Moving violations: Blending InsurTech & data in auto claims
Vehicle technology transformation has created numerous challenges and opportunities in how the claims are handled.
Perhaps one of the most exciting outcomes of technologies such as cloud, IoT, mobile and artificial intelligence (AI) is their ability to help companies deliver connected, self-directed, highly personalized, curated experiences to their customers.
In the automotive insurance industry, more and more carriers are implementing some or all of these technologies to guide and assist their consumers through many facets of the insurance experience, including claims, policy updates, insurance shopping and more. And the improved access to these technologies has helped drive auto insurance customer satisfaction to its highest level since CY 2000, according to J.D. Power. These capabilities are being introduced at a time when the vehicles themselves are also being loaded with more technology to guide and assist the consumer with vehicle ownership and driving experience.
Blending technology & data
Numerous features being offered in today’s vehicles are designed to reduce the likelihood of an accident or claim; detect a crash; dispatch emergency road-side services; provide updates when vehicle service may be required; offer updates on where to buy gasoline and more.
When an accident does occur, new digital capabilities — in this case, connected car technology via the vehicle itself or mobile device — can help reduce overall claim cycle time and provide consumers with the type of experience they have come to expect.
For example, analysis of claims data reveals the average number of days between the date of loss and the date the loss was reported was only 0.6 days in CY2019 for telematics-enabled claims versus 6.7 days for all others. The insurance customer is contacted directly when a crash is detected to determine the need for emergency services, but also to offer their customer the opportunity to start the claims process, ultimately reducing the overall time it takes to get the vehicle to pre-accident condition.
Another digital capability — virtual auto claims handling via integrated smartphone technology — has emerged as a key competency that consumers want and expect. Insurance carriers are increasingly providing their customers with access to mobile photo estimating apps as a means to conduct the preliminary vehicle inspection. Customers choosing photo method of inspection (MOI) in CY 2019 received their estimate, on average, in 1.4 days, versus 4.5 days across all MOI’s. And perhaps even more significant is the percent of claims where the time from assignment to estimate complete is less than 12 hours: 52% for photo MOI versus 21% overall (see Figure 1).
With photo MOI, insurers provide expedited information to their customers, helping them determine the next steps in the claim and vehicle repair processes. This is an example where digital capabilities can provide transparency with fewer steps and can help reduce the time spent by claims processors on the mundane, administrative nature of claims, freeing them up to spend more time on the human-touch, customer-service-oriented aspects of claims processing that technology can’t yet (and may never) replace. Providing human support and empathy at the right points while facilitating the digital experience remains job one.
As vehicles become more connected, the data from the vehicle itself may supplement digital technology such as photos and AI to enhance decision-making precision and further streamline claims processes. Insurers want and need to make things simple for their customers but have limited opportunities given the nature of the product they are selling. Claims is a key opportunity, but the challenge is that numerous entities must be relied on to deliver a quality experience — whether that is the repairer, the rental car company, the parts supplier or someone else.
Going digital
Understanding which technologies to apply and how to implement them to help with the handoff between parties while managing the performance of those business partners is a challenge. Enabling processes to support those handoffs becomes critical as insurance companies’ consumers expect the claims experience to be as seamless as ordering something on Amazon. The key difference is that the accident was not an experience the consumer chose.
Among the new digital capabilities supported by technologies such as mobile and cloud are the abilities to share data within an app that allows customers to view the estimate of the record produced from vehicle damage photos, then choose the repair facility he/she wants to fix their vehicle and even schedule the appointment with that shop. Photo estimating coupled with online claims communication and scheduling saves the consumer time otherwise spent driving around to multiple shops to get estimates or waiting for an insurance adjuster to show up at their home or work, ultimately ending up with a paper copy of the estimate and maybe a check, only to then have to research and decide where to get the car repaired and schedule the vehicle repair.
Data from a recent case study of nearly 100,000 repairs reveals customers whose chosen MOI was photo saw faster claim cycle times when the chosen repair facility and insurer provided this capability. Repairs with an initial photo MOI completed by the same repairers where online scheduling was not available experienced longer claim cycle times (see Figure 2).
With online shop scheduling available as a “next step”, the customer can select the repairer based on proximity, DRP program participation, online reviews, customer referrals, or availability of OE certification, essentially enabling the overall experience to occur on a single platform in a personalized manner — not too different from what consumers experience on Amazon today. Insurance companies and repairers who adopt a single platform can enable consumers to process their claim efficiently, schedule the repair and ultimately deliver an experience more in-line with modern expectations.
Comparison of the most common types of repairs — those that fall between $0.01 and $3,000 — also reveals customers whose initial vehicle inspection was completed by photo gave the repairer that fixed their vehicle similar customer satisfaction ratings as those whose initial vehicle inspection was done in person (see Figure 3).
Tech comes at a cost
Unfortunately, when an accident does occur, some of those new vehicle features are driving up the cost and complexity of the vehicle repair. More vehicle repairs now include additional operations such as scans and calibrations, as well as replacement of new parts such as sensors and cameras. For example, data collected by CCC Information Services Inc. on behalf of its customers revealed that the vehicle pre-repair, in-process, and post-repair scans added $40 per claim by the fourth quarter of 2019, versus only $4 per claim in the first quarter of 2016. And overall, non-comprehensive vehicle repair costs increased by 4.4% in CY2018 and another 4.9% in CY2019.
As more repairs include additional steps previously included infrequently or not at all, the importance of clear processes to help check these steps are completed and clearly documented grows. Blueprinting the repair, identifying upfront what types of electronic components such as ADAS may require calibration, completing scans, etc., have all become more important to understand as much about the likely repair cost and repair time for each vehicle. Creating and following a standard set of procedures can work to remind estimators and repair technicians to check for items such as ADAS features, which may help combat the inevitable increases in each of these as repair costs continue to rise.
With the potential for so many more permutations in the numerous process steps required for today’s repairs, managing a list and including all of the items unique to each repair has become ever more challenging. Here is another opportunity where digital capabilities can enable dynamic checklists that can address the specific steps required for each type of repair. Each step in the process can be configured based on the type of damage on a vehicle, the insurance company, payer type and even a region for repairers that are multi-store operators.
With the process digitized, repairs are no longer limited to a checkmark to complete a task. For example, a note or photo can be required and captured directly from a phone or tablet, or a step may be marked as pass or fail to measure first-time quality throughout the repair lifecycle. Putting this technology (literally) in the hands of today’s technicians helps them present the right step to the right employee at the right time.
Vehicle technology transformation has created numerous challenges and opportunities in terms of how the claims are handled. In the near term, this also means that repair costs have accelerated. Determining how the technology that underlies this new vehicle tech – mobile, AI, cloud, etc. – is essential to offering customers the digital capabilities they have come to expect.
Susanna Gotsch (sgotsch@cccis.com) is a director and industry analyst with CCC Information Services Inc.
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