we're shifting our focus to how the governments of New South Wales and Ontario have gotten deeply involved in new home warranties. Both require those warranties to be insured, but that hasn't worked out as well in Australia as it has in Canada.
November 25, 2009
Home Inspection Warranties: It seems like a natural pairing. First the home inspector eyeballs the appliances, and then the home warranty company agrees to cover them. But it's not so simple in a business where honest advice is hard to find, and wariness about conflicts of interest is everywhere.
November 19, 2009
Home Warranty Association: Why are at least 90% of existing home sales in California covered by a home warranty? A mix of court rulings, government regulations, and industry response seems to have reassured home buyers that home warranty companies are both willing and able to pay claims. And thanks to a statewide educational effort, the realtors are able to explain how it all works to their clients.
November 12, 2009
Home Warranty Scam? There are good extended warranty companies and there are bad extended warranty companies. One of the worst seems to have a policy of denying all claims over $100 for what at first seem like legitimate reasons, and then hiding from the angry mob behind the anonymity of its web site, toll-free number, and post office box.
November 5, 2009
Price Optimization: A Potent Weapon for the Warranty Industry.
October 29, 2009
Appliance & Building Material Warranties: We conclude our mid-year product warranty report with a look at the supplier side of the homebuilding industry, where we find at least one group paying more for warranty claims this year than they did last year.
October 22, 2009
Telecom Equipment Warranties: Though industry sales are down in general, a handful of telecommunications, data networking and broadcast equipment manufacturers have managed to reduce their warranty costs and increase their sales at the same time. But as dramatic as some of the recent cost reductions are, the companies rarely mention either the cause of the initial problem or how they solved it.
October 15, 2009
Medical Equipment Warranties: Doctors, hospitals, and laboratory technicians want sturdy and reliable medical systems, and for the most part the manufacturers that supply them have been steady and predictable. But every once in a while, a massive recall or a production glitch causes warranty costs to spike. And it's when the trend line leaves its historical range that we know there's something wrong.
October 8, 2009
Aerospace Industry Warranties: In an industry that puts a premium on safety and reliability, warranty costs rarely stray far from the baseline. And while many aviation companies cope with the double whammy of rising warranty costs and declining sales, some such as Boeing and Gulfstream are actually seeing sales rise and claims fall.
October 1, 2009
New Home Warranties: One CEO recently said the worst of this cycle may be behind us. In terms of sales decreases and price declines, maybe so. But in terms of warranty costs, the worst is right now, as builders have less cash to pay for warranty work on units they sold at the end of the boom years. And then there's the question of how costly the defective Chinese drywall will turn out to be to replace.
September 24, 2009
Computer Industry Warranties: For most of the major players, sales declines caused relative warranty costs to increase. Turmoil in other industries caused a major PC maker to become the biggest warranty provider in the U.S. And for the lucky few, sales rose and warranty costs fell, despite a tough market full of customers still reluctant to spend.
September 17, 2009
Automotive Warranties: With GM now government-owned and several mobile home makers trapped in bankruptcy, industry-wide warranty statistics are losing their meaning. And thanks to the distortions caused by massive sales declines this year, claims rates have also lost much of their relevance during this recession. But among at least the well-run warranty providers, accrual rates have remained proportional to sales rates and quality levels.
September 10, 2009
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
Lifetime Warranties: Companies are free to define a lifetime any way they wish, but they have to be clear about their rules and their exclusions. Some issue the warranty to just the first owner of the product. Others qualify it with words such as reasonable or useful. And some high-tech companies spell out a policy under which the warranty's lifetime will end after sales cease and spare parts run out.
August 13, 2009
Used Auto Warranties: Signs of life are beginning to appear in the used auto industry as partnerships are formed and annual sales increases are claimed. One of the latest deals is struck between the makers of electronic contract and tax form software and a veteran administrator of service contracts sold by used car dealers.
August 6, 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
Worldwide Auto Warranties, Part Two: It turns out that Volkswagen, BMW, and Fiat do disclose their warranty data, if one knows where to look and what to look for. And thanks to the help of a reader who's fluent in five languages, we now have hard numbers for the warranty costs of more than half the world's vehicles.
July 23, 2009
Selling Peace of Mind: With all the negative publicity generated by the "expiring warranty" telemarketing scam, these days it's the auto dealers that need some reassurance about the value of selling vehicle service contracts to consumers. Below is a list of some of the benefits of the different types of VSCs, followed by two different lists compiled by industry associations that can help consumers spot a scam before they buy into it.
July 16, 2009
Worldwide Electronics Warranties: It's not where you're from as much as what you make. European and Japanese electronics companies report warranty expense rates similar to what their American competitors do. The difference is that while U.S. companies must report what used to be trade secrets, the international companies are simply doing their New York Stock Exchange shareholders a big favour.
July 9, 2009
Worldwide Auto Warranties, Part One: Why do Japanese automakers and heavy equipment manufacturers seem to have such low warranty costs? Though sales are down since last year, warranty costs remain under control, according to annual reports filed recently by Toyota, Honda, Komatsu and others.
July 2, 2009
Auto Part Supplier Warranties: Claims are up a bit but sales are down a lot. And while most suppliers have reduced accruals proportionally, at least one seems to have taken an accrual holiday.
June 25, 2009
NEW's Smart Procurement: By taking advantage of ServiceBench's connectivity with servicers and parts distributors, NEW is hoping to speed up repairs by helping servicers to find and order parts. The resulting reduction in turnaround time should make NEW's retail clients happier and its service contract customers less unhappy.
June 18, 2009
RV Extended Warranties: As sales plummet, the nameplates are dropping like flies. But the dealers have to make a living, and they've found that extended warranties -- sold at a discount or practically given away -- are a great way to induce skittish buyers to drop a quarter million dollars or more on an otherwise as-is purchase.
June 11, 2009
Warranty Service Providers: It's all mixed up. Retailers are selling products under their own brand names and manufacturers are selling their own service contracts. Bankruptcies have exposed how precarious product warranties can be, while insurance has demonstrated how extended warranties can survive even a liquidation. Perhaps it's time for OEMs to think about partnering with administrators and insurance companies?
June 4, 2009
OEM Extended Warranties: Working with a manufacturer to sell service contracts is a little different from working with a retailer. The OEMs need more help with sales and marketing, and they want more failure data analysis to help them with product quality and parts planning. They'll also need just as much help as the retailers with risk management, compliance, and regulatory issues.
May 28, 2009
Warranty Insurance: Properly insured and administered, an extended warranty can survive the bankruptcy of a retailer, dealer, or manufacturer. And in cases where customers doubt the survivability of a manufacturer's product warranties, insurance can reduce uncertainty and build confidence. Could this also work in Detroit?
May 21, 2009
Extended Warranty Insurance Companies: The advice columns tell you not to buy extended warranties, but they never tell you not to buy extended warranty companies. Of the four largest publicly traded warranty insurance companies, at least two offer dependable dividend yields and perhaps also capital gains as the recovery takes hold on Wall Street.
May 14, 2009
Annual Warranty Totals & Averages: While claims were up slightly in 2008, both warranty reserves and accruals actually plunged last year. And as sales fall, the percentage of product revenue spent on claims has risen. With no less than 21 charts, we detail the industry totals and averages for the past six years.
May 7, 2009
Homebuilders' Warranty Accruals: Rather than looking at warranty costs as a percentage of sales, would it be valid to calculate warranty costs per home? Using such a metric makes some homebuilders look very precise and consistent, while others look like they're just guessing how much to accrue per home.
April 23, 2009
Appliance & Building Material Warranties: The economic downturn that started with the homebuilders is showing its effects on the makers of appliances, fixtures, tools, furniture and building materials. But some segments haven't seen very big recent declines in warranty expenses, and some companies have actually seen their warranty costs rise.
April 16, 2009
Aerospace Warranty Trends: Unlike the computer and passenger car industries, in the commercial aviation industry the customer-facing brand names and their suppliers share warranty costs much more equitably. Then again, these multi-million-dollar jets and helicopters are hardly consumer products. And since safety and reliability are such top priorities, consistently low warranty costs are to be expected.
April 9, 2009
Telecom & Medical Equipment Warranties: While Motorola sets the pace in the telecom equipment warranty sector, no one company dominates medical equipment warranties. In fact, if anything, the medical and scientific instrument makers are known for consistently low rates of warranty spending.
April 2, 2009
Computer Warranty Trends: While other industries are seeing claim rates rise and accrual rates fall, warranty providers in the computer industry are seeing claims rise slightly and accruals rise a lot. And it's not so easy to blame those changes on sales declines, or to link them with quality increases.
March 26, 2009
Auto Warranty Trends: While the RV makers are imploding, the farm vehicle makers are thriving. Somewhere in between are the passenger car and light truck makers, for whom warranty has become an important issue in the government bailout. But the 1.9% gap in warranty costs between OEMs and their suppliers remains firmly in place.
March 19, 2009
Top 100 Warranty Providers of 2008: Of all the companies spending the most on warranty, none of the largest reported massive percentage changes in 2008, which confirms the stability of their warranty programs. But there were plenty of big changes in claims and accrual rates further down the list, some for the better and some for the worse.
March 13, 2009
Warranty Conference: Economic turmoil is likely to take its toll on WCM 2009 attendance, but those who can make it to Orlando next week will see a series of how-to presentations by some of the biggest warranty providers in the world. Legal and regulatory issues are also on the agenda, and yes, there will be a quiz at the end.
March 5, 2009
Warranty Improvements: Clever companies are now looking beyond warranty, wondering what else they can do with their data to improve quality and service and further reduce costs. At the WCM Conference in a few weeks, several will report on the status of these efforts.
February 27, 2009
Warranty Experts: It's one thing to hear software salesmen talk about the benefits of their products. It's something else when that company's own customers stand up and say how happy they are, despite the challenges they had to overcome. And when warranty professionals gather next month in Orlando, multiple warranty experts from major manufacturing companies will do just that.
February 20, 2009
Warranty Optimization Workshops: Warranty data analysis can help you understand where you've been and where you're going. But can it also help you choose the right way to get there? At pre-conference workshops next month, two leading warranty optimization companies plan to show how both product warranty and service contract programs can benefit from the careful use of analytics.
February 12, 2009
Warranty Workshops: What's the probability that two Russian physicists with degrees from the same university would deliver back-to-back workshops on new statistical approaches to warranty data? On March 10, that's exactly what's on the agenda for the WCM Conference's opening day.
February 5, 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
New Warranty Regulators: As the Obama administration gets up and running, new appointees are assuming command of the agencies that affect warranty policy. So far, the Dept. of Transportation, the EPA, and the SEC have new leaders, with announcements expected for the FTC and NHTSA within days. So what's likely to change?
January 22, 2009
The Value of Warranty Expertise: Is warranty management merely a clerical skill, or is there more to it than just paperwork? Some see warranty as not only a leading indicator of product quality but also a major chance to impress a customer. However, that conversation can only take place if the warranty professional is trained to do more than merely process and pay claims.
January 15, 2009
Warranty Work: Sometimes you don't know the value of something until it's gone. Automakers measured the value of warranties by their absence. And as retail sales slow and job losses deepen, warranty professionals may appreciate hearing that recruiters are back at work.
January 8, 2009