Simplifying accident scene management complexity to drive down claims costs

As auto insurers face a competitive market and high collision claims severity, a comprehensive accident management (AM) strategy can be a strategic tool used to drive differentiation, increase policyholder satisfaction and reduce loss costs to increase profit margins.

Effective AM capabilities can bring order and efficiency to the chaos of accidents, helping insurers better manage controllable loss costs and avoid wasteful spend and cycle time. These costs include storage and impound fees, rental days and towing — all of which have risen sharply in the past decade. Storage costs, for example, have increased by as much as 70% in the last ten years.

In all, Agero research suggests AM may be able to reduce loss costs by $500-$800 per claim — a potential $3 billion loss cost-saving opportunity industry-wide. Further to this, the reduced claim cycle time enabled by AM can considerably impact customer satisfaction. According to a study from J.D. Power, satisfaction scores (on a scale of 1000) dropped by an average 71 points for policyholders who had to wait longer than two weeks for their vehicle to be fixed and returned following an accident.

Despite this significant benefit, however, the AM process is complex. It requires not only high levels of expertise across various tasks, an understanding of state and local regulations and sophisticated technology to manage players, records and protocols, but a tow operator network that is far more specialized than what is typically leveraged for simpler roadside events.

There are several major variables that drive this complexity, which can be addressed through a strategic managed service approach to case management.

Related: Automated accident management adds value, aids customers

Tow network

AM typically utilizes a specialized network of towers equipped and experienced in handling the complexity of securing a non-drivable vehicle from the accident scene or the storage lot. This highly curated ecosystem of tow operators is distinct from traditional roadside networks because there is a greater need for urgency and flexibility. In the case of the primary tow (the tow directly from the accident scene), the circumstances of the accident or the degree of damage to the vehicle may not be fully known when the operator is dispatched to the scene. It is therefore important to utilize an operator that is knowledgeable and flexible.

Accident timing

Accidents can happen at any time, anywhere, adding logistical challenges such as off-hours towing, repair shop coordination and creating a need for vehicle storage, all of which contribute to added claims cost and time. In fact, according to an Agero analysis of over one million accident yearly events, 55% of all accidents occur outside the time period that would allow for a tow directly from the accident scene to a repair shop, resulting in the vehicle being towed to an impound lot instead, which results in a tow-store-tow experience.

Related: Insurance questions arise when vehicles get towed

Tow-store-tow

Tow-store-tow, where the vehicle is captured from the scene, indemnified for overnight or weekend storage and then towed to the repair shop, necessitates schedule and dispatch of multiple tows as well as storage management. In nearly 20% of cases, the vehicle must be stored for a minimum of 24 hours until the repair shop re-opens.

Vehicle release

Effective vehicle release management helps to release the vehicle from storage two to three days faster, resulting in lower downstream costs. The ability to efficiently do this, however, typically falls outside an insurance adjuster’s core competency and can represent a significant pain point in the overall AM process. Negotiating the release of the vehicle requires significant knowledge of local regulations, processes and rates.

The storage market is highly fragmented with numerous tow and impound lots, large franchised storage spaces and smaller “mom and pop” yards, each with potentially different requirements. Release regulations — which change frequently — can further vary by municipality, county or state. According to Agero data, only 38% of vehicle releases follow standard release coordination processes. The remaining 62% pose challenges related to special paperwork needs, forms of payment and regulatory compliance that require a certain level of manual — rather than automated — involvement and can cause significant delays if not handled appropriately. Key issues include:

• Cash only: Cash payment to release from storage. This requires additional coordination with tower and cash handling processes.
• State-specific forms, hold harmless and/or notary: Various states and municipalities have different regulatory requirements regarding paperwork, validation and approvals to release a vehicle.
• Excessive release fees: There can wide variability in the costs of storage. Accident scene management capability should be able to recognize excessive charges and manage the negotiation.
• Owners presence: Based on state and municipal specific regulations, the registered owner may be required to appear at the storage facility as part of the release process.

When managing the process on their own, many insurers may also be unable to benefit from the economies of scale enabled by having numerous tow network connections and often pay the market rate for a release, rather than a less expensive negotiated fee.

Related: PCI identifies worst areas for towing hassles in new survey

The right partner

The complexity of handling non-drivable vehicles following an accident requires specific expertise as well as sophisticated technology and a managed service approach to coordinate players, regulations and records. With the right accident management partner, there is a significant opportunity to reduce claims severity and improve the customer experience.

Choose the partner that understands your claims objectives and processes and your desired policyholder experience. Look for:

• Processes to get accident specifics to the primary tow provider so they capture the vehicle effectively and efficiently.
• Insight into accident tow data in order to understand if and when a tow operator requires special equipment to control costs.
• Measures and controls to ensure that the captured vehicle is consistently delivered to a preferred shop in the insurer’s network.
• Expertise in securing a release and ensuring the subsequent delivery of the vehicle to the desired destination, with the ability to scale according to the needs of your policyholder base.
• Scale to support claims frequency demands across your geographic regions, and the capability to service the broad base of policyholder vehicles.
• A curated and highly specialized network of service providers, algorithmically chosen to provide the appropriate services, including storage, as necessary.

The claims process can be a significant moment of truth for an insurer and their policyholder and both stand to benefit from a smooth, efficient process. Through a comprehensive, case management approach to AM with a partner with the right knowledge, experience and tools, insurers have a unique opportunity to build customer loyalty, and drive down loss cost.

Related: The future of personal lines

Mubbin Rabbani (ageroconnect@agero.com) is a senior director of product management at Agero. The views expressed here are the author’s own.