This allows the dealer to provide warranties (certified or limited), loyalty programs (ie. engine for life), vehicle service contracts, pre-paid maintenance programs, and ancillary products (key, dent, windshield, theft, tire and wheel, etc) to their customers through their own insurance company.
In doing so, the dealer retains control over the customer's ownership experience and is not depending on a third party to take care of the customer like they should when the customer has a claim. It also allows the dealer to capture and keep all of the profits that the third party or manufacturer was keeping on the sale of those products previously.
The dealer is able to maintain their gross on the back end of their F&I sales at the dealership AND capture all of the underwriting profits on their policies as they expire.
Reinsurance allows you as the dealer to maintain control and make more profit on the sale of each contract allowing you to take better care of your customers which will drive repeat and referral business.