PROTECTION PLUS DISTRIBUTOR GUIDE. Air Programs Protection Plus Distributor Reference. Rheem.com INTEGRATED HOME COMFORT

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1 PROTECTION PLUS DISTRIBUTOR GUIDE Air Programs Protection Plus Distributor Reference INTEGRATED HOME COMFORT Rheem.com

2 Talking Points Who is Service Net? Service Net is the administrator of Rheem Protection Plus Extended Service Agreements (ESAs) and is a wholly owned subsidiary of American International Group, Inc. (AIG) and is operated under the AIG US warranty division. Service Net, a subsidiary of AIG, is being rebranded to the Warranty Division of American International Group, Inc. (AIG), in order to better align with their parent company. AIG provides A rated underwriter and financial strength with a $27 billion surplus. The platform of administrator and underwriter being owned by a single company eliminates the inherent conflicts that can result from third-party administration. Service Net/AIG clients include Apple, Amazon.com, Best Buy, The Home Depot, Toshiba, Sharp and LG. Service Net/AIG provides ESAs for major HVAC OEMs that include Rheem, Nordyne, Lennox, Trane commercial and Goodman commercial. The Service Net/AIG and Rheem partnership began in January The IMPROVED Protection Plus Program: Deductible and Non-Deductible Options Through flexibility, simplified program offerings and pricing options, the Protection Plus Program will provide Dealers a more comprehensive and competitive ESA program. $85 DEDUCTIBLE PLAN FOR CONSUMERS The $85 deductible amount was established by combining the feedback from Dealers, distributors and sales personnel with consumer purchase history. As well, the $85 deductible drives the most value in terms of cost and benefit for the Dealer and consumer. Consumers are familiar with deductibles as a common feature in various forms of insurance, such as car insurance, medical insurance and homeowners insurance, so it makes sense to pass along the cost savings created by deductibles in an ESA program. NON-DEDUCTIBLE PLAN FOR CONSUMERS These plans have a higher ESA purchase cost to the Dealer; however the consumer does not have to pay any deductible at the time of a claim, making this plan option appealing when thinking of future claims. Renewal Agreement Options Renewable agreement options are a way to continue to provide consumers the peace of mind and value provided by ESAs beyond the initial warranty period. In addition, renewals give Dealers the opportunity to continue the revenue stream generated by a satisfied customer and lock them in for an extended amount of time. Consolidated SKUs Simplified Pricing With fewer SKUs, we have consolidated the Protection Plus Program to include only 6 price sheets (3 for Residential & 3 for Commercial), resulting in a cleaner and less confusing program overall. Marketing Tools Protection Plus has marketing materials available on MyRheem.com including a Dealer Program Guide, Dealer Brochure and Consumer Brochure in order to aid the Dealer in closing an ESA sale. Distributor Commissions Distributors will earn a 5% commission on all ESAs sold through their applicable Dealers. Commission checks will be distributed each quarter and will be mailed the week following the quarter end. Payment will include reporting on contract details such as cost, term, product category, etc. The standard Protection Plus Program will still be sold directly to the Dealer, so there will be no administration requirements placed on the distributor. 2 Protection Plus Distributor Guide

3 What is the Partnership Advantage (PA) Program? The new Partnership Advantage (PA) Program provides distributors with the opportunity to embed the cost of a Protection Plus ESA into the equipment price given to the Dealer, lowering the overall cost. This provides distributors a way to promote the importance of selling Protection Plus ESAs to the Dealer and provides automatic coverage to the consumer at the time of installation. The PA Program is not limited to certain efficiencies or product families, but a yearly ESA contract volume of 500 is required for participation. Qualifications In order to be eligible for the Partnership Advantage (PA) Program, a distributor must have demonstrated sales volume of ESAs, in the prior program year an amount equivalent to or above 500 ESAs under the PA Program. Distributors must formally sign program documents accepting the terms of the program. Distributors must also be within good financial standing with Service Net/AIG to continue purchasing under this program. All invoices should be paid within the standard net 30 days terms. For continued participation in this program, distributors must meet minimum ESA contract volume of 500 within one year from program enrollment date. For example, if a Distributor enrolls December 1, 2014, that distributor has until November 30, 2015, to meet the designated minimum contract purchase. Contract counts for the year will be based off of active contracts and will exclude contracts in cancel status. Distributor s Administration Responsibility Once Distributors are enrolled in the program, they will need to send an to Billy Leonard (billy. leonard@aig.com), the ServiceNet/AIG Account Representative for Protection Plus, that includes a complete listing of their Dealers and the individual Dealer IDs they will use for the PA Program. Distributors will be responsible for sending a data file via to sndataentry@sndirect.com that contains the required ESA contract information on the equipment sold to a Dealer. The exact file type is negotiable between Service Net/AIG and the participating distributor; however, the distributor will need to be sure to include their PA Program ID number received at the time of program enrollment. Future program plans include creating an automated batch file processing that will automatically load the files into the Protection Plus Portal system. Dealer Registration Process for the Consumer If a Dealer has sold equipment with an embedded ESA and needs to add the new consumer information, they will need to send an request to hvacsupport@servicenet.com. The will need to include the serial number of the product registered on the original ESA contract. A Dealer can also view and update this information via the Protection Plus Portal by doing a serial number search. Penalty There will be penalties that apply against distributors unable to meet the minimum yearly ESA contract volume of 500. Those penalties are as follows: ESA Purchases Purchase $$ Penalty Amount $0 - $33, Above $33,000 - up to $75, Above $70,000 - up to $118, Above $118,000 - up to $145, Above $145,000 - up to $165, or more Above $165,000 55% Penalty on total purchase dollars during the program year 45% Penalty on total purchase dollars during the program year 30% Penalty on total purchase dollars during the program year 20% Penalty on total purchase dollars during the program year 15% Penalty on total purchase dollars during the program year No Penalty Rheem.com 3

4 The penalty is applied to total purchase dollar volume at the end of their contract year. ESA contracts purchased by Dealers directly through the standard Protection Plus program cannot be counted in total PA Program required volume. The penalty rate will be applied to the minimal allowable penalty based on either total sales dollars or total number of PA Program ESAs in a contract year, whichever has the lowest penalty amount. Penalty examples are shown below: PA Program Distribution ESA Plans Purchased ($ Volume) PA Program Plans Purchased (Units) Penalty By Sales Penalty By Plan Max Penalty Ex. 1 $23, $12,650 $10,350 Max Penalty Ex. 2 $85, $25,000 $25,000 Max Penalty Ex. 3 $85, $25,000 $17,000 Max Penalty Ex. 4 $119, $23,800 $35,700 Max Penalty Ex. 5 $148, $22,200 $0 Protection Plus Options RESIDENTIAL EQUIPMENT & APPLICATIONS Options Description of Consumer s Description of Dealer s Reimbursement Start Date Available Direct to Dealer Deductible ($85) Term Options 2 Yr 5 Yr 10 Yr Renewal Option Available after 2 or 5 Yr Term? Labor Only Labor Costs Covered* Service Call + SelecRate Reimbursement Deductible 31st Day after installation YES Labor Plus Labor Costs Covered* Service Call + SelecRate Reimbursement + Parts Allowance (Part Mark-up) Deductible 31st Day after installation NO Parts Only Parts Covered Parts Cost in Year st Day of 6th Year NO *less $85 deductible per claim based off of plan sold COMMERCIAL EQUIPMENT & APPLICATIONS Options Description of Customer s Description of Dealer s Reimbursement Start Date Available Direct to Dealer Deductible ($85) Term Options 2 Yr 5 Yr 10 Yr Renewal Option Available after 2 or 5 Yr Term? Labor Only Labor Costs Covered Service Call + SelecRate Reimbursement Deductible 366th Day after installation NO Parts Only Parts Covered Parts Cost in Year th Day after installation NO 4 Protection Plus Distributor Guide

5 Protection Plus Key Features SelecRate Labor Reimbursement is the Service Net/AIG flat style of reimbursement that uses industry average labor allowance times. There are three levels of reimbursement that directly correlate to three levels of pricing within Protection Plus (Level 1, 2 & 3). If deductible plan is sold, the new $85 deductible will be collected by the Dealer at the time of service and will be deducted from the total amount normally received from Service Net/AIG. Protection Plus has 3 types of coverage: Labor Only, Labor Plus and Parts Only. Labor Only provides Dealers with the SelecRate Labor Reimbursement along with the corresponding service call amount. Labor Plus provides the same coverage as Labor Only but with the addition of a flat reimbursement that is designed as a mark-up on the part and referred to as part allowance. Again, reimbursement levels are dependent on the plan chosen at the point of sale by the Dealer. Parts Only consists of reimbursement for the wholesale amount of the part from the distributor. Claims and order administration can be completed by accessing the Protection Plus Portal via MyRheem.com. Dealers can also manually administrate the program through downloadable forms available online or through Service Net/AIG directly. Selling Points to Remember Encouraging ESA sales will result in a stronger, more profitable Dealer base that will only strengthen the Rheem brand in their respective communities. ESAs foster the opportunity for positive homeowner experiences that will result in referral and add-on sales. Close rates will also improve by offering ESAs and combat against increased competition within a smaller space of replacement equipment opportunity. Overall, Protection Plus ESAs provide: A protected, satisfied consumer base Guaranteed future service revenue Brand protection for Dealer/Rheem Lock out competition/whole home warranty companies Referrals and add-on sales opportunity Helps drive sales for maintenance agreements Increases the value of overall proposal to consumers Differentiate from competition Aftermarket sales opportunity Rheem.com 5

6 Distributor FAQs FAQs 1. How will Protection Plus Program information be communicated to Dealers? Any new information will always be communicated to the distributor first, directly from Rheem. The distributor will always receive new or revised program information in advance of the Dealer. 2. How does the Partnership Advantage (PA) Program work? The Partnership Advantage (PA) Program provides Dealers with the ability to purchase Protection Plus Extended Service Agreements (ESA) from their distributor at the time of equipment purchase. The distributor is required to complete and submit a distributor PA Program Enrollment Form to Service Net/AIG. The cost of the ESA is embedded into the distributor s equipment price. The minimum volume to participate in the PA Program is 500 ESAs a year. Since PA Program pricing is 13-14% lower than standard program pricing, distributors will not receive a 5% commission on PA Program contracts sold. Distributors would direct the Dealer to complete the Protection Plus Residential (or Commercial) Application Order Form and return it to back to them. The Application Order Form will require the Dealer s and consumer s information. Distributors will then be responsible for processing the Protection Plus Residential (or Commercial) Application Order Form with Service Net/AIG and invoicing the Dealer for the ESA at the time of equipment purchase. Within 5 business days, Dealers will be able to utilize the Protection Plus Portal on MyRheem.com for all claims administration of the applicable ESA. 3. Is the PA Program only offered on a limited number of products (e.g. VS furnaces, but not on single stage furnaces)? No, the PA Program is not limited to certain efficiencies or product families. However, there is a yearly volume minimum of 500 ESAs in order to participate in the program. 4. What is the distributor s process of purchasing a ESA for the PA Program? What is the Dealer s role? Distributors will purchase ESAs via the PA Program by submitting to Service Net/AIG a data file containing information from the Application Order Forms on a weekly or even daily basis. The data file will include all pertinent information such as consumer name and address, equipment model and serial number, installing Dealer s contract information, installation date and SKU. Dealers will supply the required information to the distributor via the standard Protection Plus Residential (or Commercial) Application Order Form. 5. Does the consumer pay the Dealer the deductible at the time of service? Yes, the consumer is responsible for paying the deductible to the Dealer as the time of service. A deductible is required per claim. 6. How does the Dealer get reimbursed on the claim when a deductible is involved? Dealers will submit and file claims just as they have in the past, with the one exception that all claim reimbursements will be at their usual rate minus the $85 deductible they will have already collected from the consumer. 7. What is the advantage of renewable contracts? Renewable contracts are a way to continue to provide consumers the peace of mind and value provided by ESAs beyond the initial warranty period. Renewable contracts also give Dealers the opportunity to continue the revenue stream generated by a satisfied customer and lock them in for an extended amount of time. 8. How do most Dealers use renewable contracts to drive equipment sales? When Dealers execute and provide proper service for ESA customers, it nearly guarantees a satisfied customer. Satisfied customers will not only purchase their equipment from their original Dealer, but also recommend their Dealer to friends and family. 9. Will the Dealer approach the consumer when the original ESA is eligible for a renewal contract? No, the renewal program will be solicited by Service Net/AIG on behalf of the Dealer. Service Net/AIG must have written authorization from the Dealer before any renewals are attempted. Dealers have the right to refuse offering renewal options. Service Net/AIG can also perform an aftermarket campaign, upon request, for the Dealer. Any Dealer that provides consumer information for an aftermarket campaign will remain as the servicer of record for their homeowners and also receive profitability on each sale. 6 Protection Plus Distributor Guide

7 10. What is the difference between Labor Only and Labor Plus? Labor Only provides Dealers with the SelecRate Labor Reimbursement along with the corresponding service call amount. Labor Plus provides these same features but with the addition of a flat reimbursement that is designed as a mark-up on the part and referred to as part allowance. Reimbursement levels are dependent on the plan chosen at the point of sale by the Dealer. 11. How quickly will the Dealer get reimbursed when a claim is filed? Claim reimbursement will be received by the Dealer within 30 days after Service Net/AIG receives all pertinent and correct information required for claim submission. 12. What is covered under these contracts and what is not covered? Mechanical and electrical failures occurring inside the box are covered under this agreement based on the terms and conditions of this ESA. For what is not covered, please refer to the Terms & Conditions found in the Protection Plus Program Guide for further details. 13. How many evaporator coil leaks are covered under the Protection Plus Program? Agreements sold after Jan , will cover multiple leaks in evaporator coils and other covered components up to the full liability of the agreement. The limit of liability is set as the lesser amount of the retail value or retail purchase price of the covered equipment. 14. What is the reimbursement for refrigerant? The reimbursement for refrigerant is included and calculated as a part of all SelecRate Labor Reimbursement involving refrigerant exchange. 15. How does the Dealer sign up for the Protection Plus Program? Signing up for the program can be done through the Protection Plus Portal via MyRheem.com by simply logging on and accepting the stated terms and conditions. Upon acceptance, Dealers will be instructed to supply contact information such as FEIN #, points of contact and other relevant data. In addition, Dealers must fill out and fax, or mail a copy of liability insurance naming Service Net as insurer, as well as a completed W-9 form to address tax requirements. 16. Is there a tutorial on how to use the Protection Plus website to submit claims etc.? There is a Protection Plus Portal Quick Reference Guide that can be downloaded from MyRheem.com. 17. What reporting is available to see how many contracts the Dealer has sold? Can the Dealer export these reports into Excel or into my company s computer system? Sales reports are available by request. hvacsupport@servicenet.com for any reporting needs. 18. Who does the Dealer contact if they have questions regarding this program? Dealers can contact hvacsupport@servicenet.com or call (877) with any questions regarding administration and processing of the Protection Plus program. Rheem.com 7

8 Air Protection Plus Distributor Reference INTEGRATED HOME COMFORT Customer Service Mail: Protection Plus Attn: Customer Service P.O. Box 928 Jeffersonville, IN Fax: Phone: Claims Submission Mail: Protection Plus Attn: Claims Processing 650 Missouri Avenue Jeffersonville, IN Fax: Rheem Heating, Cooling & Water Heating P.O. Box 17010, Fort Smith, AR Rheem manufactures residential & commercial heating, cooling and water heating products. In keeping with its policy of continued progress and product improvement, Rheem reserves the right to make changes without notice. Printed in the U.S.A. 9/14 DC Form No. M Version 2 Distributor Pocket Guide Rheem.com