Waiver Reimbursements Liability

3 Months Ended

Dec. 31, 2011

Waiver Reimbursements Liability [Abstract]

NOTE 8 – WAIVER REIMBURSEMENTS LIABILITY

The Company has entered into contractual arrangements to administer certain membership programs for its clients, primarily in the rental purchase industry. For some clients, the administration duties include reimbursing the client for certain expenses incurred in the operation of a particular membership program. Under these arrangements, the Company was responsible for reimbursing the client when (under the terms of the agreement with the client’s customer) the client waives rental payments required of the client’s customer under specifically defined and limited circumstances, including the situation when the customer becomes unemployed for a stated time period or when the Company’s client provided product service to its customer.

The life of the contracts subject to the Company’s reimbursement of clients for the waiver of rental payments and product service commitments is generally one week. The Wholesale Plans Division clients in the rental purchase industry entered into agreements with their customers for the rental of merchandise that had a term equivalent to their scheduled payment period and for the majority of agreements that period is one week. The agreement was renewed weekly by the customer by making its scheduled weekly payment. The average length of a customer relationship under such an agreement lasted for four months as approximately 75% of the customers return the rented item within the four months, 17% exercised early purchase options and 8% rent for the full term and became owners. The customer may return the merchandise and terminate the rental agreement at any time without any future obligation.

Product service expense represented costs the Company incurred on the repair of household merchandise. Plan members that completed their rental purchase term and choose to continue their membership on a month-to-month basis were entitled to repair or replacement of such merchandise by the dealer in cases of mechanical failure. The Company reimbursed the dealer for those costs. This element of a member’s plan terminated 12 months following their date of product ownership (12 months following the end of the member’s rental term) or at any time that the member did not maintain its month-to-month membership.

The Company’s policy was to reserve the necessary funds in order to meet the anticipated reimbursement obligation owed to the Company’s clients in the event the Company’s reimbursement obligations required payment in the future. The Company’s obligations for these reimbursements did not have any kind of a tail that extended beyond the Company’s client’s payment obligations following termination of the contractual arrangement or agreement with either the Company’s client or the client’s customer. The Company’s estimated incurred-but-not-reported-reimbursements obligation consisted of the following:

		September 30,			September 30,
	Quarter Ended,
	December 31			September 30
Balance, beginning	$	699,500		$	644,300
Claims paid,		(1,144,964	)		(1,460,764	)
Claims accrued,		1,003,264			1,515,964

Balance, ending	$	557,800		$	699,500

Access Plans Inc 10-Q