Using technology to disrupt the auto insurance supply chain
Advanced technology promises to shorten the claims cycle from hail damage while improving customer satisfaction.
From the early 2000s, there have been many opportunities to digitize and automate in the insurance, claims and collision repair industries. During a 30-year career, I’ve specialized in tech-enabled problem-solving in these industry sectors that at times have centered specifically on automotive hail catastrophes.
Until recently, a vehicle owner was required to schedule an estimate into a temporary location (known as a “CAT site”) set up by the insurer. The owner may sit in line and wait anywhere from 45-90 minutes for a hand-counted hail damage estimate to be produced. Worse still, the vehicle owner may be required to make multiple visits to different repair shops and go through the same basic process at each location, wasting valuable time and creating unnecessary stress. Thankfully, those days are nearly over.
Technology catches up with the customer experience
Now in 2021, automated drive-through hail damage scanning technology is becoming a reality.
Not only does it take the human subjectivity out of the automotive hail estimate, but it also provides a solution for large-scale hail events. This technology expedites the entire estimating process for the vehicle owner while reducing overall storm costs for insurers.
Starting the estimating process within minutes
The “Holy Grail” in dealing with automotive hail catastrophes has always been to empower vehicle owners with a convenient, mobile phone-enabled solution. However, if you’re waiting for smartphone camera technology to provide the solution without special lighting, the wait will continue. The phone can gather key information on the damage, and the computers can do the rest through artificial intelligence and machine learning.
Culture still key to driving change
Interestingly, the key challenge is not the technology but dealing with resistance to change. It is well-documented that culture, not technology, is usually a major barrier to adoption and successful digital transformation. It seems the insurance and collision repair industry is a good case study in this respect.
A trip down under to test technology
In the U.S., my experience has been that the insurance industry tends to resist new solutions unless there is no choice but to change. This frustration led our team to launch our first tech solution in 2004 in Australia, where there was a strong culture of “let’s give it a go” and experimenting with new approaches. Sometimes, the scale of the U.S. industry can work against progress.
Some of the results of utilizing this different approach in Australia:
- Reduced the insurer’s overall storm costs in the first small- to moderate-size hailstorm event by more than $14 million.
- Reduced the storm team from 20 adjusters to two desk-assist auditors.
- Engaged the vehicle owner within “minutes” of filing a hail claim by inviting them to participate in a “contactless” estimating process from their home or office instead of waiting days, weeks or even months.
- Reduced insurer/customer touchpoints by almost half.
- Maximized the usage of paintless dent repair (PDR) while reducing total losses.
- Reduced the days to repair and rental car costs.
- Reduced the total claims costs by nearly 40%.
Australia’s largest insurer ultimately insourced the process and system for their catastrophic hail events.
COVID-19 & the incentive for change
The pandemic has now provided the incentive for customers, insurers and repairers to adopt a new way of doing things, thus, driving a culture change. If they don’t, my view is that consumers will switch to an insurer that does provide a digital, contactless service that keeps them informed of the progress of their claim and repair. Just like Amazon does when you make an online purchase or DoorDash when you order from their food delivery service.
Not only is COVID-19 changing the business and consumer mindset, but continuous advances with web browser technology have also enabled digital services to step up. Experience has shown that using a mobile browser rather than native apps works well for this type of customer solution. It can be challenging to persuade a customer to download an infrequently used app onto their phone. Another advantage of taking a browser approach is that updates and new releases can be made globally in hours, not weeks or months.
The coming of age of PDR
After almost three decades in the automotive industry, I’ve recently witnessed a maturity in the paint, dent and removal (PDR) industry that has been nothing short of miraculous. This includes ever-changing PDR tools that address the changing metal types, access points and complexities of repairing modern vehicles. With access to sophisticated training, the skill of today’s technicians is also impressive.
Armed with these tools, training and techniques, today’s PDR technician can repair damage severity and areas of a vehicle that were thought to be impossible not long ago. This is great news for vehicle owners, insurers and body shops that can quickly become overwhelmed during a catastrophe hail event.
Over the next few years, the utilization of hail claim-specific technology as a “partnered solution” could create a sea-change in the hail CAT management process in the U.S. It could help unleash the full potential of the PDR industry while creating better outcomes for insurers, repairers and vehicle owners.
Keith Volquardsen is a key part of the leadership team at www.theclaimsbridge.com. Volquardsen has been in the vehicle repair industry for 30 years, including 28 years in the PDR industry.
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