The success of a warranty and/or service contract program relies on proper forecasts and analytics. These forecasts depend on a number of factors that go far beyond simply projecting product failure—including warranty cost and duration, product mix, seasonal patterns, and changes in consumer behavior.

As leading experts in this area, Milliman actuaries bring decades of experience to the warranty business, offering both insurance and non-insurance clients a deep understanding of the risk involved in the following types of warranty products:

• Warranties
• Maintenance agreements
• Extended service plans/contracts
• Extended warranties

Our expertise also extends to a wide range of applications, including consumer electronics, automobiles, homes, brown and white goods, as well as non-traditional exposures.

Our understanding of the financial mechanisms underlying risk provides a competitive advantage that helps warranty providers and insurers maximize profitability. Our assessments are based on a methodology that has been reviewed and approved by most major auditors.

We offer consulting services that cover all major warranty-related issues, including the following:

• Pricing
• Reserving for financial reporting
• Revenue recognition patterns
• Estimating impacts of coverage changes
• Actuarial opinions
• Mergers and acquisitions
• Captive feasibility
• Warranty goodwill valuation
• Expert-witness testimony

Milliman clients include insurers, captive insurers, manufacturers, retailers, administrators, law firms, and start-ups.

Using predictive analytics for warranties and service contracts

Our use of predictive analytics gives clients another competitive advantage to help maximize profitability. Our models help identify what segments of our clients' portfolios are most profitable, allowing the business to make educated pricing and marketing decisions.