Blockchain is an open, distributed ledger that can record transactions between parties in a verifiable, and immutable way. A smart contract is the codification of the terms of an agreement intended to digitally facilitate, verify, and/or enforce the performance of a respective contract which runs, or executes, on the blockchain. Smart contracts allow the performance of credible transactions without third parties. This disruptive technology holds tremendous promise, especially given the proliferation of IoT devices. However, it also presents many challenges for all stakeholders in the warranty value chain, especially with respect to legal and regulatory frameworks that govern the industry.
Aleem and Brian will speak to innovation in the application of blockchain in the warranty industry and its corresponding challenges and opportunities from a business and compliance perspective. Aleem will focus on the technical and business considerations and Brian will focus on the complex and emerging legal and compliance issues associated with this digital disruption.
Brian Casey, Partner and Co-Chair of Regulatory & Transactional Insurance Practice Group, Locke Lord LLP; Aleem Lakhani, Executive Vice President, AmTrust North America
In order for companies to effectively sell products and associated support contracts, they must fully understand their cost of doing business to appropriately price new products and service offerings. Support costs per product shipment or contract have historically been illusive if not all but unobtainable for many companies. Product warranty and support cost data, if leveraged correctly, are a substantial decision support base to build those new product and service offering pricings on. In addition, operating margins can be optimized if the ‘true cost’ of product support is known. What is the cost of support per product shipment over the life of the warranty period? What does it really cost to support a product per year over a multi-year contract? What is the actual cost of supporting varying contract service levels between customer offerings? Service and manufacturing companies are faced with these questions on a daily basis. As part of eliminating inefficiencies in the business, or not ‘leaving money on the table’ these cost liabilities must be actively tracked and managed. Communication of this data to product engineering and support for the improvement of quality is also vital. Understanding what the actual costs are, the drivers of those costs, the effect of shipping volumes and multi-year contracts, and to which products or service they relate to is a key element of leveraging this crucial data asset.
A number of factors such as industry disruptions and competitive forces are compelling manufacturers towards “servitization” of their product offerings. Product servitization is a scenario wherein, manufacturers sell outcome based monthly subscription plans to their customers. These plans utilize the large amount of data generated from connected products. Customer experience is principally a product of interaction between organization and customers over the duration of their relationship. One of the key facets related to customer experience is assurance against financial loss and product unavailability, due to events such as product failures, unexpected service costs, accidents, thefts and natural calamities. Currently, different types of covers such as warranty, service contracts and insurance plans provide protection against these categories of risk events. Use of statistical techniques to determine price and to manage risks by leveraging large amounts of data, is common to all these types of covers. Interestingly, most of the data related to these covers is available with manufacturers. Therefore, manufacturers can play a key role in developing comprehensive, personalized and subscription based product assurance plans that cover all types of risk events associated with customer experience. Nonetheless, designing such comprehensive assurance plans, manufacturers will need to implement business and technology solutions, such as Atos Syntel machine-learning solution for warranty claims anomaly detection, cognitive models for determining warranty accruals, Atos Syntel predictive maintenance solution framework, big-data platform for exploiting vehicle telematics data and so on. Benefits of such comprehensive assurance plans include lower price due to economies of scale and improved experience to customer and greater customer loyalty and newer revenue streams for manufacturer.
There is an emerging and evolving market for commercial warranty. For many years, the commercial warranty market was limited to the medical field and restaurant market. However, it's growing at a rapid rate with demand creating several new warranty markets. The rapid change in consumer products have reshaped the warranty industry with the emergence of “Performance Guarantees”. Warranty coverage for previously expensive and complex systems for security cameras, home automation, and audio systems are now available using relatively inexpensive connected devices. Commercial entities are increasingly using automation and artificial intelligence due to a shrinking labor pool driven by historically low unemployment. New companies supporting this technology are driving demand for “warranty insurance” to stand behind their limited warranty or product performance. Increasing oversight of financials and services is driving companies to use financial tools such as Deferred Liability Insurance to remove long term liability on the books and increase current profitability. Overall, these markets have led to important developments in the, previously stagnant, commercial warranty market. For the time being, these markets are relatively unregulated allowing for creative new risk and warranty solutions.
Dan Tafel, Vice President of Business Development, Hornbeam Insurance; Jesse D. Wilson, Attorney at Law, Frost Brown Todd LLc
Many of the most revered product companies in the world have placed serious bets on new Services strategies to fuel consistent growth, improved customer acquisition and retention – and they are winning. The key ingredient to their winning streak? Taking an owner-centric approach and seriously re-thinking the role of mostly outdated of Extended Warranty programs. The collective thinking from the panel of experts will share: Who consumers prefer to purchase a plan from; What consumers really want from brands; How demoting Warranty and promoting Care will transform relationships with your owners; The power of bundling to achieve transformative results.
Moderator: Chris McDonald, CEO, Registria
Aleem Lahkani, Executive Vice President, Amtrust North America
"This is the best warranty conference serving the industry. I've been to other warranty conferences, but with the current economic climate I could only attend one event this year. I chose the WCM - it was a no-brainer."
-Warranty Strategy & Planning Manager, I.T. Company
"Other conferences are copying WCM, but they are NOT WCM! This is hands-down the best warranty and service contract management conference out there."
-Manager, Automotive Company
"This was a great opportunity for me to understand how others in the industry are performing, and to open issues for discussion."
-Warranty Recovery Manager, Transportation Company
"After 18 years in the warranty business and 24 years in the insurance business, I have never been so impressed and excited about a conference the way I am enthused by WCM. The event has value across the board, and I hope to participate in many more.
-Business Strategy, Risk Management & Compliance Executive, Consumer Services Company
"I've learned more about warranty management during the last two days than in the past five years of working in the industry. The warranty industry has needed this forum for a very long time."
-Warranty Project Manager, Construction Equipment Manufacturing Company