U-R-G On the Go
An informative podcast for the United Recyclers Group. Each week we will feature an entertaining guest that will share their knowledge and information with you, providing you with tips and tools to help you become a more profitable business.
U-R-G On the Go
Own the Risk, Keep the Cash: How Recyclers Build Wealth With Reinsurance
Warranties aren’t the enemy of profit—bad accounting and fuzzy reporting are. We sit down with Brett Buike of National Reinsurance to unpack a simple shift that helps automotive recyclers stop bleeding cash on claims and start building a durable revenue stream: move the warranty risk into a reinsurance company you own and pair it with clean, actionable reporting.
We walk through the nuts and bolts without the jargon. What does it mean to reserve for 90-day warranties and extended terms? How do you net claims, keep access to cash, and still gain the tax advantages of a specialized entity? Brett breaks down a million-dollar monthly example, shows how to right-size reserves for your cash cycle, and explains why pooled programs and trust-heavy structures held recyclers back. The punchline: you can achieve better tax outcomes at year-end without panic-buying equipment, then start Q1 with cash in hand.
Data is the second engine. Together, we outline a practical way to fix credits and codes so refunds, exchanges, defective returns, partial credits, brokered vs in-stock parts, and second-ship freight are accurately captured. With URG’s warranty program and enhanced Pinnacle/Easy Suite reporting, ASE-certified techs triage claims, sales teams get back to selling, and owners finally see true loss ratios by 90-day, 1-year, and 3-year terms. We also dig into upstream insights—auction source, buyer, dismantler, QC—that reveal why certain parts or customers drive outsized failures and how to correct course fast.
If you’ve wondered whether your warranty program could be a profit center, this conversation gives you the roadmap: reserve, measure, price, and review every 90 days. Own the risk, keep the cash, and use the surplus to buy cars, reduce debt, or fund growth. If this resonates, tap follow, share with a fellow recycler, and leave a quick review—what’s the one change you’ll make to your warranty process this quarter?
Welcome one and all to the URG on the go podcast. We are here, you are there. Now remember, this is the true voice of the automotive recycling industry. It's for all the pros that have a need to know that are on the go. I'm DJ Harrington, your co-host, better known as a cardiologist. But the real host of this program is the talented Amanda Marson, who is director of member and vendor relationships for URG. Amanda, this will be a good one. This is a great guy we have as a guest. I met him years ago in the automotive industry. And he and his family had a bunch of dealerships, and he is a gifted guy, and I am so proud that we have him on the podcast today.
SPEAKER_01:I agree, JJ, and thank you so much for that intro. And so, you know, I I we always try to get people on this podcast that are gonna give you some value added, and this guy really knows his stuff and will definitely give you a good ROI on your on your um investment whenever you're doing this uh with him. And so most recyclers don't realize that they're leaving money on the table with how they account for warranties. And so we're gonna dig in on this episode and breaking it down uh with Brett Buick at National Reinsurance. So, Brett, thank you so much for being on the podcast today.
SPEAKER_04:Yeah, thanks for having me. It's uh good to be with you guys. I really appreciate the opportunity to be on the show. And uh DJ, it's uh great to see you. And uh yes, we have uh known each other for quite some time. I won't tell everybody just how long because that would definitely date you. But you've known me since I was a little pup for sure.
SPEAKER_03:Hey Amanda, I had brown hair and I had it.
SPEAKER_01:I love it, I love it. That's awesome. Uh we love having you know connections with different people and and making sure that you guys are are getting to know these good people that we've known for a long time and and and being able to learn about the different benefits in this podcast is specifically for um getting you know that value added in those different services that we uh can help you guys get connected with. So, Brett, I appreciate you being on. Um, but before we dive into warranties and what reinsurance is about, many listeners may not know you yet. And so can you tell us a little bit about your background and how you found your way into the automotive recycling industry?
SPEAKER_04:Absolutely. Uh so you know, grew up as a uh a dealer son, right? So in our industry, it's called having a PhD, stands for Pop Ahead of Dealership. And um, so I was a second generation car dealer. Uh, you know, we had some new car stores and uh a bunch of uh buy here, pay here operations, uh JD Buy Riders in Ohio and Pennsylvania. And you know, one thing led to another. We were lucky enough to build up a great business and sell to private equity back in 2016, which kind of left me with you know nowhere to go and looking for something to do. And I didn't necessarily want to get right back into the car business. Uh so I started kind of like consulting for other dealerships and just helping people out. And one of the things I realized as I was doing that was that there was a real need for returning and operational help at dealerships, uh, especially independent ones. And as I was helping them with that, one of the things I realized secondarily was a lot of them didn't reinsurance companies. And in the environment that I grew up in, I honestly just assumed everybody had one because it was just such a common practice uh in the automotive industry. So I started, you know, helping people set up those businesses, showing them how to utilize them, how to maximize the benefit, uh, how to turn it, you know, what is traditionally just an expense in our business into a new revenue stream. Uh and then, you know, one thing led to another, and I ended up working uh with uh Buckeye Risk Services, who is a just uh a really fast-growing uh reinsurance provider, full service consulting firm in the automotive space. And what happened was some clients of mine down in Georgia, uh, Jack and Ben Carter down at Turn and Burn, uh good, good, really good friends of mine, great operators. And he called me up one day and he started asking me about the warranties and the extended warranties uh that his buddy, who owns an auto recycling yard, sells. And he's like, Well, if I can reinsure my warranties, can he reinsure his? And we had a couple of conversations. I flew down there, and uh, next thing you know, you know, I was in the auto recycling business. And so I, you know, just one of my automotive clients introduced me to uh Rick Sieg down at SW. Uh, and he was my first auto recycling client, and that was you know going on I think four years ago now. So I was always in the business, and I guess I'm what you guys call an end user, right? So I was always buying parts from you, um, but it wasn't until you know just a couple of years ago that I actually kind of got to see behind the curtain uh of the auto recycling industry and um was first of all just completely blown away and super impressed by it. And then I got really excited when I saw that there was this huge opportunity not only for the industry, but you know, for for my company. So uh very excited to be here.
SPEAKER_01:100%. Yeah.
SPEAKER_03:So go ahead, J. Hey Amanda, can I add something? You just mentioned a guy's name that owns Turn and Burn. Just one month ago in Las Vegas the number one dealer in the whole United States Jack Carter and his brother, Kern and Burn.
SPEAKER_04:Ben and Jay Kern and Burn. Yeah, he was uh he was uh nominated and uh voted as the National Quality Dealer of the Year uh 2025. So it's a huge honor for him. And uh he's a a great operator, a good friend, and and he's ultimately the one who opened the door for for me into the uh auto recycling industry.
SPEAKER_01:I love that. That's awesome. Yeah, so you know, you've obviously been around the industry for a long time and and doing different things. Can you kind of explain what reinsurance is and why auto recyclers should be thinking about it?
SPEAKER_04:Yeah, absolutely. So um, you know, simply we'll kind of do that 30,000-foot version. Yeah. Reinsurance is is is two pieces, right? So it's at its core, it's really just a better way to account for a transaction than everyone's already doing. Um so you know, most of the yards that I've been to, and this is whether they're full service or U-Pool, you know, or a hybrid, when a consumer, whether it's a business or an insurance company or someone off the street buys a part, they're getting a 30-day, 60-day, 90-day, you know, or 101-day warranty with that part. And we're what we're doing is we're basically guaranteeing that this part's gonna last at least that long, right? And then on top of that, um, the yards are working really hard to sell extended warranties. And they sell the extended warranties to, you know, generate more revenue and also to protect them from losses for parts when they're, you know, you're one year's and three years worth of protection. So when you do that, what happens from an accounting standpoint is you're generating risk, right? You're you're you're holding on to every part that you sell now has 90 days of risk or one year worth of risk. And what most well well what almost all of the auto recyclers are currently doing is they're holding that risk on their books. And then when there's a claim of some kind, they just kind of pay it and they just chalk it up as the cost of doing business and they move forward, right? Um, which is what a lot of other industries do that monetizes that risk, accounts for it in a better way, and then it ends up being turning what is you know right now just an expense and a partial revenue stream into a significantly larger revenue stream that comes with better reporting, better tracking. Um and when you set it up inside of a reinsurance company, there are some pretty significant tax advantages to doing it that way.
SPEAKER_01:Right, right. And and you know, right now, most yards, you know, especially bigger yards and even the smaller guys are starting to, you know, make sure that they have these warranties and and you know, kind of break it down a little bit further. You know, how do most yards handle extended warranties and warranty claims right now without that insurance? I think you kind of dug in a little bit, or you know, they're just kind of eating the cost, right?
SPEAKER_04:Yeah, they're just they're just kind of eating it, um, or you know, kind of expensing it out. Um, but what we've noticed, um, and I'm I know we're gonna talk about the reporting later, but as I started working with the yards, one of the first things that jumped out, besides that there was this huge opportunity um, you know, for them to generate more revenue off of the existing program, was that how they track it and how they report it, it wasn't very good. Meaning, if if I ran, if I'm in Pinnacle and I run a B9 report or an S12 or something like that, and I go to look up all of my credits, there's a couple of reasons, codes, you know, um, more damage than described, effective, part not needed, this, that, whatever it is. And when they run, hey, how many credits did we have last month? All of that kind of gets lumped into one pile. And you can't really tell, you know, how much of those were refunds easily, how much of those were actual parts where we had to send another part. And so we really had to work with Hollander and uh Pinnacle to kind of refine that reporting and work with the yards that I have been working with to kind of standardize like, hey, if the part comes back and we put it on the shelf, put it back on the shelf, right? Choose this option. If the part doesn't come back, then obviously it was defective. So we had to send another one. That's a warranty claim. Um, if we initied a partial credit, right? Hey, they want to keep the part, but they need$300 off, you know. Well, that should be included. So we've really been working with them to try and identify what is the true cost of the warranty program, and then identify how to break that up by type. So, how much is our 90-day warranty costing us? And how much is our one-year warranty costing us, how much is our three-year? Because if somebody buys a part and nine months from now it fails, they just chalk it up as warranty expense. If a part fails 24 months from now, they chalk it up as warranty expense. So you don't really know how much money did I make on my one year, how much money am I making on my three year? And so we've really been working with you and Pinnacle, uh, and you know, Jim over at Easy Suite and everyone to try and generate better reporting so that we can not only maximize the benefit of having a reinsurance company, but identify what is my warranty program actually costing me and how much am I actually making? Yeah.
SPEAKER_01:Right. And, you know, I we've talked at conferences and all of that, and it just seems like such a no-brainer, you know. Um, you know, that you you go and you you educate these recyclers. I know you were just visiting Greg Dario um last week as well, or the week before, and um explaining all this to him and how how it really can benefit them and then help with their ROI and essentially make that much more off of warranties. Because a lot of times, you know, the warranty um that you're you're providing, you don't necessarily see a claim come through, or you know, if you do, you're still gonna be able to, you know, pull from that savings essentially that you're you're discussing, correct?
SPEAKER_04:Yeah, absolutely. Um, and then you know, we've been working on really trying to drill down into the specifics. Um, you know, one of the things that we're working on with the reporting is not only being able to break out the expense and the profit by internal parts and labor warranty expense, brokered parts and warranty or you know, or parts and labor expense, but then isolating, you know, how many of these claims were specifically one-year claims, how many of these claims were specifically three-year claims. Uh, you know, are we charging enough for a one year? Are we charging too much for a three-year? So I think it's not only helping to maximize the benefits of the reinsurance company and get real loss ratios when it comes to dollars, but it's also in several of the yards that we've worked with kind of uh bring something to the surface. They're like, wow, we need to change that. Yeah. Uh, you know, just little things like, hey, if we did it this way, we'd get a much better response. And so that seems to be really helping.
SPEAKER_01:Yeah, and just kind of digging into their processes day to day. And and you know, you mentioned the reporting, and we now have that, you know, especially if they're if they're on the warranty department or the warranty um claims a part of URG. We now have reporting uh and and that's you know broken down between you know brokered parts versus um in-stock parts and sales, and then it'll give you labor payouts, uh, reporting, and then you know, also give you warranty by part type and interchange. Um, and so just something that you guys can like really be able to analyze. And I think that's something that they just haven't really ever had before when it comes to warranties. A lot of these guys, you know, if they're not on the warranty program through URG too, uh they're using Excel spreadsheets, right? And that's not gonna necessarily be accurate. And and having this process and having you involved with their uh warranty department, I think is huge.
SPEAKER_04:Yeah, and it's it's been good for me because you know, as I'm working with more yards and going to more shows, um, and and realizing that, you know, uh the yards all have their own personalities and characters and unique ways that they do things and you know, outside salespeople, inside sale people, um, what you know, that the more time I spend at the yards, the more I learn, and the more I'm able to not only help customize the programs and become a better vendor, but um also just kind of from just from a business aspect, right? Like how would I look at the business if it was mine? And you know, as the second round of reporting is gonna go, ultimately what we're gonna be able to do is we're gonna be able to track our failure rates and percentage of parts and also the dollars associated with those failures by where we purchased the car from, what auction, what buyer, what buyer is the one who bought it, and then even by dismantler dismantler QC department, and then who we sold it to. And the idea there being if we have six dismantlers or 10 dismantlers and we've got an 18% failure rate on powertrains, don't you want to know that of that 18%, 40% of them are coming from one dismantler or from one specific yard? Or this one person who's buying a lot of parts from us, man, he files a lot of warranty claims on us, and we need to figure out why. Um, and all of that boils down to more information to not only sure maximize the benefit of the reinsurance company, but this is all extremely valuable information for just running your yard. So I'm I I feel like I'm in a unique position where I'm, you know, an end user who's saying, hey, you know what would be really awesome if you guys could offer me. But then on the inside, kind of, hey, if this was my yard, I would want all this information. Let me see if I can help you get it. And then with, you know, like I said, uh, you know, pinnacle's help and your help, um, creating that first level of reporting that's now available to everyone was uh a lot easier than I expected. So I'm very excited about it.
SPEAKER_01:Good. That's awesome. Awesome. Well, DJ, I almost forgot. We need to do it, uh, take a commercial break.
SPEAKER_03:You got it.
SPEAKER_00:We'll take a break and we'll come back with Red Vue, and this has been a great URG can help you streamline your business for maximum efficiency and increased profits. Access powerful software and unique tools, receive top-level training with industry experts, with experts, exploit e-commerce with discount, receive support resources discounts. Starting at just$150 a month. That's the smartest investment you will make for your business this year. Go to u-r-g.com and click on Become a Member. Your path to a profitable future is just a click away. That's u-r-g.com.
SPEAKER_03:Welcome back, everyone. You are listening to the URG on the go podcast. Every week, Amanda and I do our best to bring you good episodes. Please remember to listen. We're available on Spotify, iTunes, Pandora, Stitcher, iHeartMedia, or wherever you get your podcast. Now, for our listeners, we're over 10,000 listeners now, Amanda. And so I have to say something. I send people to Bradley only because he's like a tailor to me. You go to him and he customizes the program. So if you're a small recycler, he helps you there. If you're a large recycler with a lot of headaches, he helps you there. He customizes, it's not one of these programs where everyone gets the same. He listens like a doctor and goes through the program and then says, Okay, let me give you some suggestions to save you on the tax. Let me give you some suggestions to help you with your grandchildren. That's how it's done. So I'll pass it back over to you.
SPEAKER_01:Awesome. Thank you, DJ. Yes, I think um, you know, all of this information that Brett is giving you is all just continued education to help your business in the long run, right? It's gonna help with your ROI with warranties. It's gonna help you really, you know, save money and potentially make more money on your warranty sales. Um, and you know, now that we've partnered with uh Brett, we're at uh National Reinsurance, I think it's just gonna help benefit these automotive recyclers even more so. So again, Brett, thank you so much for being on and helping our URG members and helping educate them through this uh podcast and through your your services.
SPEAKER_04:Yeah, thanks again. Thanks again for having me. Appreciate it.
SPEAKER_01:Yeah, so can you walk us through um say just a simple example? If a yard, you know, is doing you know five million in sales per year, how does national reinsurance change the outcome financially? And is there any way you can kind of explain how that works for them?
SPEAKER_04:Yeah, absolutely. Um, so the example that I've kind of been using for everyone, uh, and to DJ's point, this is just an example, right? So this isn't um specific to anyone's you know, yard or anything like that. This is just if we're just using these numbers because it's easy math, right? So if you're doing a million dollars in gross sales in a month, just the part sales, right? Let's just say for sake of argument, everybody gets in 90 days and we did a million dollars in gross part sales, we're going to analyze what is your historical monthly credits look like? Is it 20 grand a month, 30 grand a month, 40 grand a month, you know, something like that. And once we kind of get that number, what we're gonna do is we're gonna find a way to monetize that risk for all those 90 days. And just for again, easy math, let's say that we're gonna use 10%. So at the end of the month, we're gonna assume that we have$100,000 worth of risk just from our gross part sales, okay? Then we have our extended warranties. And let's just say that this particular yard did$25,000 in sales on extended warranties one year, right? And that's all they offer. So at the end of the month, they've got a million dollars in part sales and they've got$25,000 in extended warranties. And the way that people currently do it is they're just holding all that revenue and they're holding all that expense on their books. When you reinsure, the idea is to again monetize that 90-day risk. So again, now we've got a$100,000 expense to the yard, not$100,000 in revenue. And the$25,000 in extended warranties is now also an expense. So at the end of the end of that same month, this month, what we're gonna do is we're going to send$125,000 to our reinsurance company. When that money is inside the reinsurance company, nothing really changes. We're still gonna handle claims the way that we've always done, we're still gonna do what we need to do and all those things. But now what we've done is it's forced us at the end of the month to say, okay, how much business did I do? How much did I earn in extended warranties? What type of credits am I paying out? So in that same scenario, we did$125,000 worth of business. Maybe we had$50,000 in claims. So at the end of the month, it's like, hey, you know, we profited$75,000. But what we want to do is we want that profit to be in the reinsurance company because the reinsurance company is just one, it's a better way to account for that profit because reinsurance companies get special tax treatment, which makes it way more tax advantageous to use the reinsurance company and to reserve for future losses inside of your basically, it's like you own your own warranty company and you're sending the money to that warranty company. So now with the money inside that warranty company, the business still has access to it, right? We still need it when it when we need to, you know, put some capital into the business or something like that. But we're getting a lot more benefits now. So if we took that scenario and we multiplied it by 12, we're essentially have this new company that has this special treatment and it's gonna look like it made a million dollars last year, which means our yard looks like it made a million dollars less, right? So the idea the idea is just exactly right. So there's there's a lot of benefits to doing it. And traditionally, there was a couple of ways that programs like this were set up, which made it not beneficial uh for auto-recycling yards. One was some people used to take a bunch of yards and put all their risk in one pool, and they were basically if one yard went out of business, it would impact everybody, right? That's more of what they call a risk retention group. We're not doing that. This is one yard owning its company, holding its own risk exactly the way that it is now, just with better accounting and a better vehicle to turn this program into a revenue generator rather than just a direct expense.
SPEAKER_02:Great.
SPEAKER_01:Makes total sense. Yeah, it just it seems like such a no-brainer. Every time you explain it to me, I mean, it's it it's not all that, you know, hard to understand when you put it in those terms. And I think that's what makes people understand you a little bit more. Then, you know, I think you kind of come in, you know, with a point of view of, you know, they're not really uh knowing about how this would work, and and the way you're able to explain it really helps um, you know, get them on board. And it's it really is truly a no-brainer. I I'm sure, I mean, I've seen you at conferences and you guys are crazy busy every time. I'll be like, what's that crowd over there? Like, of course, it's natural reinsurance.
SPEAKER_04:Yeah, we we have been, and uh, you know, we've had a lot of success, and we're definitely signing up a lot of yards and we've got a lot of good conversations going. But it's it's funny that you you you say that because people have heard of it in the past. And I think that the thing that prevented them from doing it was one, it was never truly explained. Yep. I think maybe two, the person they they knew there, they knew reinsurance, but they didn't understand business and the yards, so the applications were wrong. And then the other, the biggest barrier to entry was that a lot of reinsurance companies require trust accounts. Meaning, not only do you have the expense of the claims, but now, yeah, you're generating revenue inside of this new company, but you lost access to it.
unknown:Right.
SPEAKER_04:So we don't do it that way, right? We're we're putting these, we're we're we're open, we're helping these companies, we manage these companies for you, we do the accounting for these companies, we do the taxes for the companies, all that. For you, it's pretty much just business and normal, but with a little bit of extra reporting at the end.
SPEAKER_02:And then again, it just comes down to revenue as well, right?
SPEAKER_04:Yeah, it's just yeah, it and it it's it becomes like the greatest 401k for a business owner ever because it's a better way to account and it's a long-term wealth generating tool at its core.
SPEAKER_01:Right. Well, and I think the you know, the great thing about working with you in national reinsurance is that you are on the ground floor, you are going to these businesses. You know, you were literally just at, you know, uh Dario Auto and Truck here last week, you know, um, spending a few days with them, you know, taking them to dinner, really getting to know the owners, really getting to know their pain points. And I think that's, you know, key. And that's kind of what, you know, Chrissy and I, we've been Christy and I and Kristen have been focusing on as well, is getting out to these members and really understanding their pain points and and what we can do to help them. And I think that's really, you know, helped you get um some longevity as well and get some really good relationships started.
SPEAKER_04:Yeah, it's it's been good. I um I've I have said it multiple times that I'm I feel very lucky uh to have, I guess, covered as much ground as I've had as quickly as I have. And I really owe that to, you know, the seeds, uh, you know, down at SW introducing me to people. Um, you know, Sean Garber uh at grade A, um, you know, he he drilled me pretty hard to get started. But once he understood it, you know, he was just he really helped open a lot of doors for me and he introduced me to people. Zane Malcolm has been great. Uh the Kaziskis have been awesome. Yeah, H H. And then getting to work with Lisa and Autumn uh and and their um, you know, CFOs and and and general managers to kind of really dig in and and and learn more about the industry. And I always joke that you know the auto recycling yards is one of the most competitive, but at the same time, one of the most communal businesses I've ever seen, where it's like that guy drives me crazy, but I do 300 grand a month with him every month.
SPEAKER_02:And I'll have a drink with him every time I see him, right?
SPEAKER_04:Yeah, and I'll hang out with them every time I see them. So but everyone's been really, really um open about their businesses and they've they've shared a lot and they've educated us a lot. And um it's uh it's really helped us to refine the program, you know, and of course our sales pitch too and and everything else, but I I really enjoy hanging out with everyone and it's uh it's been it's been good to us these last two years. We've grown a lot.
SPEAKER_01:Yeah, I mean, you know, I we just started kind of talking, I think a couple years ago, and and I feel like you're everywhere now, you know, which is great. You know, you guys have done a great job, you know, getting yourselves out there and and you know, partnering with us as well um with our warranty program. And I think you know, that's really gonna help get your name out there too, uh, to the URG members that are utilizing the warranty program, which you know has has helped quite a bit. And you know, working with Easy Suite and Pinnacle and building these reporting tools is just gonna be giving you more and more leverage to Yeah, it's uh it's like I said, everyone that I've talked to is, you know, they they know it's a good idea, but they feel like it's it's really never a matter of this doesn't make sense.
SPEAKER_04:It usually just comes down to timing, right? Does it make sense for me to do it now? Um do I need to do it now? So, you know, I'm I'm well aware of that. And I'll be honest with somebody like, hey, you don't you don't really need this right now? Or hey, are you in growth mode? Then let's set the company up that way. Are you getting ready to sell? Then let's set the company up that way. Or do you have a second generation coming in? Yeah, how can we set this company up to help them fuel the purchase of the yard, you know, or buy you know, mom and dad out or whatever the scenario. And again, you know, the the more that uh, you know, people are educating me, uh, the the easier it gets. And and like you said, you know, you guys and and Jim and Sean and everybody, and I mean the amount of help that I've gotten from, you know, Jarrett at PRP and Vince and Sandy, you know, with ARA and going to all the shows. Um it's just it's it's been it's been really great. We're we're extremely grateful for all the support that we've gotten, and we're we're happy to do everything we can to return the favor.
SPEAKER_01:Yeah, well, it helps that you're you guys are so much fun to hang out with. You and Patrick are a great team, and you know, it's it's fun to be able to see you at all these shows. So it's it's great. So um can I ask as well, you know, you kind of mentioned, you know, there you guys do the accounting and the taxes behind it, but how does your team support recyclers once the program is set up? And you know, what is that long term support like? Look like?
SPEAKER_04:Yeah, so long-term support basically boils down to Patrick and myself always being the point of contact. These programs are also designed to change, right? So the rules, it's our job to make sure that you stay compliant. But it's also our job to make sure that the desired outcome is what's really happening, right? So every 90 days when we do the financials, we're going to review them. We want to make sure if there's new businesses or changes in your business, if you start to grow, does the program need to be adjusted? So we're always involved in that aspect. But the other aspect is it's like, okay, hey, I've been doing this for 12 months. Maybe I've got a half a million dollars in this account. Maybe I've got two and a half million dollars in this account. Because any one reinsurance company can hold up to 2.8 million every year. So if you max this out, you know, in two years, and see how then it becomes, okay, well, now what?
unknown:Right?
SPEAKER_04:What do I do with it? It's like, okay, well, what do we, what's the best use of that money? Is it to um, you know, for and and what's the best use for you and your yard specifically? Are we going to bring that money back in as capital to buy more cars? Um, I've worked with yards to use that money to deleverage, meaning they had some loans or some loans on properties or equipment. It's like, well, let's pay those off and then I'll pay myself back with interest instead of somebody else.
SPEAKER_02:Um, yeah, there you go.
SPEAKER_04:Is there an opportunity? Yeah, I mean, is there an opportunity? One of my yards just very recently used their reinsurance company to help them put a new building on their property. Um, so again, the idea is there is no one way to properly run this company. It's from a compliance standpoint, right? That's on me. My job is to keep you compliant and to do all that. But we we very much want to communicate with the yards. And the best time to start a reinsurance company is in the fourth quarter, right? Which is why I'm very excited about Alabama, you know, this year, the ARA show coming up and and having the opportunity to be on the podcast because everybody's about to start having those conversations like what's my end of year going to look like? What things could I have better this year to either you know make more money or do invest in the business? And we should absolutely be part of that conversation. Um so and my rule, my kind of, you know, my one of my sales pitches, I guess, has always been you're never gonna ask us for permission on how to access your money, but you should always ask us for our guidance. Hey, I want to do this for my business, or hey, I also buy a lot of rental properties. You know, how can I use this to fuel that business? And um, all of those conversations are things that we do to try and be a value add to not only help to build and run your existing business, but maybe other ones that you might you may have also.
SPEAKER_01:Gotcha. Yep, yep, yeah. We're excited to see you here um next week uh at ARA. And I think you know you guys are just gonna continue getting more and more leverage. Um, DJ, I think it might be time for uh one last break.
SPEAKER_03:You got it. Let's take the break, folks, and we'll be head back.
SPEAKER_00:The URG Scholarship Foundation was founded in 2014 in honor of individuals who give their talent, time, and very often their own finances to ensure the growth and success of the automotive recycling industry. We understand college is not for everyone. So each year, the foundation offers substantial financial scholarships to auto-recycling employees and the children of employees that are attending four-year and technical or trade schools to assist with their education. Don't leave money on the table. If you have a child or if you're interested in attending continuing education, this money is available to you. Go to U-R-G dot com and click on the Scholarship Foundation tab. URG, keeping our industry strong through education.
SPEAKER_03:Welcome back, listeners. You know it's the number one podcast in the recycling industry, and I can't thank you enough. If you want to hear another industry expert, like my friend Buick here, by all means, regardless at a hotline right here in the podcast center, 706-409-5603, and we'll be happy to put that expert on the podcast. So without further ado, this is our last segment. So Amanda, it has been good. All I keep thinking about is all the good people he's been introduced to. You know why? Because when you find something good, you want to share with another person. So that's the reason. The Kaczynsky's love him, the Dorios, everybody. And of course he's you know, he doesn't want to tell you this, but other insurance reinsurance companies, they don't have the expertise of owning a business and doing what he does. He does so much research and then advises you this is a possibility you can do. And just like when he talks about buying trucks or industry, my family with the 250 employees, they they go to their reinsurance company to ask them what do I do to come to December? And they buy all their vehicles in December. Take it off the taxes. Yeah, exactly. It's amazing what but they advise them, they help them.
SPEAKER_01:Yeah, yeah, and you don't know until you until you know, right? I think that's that's one of the biggest things. And and like Brett was saying, this industry is is the most competitive, but also the most um collaborative that I've ever seen. Um, and I think that's you know, one of the reasons why I've also stayed for so long. It's just like a big family. We all get together at these conventions and they all want to learn and and and show what has made them so successful, you know. And I think, you know, I think that's one of the coolest parts about being in the automotive recycling industry and and going to these conferences and and seeing these businesses grow, like Brett, um, within the industry. And and um, you know, if you're if you're doing good for one one uh one person, they're gonna definitely get the word out there that you're doing good. So Brett, we appreciate all the hard work you've done and and showing up for our recyclers.
SPEAKER_04:Well, thank you. And you're a hundred percent right. Everyone has been you know very gracious with their time and uh and you know, in some industries, you know, they almost kind of want to keep you a secret. And in this one, everyone has kind of been, hey, this is working really well for me. And once we have proof of concept, you um, you know, they really wanted to share it. Um, and you know, DJ, you were talking about how you know the decisions that businesses need to make at the end of the year. Um, and one of the things that the conversations we've had with some of the yards is at the end of the year, you know, you're finding out what your year is gonna look like, and and you're you're talking to your CPAs and you're getting whatever advice they give you. And a lot of times what that looks like is, hey, let's run out and buy some stuff, right? Let's go buy some cars, let's go buy some equipment, and let's create some expense that may or may not help you with your um your tax decision for that year, right? And I'm definitely not a tax person, right? So you're gonna get that permission from your CPA. But the idea is with a reinsurance company, it's like, what if you could accomplish the exact same thing, but you actually got to keep the cash? What if you didn't have to use that cash and put it into some depreciating asset, right? Or a car that maybe you're not gonna get a chance to dismantle anytime soon. So at the end of the year, now what you get to do is and you get to you, you have to make some financial decisions to your business, right? Trying to figure out what are we gonna do and how do we set our sum. If you were put in a situation where you could keep the cash rather than buying equipment that maybe you don't need or you know, the new trucks or a bunch of cars that you know you hope to you know be able to dismantle in a timely manner. And when you do that, what the yards have told me is hey, that's great. But then what we run into is in January, February, and March, we're thrust for cash. So the idea is if you use these reinsurance companies appropriately, and if we plan together, you can accomplish the exact same thing for your current year, but then in January, February, and March, you're flush with cash, right? So you get to start the next year coming out of the gate, ready to go. Um, so it it we're really here to work with the business owners, with your CPAs to create a program that is going to benefit the yard in in a lot of ways.
SPEAKER_01:Right. Yep, I completely agree. And and let me kind of ask you a little bit of a of a different question. If I'm a recycler listing today and I was a little skeptical of why, I don't I don't know why they would be, because it just seems like a no-brainer to me. But if I was skeptical and um why why would I want to do this? What would you say to someone, you know, who's kind of on the fence and or you know, is thinking that this might not be the answer for them?
SPEAKER_04:Well, I mean, if they're on the fence, usually what that means is it's probably for a good reason. Um if they're if they're on the fence, then it it it usually comes down to, you know, am I asking the right questions? Um, you know, am I looking at the business properly? Um one of the first things that comes up is people tend to look at adding this program as an additional expense, right? So it's like, okay, well, if I've already got$50,000 a month in claims, how do I send another hundred grand? It's like, well, hold on a minute. If you generate it like on that same million dollars, right, if we reserve 10%, that creates a hundred thousand dollar expense. But if you already paid fifty thousand dollars in claims, well, you're not sending a hundred to your reinsurance company. You're only sending 50 because you're reimbursing yourself for those first claims, right? So it just comes down to what and the kind of the little litness test that I like to do is what's the best month you've ever had? Let's pretend you had the three best months you've ever had. Let's use our Excel sheets and our pro formas to show you this is what it would look like those three months with claims. And if you can live without that money for 90 days, or if it makes sense to do this, then you're good. If it doesn't, then it just means we need to go back to the drawing board and maybe dig into the reporting a little bit more, or maybe 10% doesn't make sense for you. Maybe it's only 6%, or maybe it's only 5%. But that is easy to do because what you don't do is go to a yard and then give them a number. I go to a yard and we have a conversation, they share information with me and then we back into a number. And that number is always gonna have to make sense to the business owner because they know it better than I do. So it really just becomes a sharing of information and a fact-finding mission. And ultimately, I have several yards who want to do this program right now, but maybe they already started a building and they're like, I don't need to do it this year, or I don't have the cash to even get started because I just did this or I just did that. But hey, next year, this probably makes a lot of sense. Uh, and it again, it's it's never it's that's not true. I won't say never. It's very rarely, I don't want to do this. It's always, man, this makes a lot of sense. It just doesn't make sense to me right now. And that's true for big yards, small yards, U-poles, full service. It doesn't matter. Um, and again, that's why the more I learn and the better conversations we have, the likelihood that we're we're gonna be able to set somebody up and that they're going to have a good outcome. Uh, it gets better every time.
SPEAKER_01:Yep, totally makes sense. And and I think that's, you know, the way you explain it is just so um much more level than, you know, I think a lot of people have heard from other reinsurance companies. It just it it just it's not layman's terms, but it's it you meet them on their level of where their business is. And I think that's that's just so key whenever you're you're dealing with each business, because all recyclers are different, right? They all are a different beast in themselves. And I think that's what's that's what's cool about the industry and also um challenging at the same time, especially for different vendors trying to service different companies. So I yeah, I appreciate that you guys kind of go to each company and are able to kind of identify what what those aspects are. Um, I do kind of want to plug a little bit about the URG warranty program and and you know um how that's benefited so many recyclers. Um, you know, we have one recycler specifically. I've got some stats here. Um they ended up saving 486,000 in one year, and that was just one recycler. So this uh warranty program, we have uh ASC certified tax that will take the uh pains of the warranty program that you are dealing with, take it away from your salespeople. Um, that you know includes the labor and the hours that they're having to put in. So if you have these ASC certified texts dealing with these warranty claims, you know, it takes the headache away from your salespeople and they'll be able to actually sell in that time rather than you know dealing with the headaches of the claims. Um, and you know, on average, we have a 30 to 40 percent of parts, you know, flagged for warranty that are not replaced and saving a thousand and award thousands and avoidable costs as well. So um, you know, just the the hundreds of thousands of claims that we've been able to process since 2018, you know, it it saves uh the recycler 25 to 35 percent per month as well. So um, you know, that just all of it right there, and then having you guys involved as well and and having these new reporting systems, I think is all just gonna be such a key thing for these automotive recyclers and um you know helping with their warranty uh processes and just making it that much better, right?
SPEAKER_04:Yeah, I I agree a hundred percent. Um I was um honestly a little surprised that the room was as vague um as it was initially, um because it just seemed obvious that hey we should track these things.
SPEAKER_01:So sorry, can you start that over? You've gotten out there.
SPEAKER_04:Um I couldn't I no problem. Uh yeah, I agree with you completely about the warranty program. I think that the enhanced reporting is uh is gonna be a really big deal for people. Uh I think it's one of those situations right now where they just don't know what they don't know, and things that we're gonna be able to capture I've seen in the yards is through your through your business one time. But it was brokered. That brokered part comes to me and I sell it. My salesperson also sold a one-year warranty. Four months later, that part fails. They call my yard directly. My people see that there was a one-year warranty on it and they just process the claim to the tune of like$15,000 to$20,000 a month. That part also still was under warranty with the brokered yard and it was never expensive to them. Right. Yeah. So there was so there was some missed expense. The other situation that I ran into was let's say you've got a 150,000 mile motor and you sell it to someone and it fails, and you send them another one. But the next one that you had, maybe it had 125,000 miles on it, and you were going to sell that one for more money, but you don't. Yeah, sure, they can write it down, but are they capturing that write down, that$600 in lost profit, so that they know yes, you know, it wasn't a part, it wasn't a one-for-one credit that this warranty program didn't only cost me another engine, it also cost me$600 in profit. Right. So the new the new reporting and uh is gonna do a really good job, I think, of helping the yards to analyze the true liability of the warranty program and then also maybe some of the deficiencies, right? Because salespeople are salespeople, right? And what they're good at is selling stuff. As a as a as a recovering salesperson myself, I can tell you attention to detail is not my thing. Right.
SPEAKER_02:100% when they're when they're right, yeah.
SPEAKER_04:When they process if you have your salespeople processing not only your sales, but your warranty credits, how much of that is just giving, you know, are they just trying to save the relationship? Are they just doing the business? Or what you know, how much time is wasted by a salesperson in doing those things? Um, I don't have all the answers to that yet, but um I think the the first part is what's the true value of the URG warranty program and then what's the value of the warranty reporting? And from what I understand, if uh somebody wants access, if they're on pinnacle, they can obviously get the full suite, hey, URG warranty program with the reporting, or they can just access the enhanced reporting, uh, which I think is uh really great because some people do have great systems in place or you know, a specific employee who's doing all the warranty management. And I'll work with that employee to say, hey, like let's create new return codes. And when this specific situation happens, this is the code we want to use, you know, part back on the shelf, part didn't go back on the shelf. Was it a refund or was it just did we send out another part? And you know, the other thing that I noticed was shipping the part the second time.
SPEAKER_02:Yeah.
SPEAKER_04:The expense of the freight the second time wasn't being captured as part of the expense of the warranty program. So we've we've really um done a good job with the yards we're already doing business with to kind of dig through the existing reporting. And now that we have better reporting, I'm I'm very excited to start seeing it work at the yards.
SPEAKER_01:I completely agree. I think it's gonna be awesome. Well, this has been a phenomenal podcast, very educational. Um, as DJ says, I hope you guys were taking notes. It's just like going to college and and and learning new things and helping your business in the long run. Um, for members who are interested in national reinsurance and getting set up with you guys, what's the first step that they should take and how can they get in touch with you?
SPEAKER_04:Yeah, I mean, obviously they can reach out to me. Um my uh email is Brett at nationalreinsurance.com. Um the best way is to um, you know, people can just reach out to uh Patrick and myself directly, uh, you know, via cell phone. Um I'm sure you I'll give you my number and you can, you know, put it up on the website. Uh and then also, you know, visit the website and just you know make a contact uh you know, request and we'll reach out to you right away. Um and I guess the easiest way is probably just you know, if you see us at a show, uh, you know, come up over to the booth and ask us to explain it, you know, in detail for you. I'd be happy to do it.
SPEAKER_01:Yeah, and what's what's the website URL for your guys' direct site?
SPEAKER_04:Yeah, so it's www.nationalreinsurance.com. Perfect.
SPEAKER_01:Awesome. Well, DJ, do you have any uh more questions for for your bestie from for 30 years?
SPEAKER_03:Okay, I'm president of his fan club. Brett, give everybody a phone number because we have some people. I know they're not going to ARA, but some people will, and I hope they can buy you a booth. But what's a sell or a number they could reach you at?
SPEAKER_04:Yeah, yeah, you can call or text me directly anytime at 440-22124717.
SPEAKER_03:You got it. That's it.
SPEAKER_01:Beautiful.
SPEAKER_03:Amanda, this was a great one.
SPEAKER_01:Thank you, DJ. You're always a rock star as well with those intros.
SPEAKER_03:Well, he's a great guy, and this is a financial guy who's helping us. So this is another benefit of being a member of URG and being a member of PRP. I mean, it's just great.
SPEAKER_01:100%.
SPEAKER_04:Thanks again for having me on, guys. I really appreciate it. I look forward to seeing you all soon.
SPEAKER_01:Thank you so much, Brett. We'll see you at next week.
SPEAKER_04:See you then. Have a great one.