Archived Copies of Warranty Week

January 1, 2004 to today

Integrated Warranties: Assurant Solutions, along with partner General Electric, has quietly built itself into one of the largest and most diversified extended warranty service providers.
December 14, 2004
Unusual Warranties: Ever since it pioneered the sale of extended warranties for VCRs almost 25 years ago, VAC Service Corp. has boldly gone where no administrator has gone before.
December 7, 2004
The Power of One: The Aon Warranty Group has turned vertical integration into a strategic advantage, expanding and acquiring its way to a position where it can sell extended warranties on electronics, homes, or cars, all of which it can underwrite itself.
November 30, 2004
Warranty Outsourcing: For one service contract administrator, discretion is a virtue. Some clients don't want anyone to know they outsource claims administration. Some don't even want their names to appear in print.
November 23, 2004
Public Warranty: Of all the companies in the extended warranty business, most are either small units within very large companies, or they're family-owned or privately-held companies. Only one is publicly held, and lately that's been a problem for them.
November 16, 2004
Extended Warranty Income: If comparing extended warranty to net income is misleading, then let's correct the record by comparing apples to apples: warranty claims paid to recognized revenue over the past two years.
November 9, 2004
Service Dispatch: With home appliances, warranty work almost always involves a housecall. Claims administrator ServiceBench has turned the dispatch of service technicians into a strategic advantage.
November 3, 2004
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
Selling Customer Care: While an extended warranty is a type of insurance contract, NEW sells it as an enhanced customer assistance program, promising consumers 24x7 access to advice and boosting customer loyalty for retailers.
October 19, 2004
Home Warranties:  Three decades ago, American Home Shield, now part of ServiceMaster, invented a new category of extended warranties, covering the major systems and appliances in a home but not the home itself.
October 13, 2004
Auto Inspectors: Continuing our tour of the extended warranty industry, this week we take a look at a company whose detailed inspections help warranty adjusters decide whether or not to pay a claim.
October 5, 2004
The SAFE Guys: As with manufacturer's product warranties, the extended warranty industry is huge yet easy to take for granted. Two industry experts explain why they left the comfort of the insurance business to open their own extended warranty consultancy.
September 28, 2004
Warranty Promotions: Once an afterthought for both manufacturers and customers, warranty is becoming the simplest way to express the quality of a product. Lengthened warranties, which began as a bid for market share by certain auto importers, are now spreading to computers and home electronics.
September 21, 2004
The Warranty Reserve: With 18 months of data in hand, it's now possible to begin defining a normal range for the size of the warranty reserve fund, expressed as a multiple of the average amount spent per month on claims.
September 14, 2004
Auto Warranties: It's not just Ford and GM. There are numerous other types of vehicles, and numerous automotive suppliers to those OEMs who each have their own characteristics when it comes to warranty claims and accrual rates.
September 8, 2004
Home Warranty Claims & Accruals: Homebuilding, heating and cooling each have their peak seasons. But do warranty claims for new homes and HVAC units also have a peak season? Recent data suggests that claims actually peak later in the year, months after sales do.
August 31, 2004
Computer Warranty Claims & Accruals: The companies whose brand names go on the front of the computer continue to pay the lion's share of warranty claims. Makers of disk drives, printed circuits, semiconductors, and most types of peripherals see a significantly smaller share of warranty claims.
August 24, 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
Microsoft Automotive and AWS Microsoft Automotive to enter the warranty claims processing business through partnerships with Active Web Services, Capgemini, and others.
August 10, 2004
Seagate's 5-yr. Warranties: Is it a bold marketing move that will increase sales? Or is five years a bit too long for a product in such a fast-changing industry?
August 3, 2004
Warranty Seminar: Last month, a business intelligence software developer sponsored a morning seminar on the topic of the TREAD Act and warranty claims. For those who couldn't make it, here's a brief overview of the proceedings.
July 27, 2004
The Accidental Warranty Software Developer: Manufacturers pressure an electronics testing software vendor to do more to help them avoid warranty costs. As has happened to so many others, they find themselves pulled into an industry they barely noticed was there all along.
July 20, 2004
Setting Warranty Policy for Products That Generate Annuity Streams: Most warranty-management analysis concerns warranty as cost, the effect of warranty on customer satisfaction, or the signaling impact of warranty on customers. This article describes a study where the focus was not on the product under warranty, but rather on the effect that warranty length might have on the sales of related peripherals and supplies. These sales generate annuity streams for the manufacturer as long as the product remains in operation. However, cost savings from a shorter warranty period must be weighed against potential lost profit from reduced annuity streams. A shorter warranty policy might cause products to drop out of active use sooner, and the cost savings from a shorter warranty policy therefore might be outweighed by the lost annuity profits.
July 13, 2004
Warranty Primer: As requested by a student writing an independent study project, what follows is an essay about How Warranty Works. Industry experts who regularly read this column have a choice of either taking this holiday-shortened week off or correcting the editor's mistakes.
July 7, 2004
Warranty in Europe: As a major part of consumer protection, warranty has a high priority in the policy of the European Commission. Consumers are protected by mandatory warranty periods of two years, by legal instruments to guarantee access to the aftermarket for automotive spare parts and by stringent rules for product safety. However, increasing warranty costs in the automotive industry may indicate that the reality of product quality has not yet met the requirements of those legal rules. A warranty industry association is needed to satisfy consumers and to reduce these tremendous costs.
June 29, 2004
Industry Segments: Year to year, each industry's overall share of warranty claims changes slowly, as do their individual claims rates as a percentage of sales. But because many companies operate in more than one industry, precise calculations are elusive.
June 22, 2004
Declining Warranty Claims: In both dollar amounts and as a percentage of product sales, warranty claims took a steep dive during the first quarter of 2004. Was it caused by cyclical factors? Was it due to rising sales? Or has there been a product quality improvement?
June 15, 2004
The Warranty Cushion: Very large companies put aside proportionally more to pay warranty claims than either mid-sized or small companies, while very small companies allow their reserve fund ratios to rise and fall. The difference between them is their skill at the arts of warranty estimation and accruals.
June 8, 2004
Warranty Claims Rates: In both the automotive and computer industries, the OEM -- the brand name on the product -- is frequently left holding the bag when it comes time to pay warranty claims. As the latest data shows, their suppliers usually see much lower warranty claims rates.
June 2, 2004
Warranty Measures: Matching warranty claims and accruals to reserves has always been a balancing act. Now it must be done in public, making it harder to conceal raids on the reserve fund or spikes in claims. But it's also easier to see how a company's quality improvements and claims reductions can translate to bottom-line gains by reducing the need for reserves.
May 25, 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 Intelligence Software: How does one launch a warranty software company that attracts John Deere and Whirlpool as early customers? And how does one attract the CIA as both an end user and an investor? Perhaps it takes equal parts skill, spunk, and luck.
May 11, 2004
Warranty Industry Associations: Readers respond to a brief survey, expressing a clear preference for an independent cross-industry warranty group and a multi-day warranty industry conference focused on quality, best practices, measuring return on investment, and benchmarking efforts.
May 4, 2004
Warranty Industry Associations: Until recently, nobody thought warranty could support a trade association, especially one that crosses industry boundaries. But when a warranty seminar held in a Detroit suburb in the middle of the week sells out, you can bet people will take notice. So who can host a talking shop for warranty professionals?
April 27, 2004
Telecom Warranties: While the ups and downs of the heavyweight manufacturers throws off the averages, it appears that TV and radio broadcast equipment generates half as much in warranty claims as newer technologies such as cellular and Internet gear. Are telecom warranty rates related to the maturity of the technology or the age of its manufacturers?
April 20, 2004
Automotive Warranties: Ford and GM are not only the largest providers of automotive warranty. They're also paying a higher percentage of their revenue in claims than everyone but the makers of RVs and rider mowers.
April 13, 2004
Warranty Reserves: While the average manufacturer spends 1.9% of product revenue on warranty claims and keeps a little over a year's worth of funds in reserve, each industry is different. Computer manufacturers and automakers fund their warranty programs at different levels than telecom or aerospace manufacturers. But in any group, as with any trend, there's always the odd man out.
April 6, 2004
Warranty by Industry: While automotive warranties continue to account for half of all claims, a diverse mix of other industries makes up the balance, from air conditioning to airplanes. Manufacturers grouped by the types of products they make exhibited distinct personalities during the past year.
March 30, 2004
Top 50 Warranty Providers: The data is in, and there are four new names on the list of companies with the largest warranty programs. American manufacturers reported more than $23.675 billion in warranty claims during 2003, a rate very close to $2 billion a month.
March 23, 2004
Is the TREAD Act Working? It may still be too early to say for sure, but recent auto safety-related announcements have been filled with specific quantitative data about warranty claims and failure rates. Could it be that the TREAD Act's Early Warning Reporting system is really doing its job?
March 16, 2004
Business Jet Warranties: Unlike the airlines, the owners of corporate jets expect the white glove treatment from manufacturers. While they'll gladly bring their jets to an authorized service center for warranty work, they'll never try to do their own repairs. And while they expect their planes to be fixed fast, they'll almost never have their own spare parts on hand.
March 9, 2004
Jetliner Warranties: In the good old days, the airlines and aviation parts manufacturers already swamped by regulatory paperwork had little time for the additional bother of warranty claims. But in an era of falling revenue and rising costs, warranty has suddenly become very important to both operators and their suppliers.
March 2, 2004
Skatepark Warranties: Whether they're made of steel, plywood, plastic, or paper, the ramps and rails installed in skateboard parks are sold with a warranty. But whether the warranty lasts for a year or 20 years seems to have more to do with marketing than the strength of the materials used.
February 24, 2004
Stadium Warranties: Like any other large construction project, sports stadiums come with product warranties. Just because there's no warranty registration card in the box doesn't mean that the builders don't face warranty claims from stadium owners. Two examples follow, from Seattle and Houston.
February 17, 2004
Turf Warranties: In some of North America's largest sports stadiums, the grass is always greener, thanks to AstroTurf and its successors. Unlike the sods it replaces, an artificial sports surface comes with an eight-year warranty. But if you're planning to make a claim, bring your lawyer.
February 10, 2004
Reducing Warranty Claims: Sometimes a company focuses its engineering talent on a manufacturing problem that once solved, results in soaring product quality improvements and plummeting warranty costs. Other times, a company gets lucky as product families mature and installed bases age themselves out of warranty.
February 3, 2004
Auto Warranties: While the Big Three sold two-thirds of the vehicles purchased in the U.S. in 2003, they settled three-quarters of the warranty claims. On average, Detroit pays twice as much in claims per vehicle as Toyota and Honda. But that's not the only quality gap. Recent research finds striking gaps between perceived and actual quality levels.
January 27, 2004
Extended Warranties in the UK: After concluding that British retailers charge some of the highest prices in the world for extended warranties, the UK's Competition Commission's final report advocates reforms of the salesperson-to-consumer relationship.
January 20, 2004
Warranty in the IT Industry: Readers ask for more details on warranty claims and accruals in the computer, telecom, semiconductor, disk drive, and peripherals industry sectors.
January 12, 2004
Controlling Warranty Costs and Exposure: Using Early Warning Systems,
Warranty Becomes a Board-level Issue
January 5, 2004