Kelly’s Korner: Tracking Policy Cancellations
Question: How do we track our policy cancellations through the process?
Answer: No one likes getting cancellations, although there are bound to be a few in the normal course of business. We must bear in mind that 85% of all loans do not go full term. We experience a few cancellations from the trade cycle, repossessions, and total loss vehicle. As you may know, the customer must sign the cancellation notice for both parts and labor agreements and credit insurance policies. The cancellation form is then submitted to the company for processing. In Oregon, cancellation for credit life insurance is calculated by the Rule of 78. Accident & health insurance cancellations are calculated using the Rule of Anticipation. Pro-rate time, pro-rata miles, or the Rule of 78 can cancel parts and labor agreements. Read your policy to identify which calculation is applicable.
Kelly Enterprises has designed a cancellation log which office personnel can use to track the cancellation process. The ultimate refund check should be issued to the lender if the loan is still open. If the dealership has proof that the loan has been satisfied, only then can the refund check be issued to the customer.