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Report: Technology is reshaping the insurance industry

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Insurance | Market Trends | Technology
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Technology is making it easier for insurance companies to produce quotes, with artificial intelligence (AI) now capable of starting and completing its own estimates, a new study says.

Reuters Events’ Auto Claims 2023: Fine-Tuning The Moving Parts Of Total Loss lays out the ways in which technology is delivering solutions to make roads safer and improve internal processes for carriers.

As automakers install anti-collision tools on new models, insurance companies are investing digital tools to create efficiencies with 39% of respondents seeing a benefit from such investments, the study said.

“The process of getting an insurance quote used to be onerous,” said Frank Cesario, director of U.S. claims at LexisNexis Risk Solutions, which participated in the report. “But today it’s driven by data and the outcome is a much quicker, more seamless process for customers. Claims departments can leverage data to achieve this same end.”

Predictive analysis can determine whether a vehicle is repairable or a total loss based on factors such as year, model, type of impact, whether the vehicle is drivable, and if airbags were deployed, the report said.

And after a vehicle is transferred to a salvage yard, video streaming can be used to complete the estimate and finalize a decision, with AI-driven heat mapping technologies identifying areas of damage, the report said.

“The AI is intelligent enough to start and complete an estimate on its own,” Lance Ondrej, chief operating officer of Texas-based Germania Insurance, said in the report.

As engineers work to perfect the technology, it’s up to people to review and make decisions on complex losses, he said, adding: “but the Holy Grail is to go all the way through the process to issue payment, as is done on lower exposure losses.”

The rising cost of repairs

Supply chain disruptions and inflation have made it more complicated to determine whether to repair or write off a vehicle, the report said.

Even if it initially seems more logical to repair a vehicle, it said insurers must factor in the time it will take for the necessary replacement parts to arrive. And with some items facing months-long backlogs, carriers or policyholders who don’t have sufficient rental coverage are forced to foot the bill for rental cars for longer.

During Q3 2022, the length of time in a rental, or length of rental (LOR) reached 18.2 days, a year-over-year increase of three days, according to Enterprise Rent-a-Car.

“When you factor all that into a cost benefit analysis, sometimes it makes more sense for a vehicle to be declared a total loss, and at a percentage lower than what it was in the past,” Ondrej said.

Another issue is that OEM repair procedures recommend pre- and post-scanning, as well as calibrations for the systems to work correctly. However, insurers aren’t always willing to pay for such procedures.

Anti-crash technologies

Vehicles equipped with anti-crash features such as rear cameras, automatic emergency braking, and parking sensors can help avoid claims altogether.

But when they don’t they can add another layer of complexity to the repairs process. A recent Insurance Institute for Highway Safety {IIHS) study found that while new technologies can prevent collisions, they’re making repairs more difficult.

Shannon Terry, Nationwide’s senior vice president and chief analytics officer, made similar remarks in the Reuters report.

“It’s no longer inexpensive to replace a side mirror,” he said, noting advanced safety features must be scanned and analyzed to properly repair.

For example, the mandatory safety features in these vehicles, he said, must be scanned in and studied in order to return a vehicle to its original state.

Although Terry acknowledged that new technologies can be useful, he said that doesn’t mean humans should be out of the picture entirely.

By leaning too heavily on technology throughout the claims process, he said insurers risk delivering “cold, detached or alienating experiences and going sideways with your customers.”



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