CCC Intelligent Solutions said Wednesday cumulative annual cycle time across 26 million automotive claims last year added up to 2 billion days, up 1 billion over 2021.

The metric was first measured by CCC in 2021 to determine the number of days claims remained open.

Enterprise reported in July that length of rental (LOR) reached 17.4 days during Q2 which, for the first time since the onset of the COVID-19 pandemic, was a year-over-year (YoY) decrease; down from 17.7 days last year.

“The auto insurance economy is being impacted by multiple headwinds, including staffing shortages, inflation, supply chain issues, increasing vehicle complexity and rising consumer expectations,” said CCC chairman and CEO Githesh Ramamurthy during CCC’s Aug. 1 Q2 earnings call. “These challenges are being compounded by claim counts that have rebounded significantly from the pandemic and are now less than 10% below 2019 levels. Net result of these trends has been a significant increase in repairable, total loss, and casualty cycle times.”

Ramamurthy called reaching 1 billion days “staggering” and that 2 billion “underscores our claims in the P&C insurance economies need to address operational efficiency.” One of those solutions is the use of artificial intelligence (AI) — specific to the collision repair industry he mentioned CCC’s Estimate-STP — to not only reduce cycle time but also administrative costs and environmental impact, he said.

One investor asked Ramamurthy during the call to expand on the use case for Estimate-STP’s AI-based computer vision technology at repair facilities and by field adjusters. Ramamurthy said it’s still in testing.

“The way it would come to market is that, for staff adjusters, that would essentially be a package or a component to be added inside… components that insurance customers are buying,” he said. “And then on the repair facility side, we haven’t fully sorted out exactly from a revenue model but it would be included in one of our repair packages.”

It could be an answer to a “huge shortage of estimators and staff” at repair shops, he added.

“What customers are super excited about is the ability for the AI to take consumer photos and generate a predictive estimate,” Ramamurthy said. “Someone can look at it and see, ‘Hey, do I have capacity to take this car in? Can I schedule it?’ It provides a lot of downstream benefits, and it’s also integrated deep inside the CCC ONE platform.”

Based on new research, the MarketWatch Guides Team has found that the insurance industry’s use of AI may only increase due to customer demand and isn’t far from making real-time underwriting possible.

Seventy-nine percent of “tech-savvy” car insurance customers said they would trust a claims process fully automated by AI, according to a Solera Innovation survey, leading MarketWatch to believe insurance underwriting of the future may include a myriad of data points about a customer’s lifestyle and driving habits.

The application of advanced computer vision AI for claims processing increased 60% year-over-year, according to CCC’s insurer AI adoption report, released in February. More than 14 million claims were processed using a CCC AI solution, which shows growth of three times over 2019.

The growth in AI-powered claims is driven by a number of factors, including an increase in the number of insurers using AI solutions, the expansion of applications of AI across their business, and an increase in AI-eligible claims through an uptick in the use of photos to initiate a claim, according to CCC.

“Today, a repair estimate prepared manually by an adjuster can take hours or even days to schedule and complete, which can negatively impact customer satisfaction as well as costing the insurer over $150 a claim,” Ramamurthy said during Tuesday’s earnings call. “It also typically involves driving on the part of the consumer and/or the adjuster as well as plenty of paper forms.

“Roughly 30% of claims are inspected by consumers via the mobile phone self-service channel, but 45% are inspected in the repair facility and approximately 25% are inspected by insurance staff in the field.”

Speaking on revenue streams, Ramamurthy told investors that while CCC Parts only makes up about 5% of the company’s revenue, it’s growing significantly faster than the overall company.

CCC Parts connects CCC ONE repair users with parts providers to order parts.

“Last year, the collision repair industry spent about $18 billion on parts,” Ramamurthy said. “Based on our existing business model, we believe Parts represents a multi-hundred-million dollar annual revenue opportunity for CCC or more than five times our current parts revenue.

“Today, only about 15% of industry parts volume is ordered electronically through the CCC network. We believe that CCC has the opportunity to increase that percentage over time… In a world where supply chain disruptions are a regular occurrence, knowing supply and availability at the time of part selection is critical [in] managing cycle time and total operating efficiency. Longer cycle times can mean higher rental car costs and lower customer satisfaction, lower shop and labor utilization for repair facilities, and lower volume of parts sold for parts suppliers.”

Total revenue during Q2 was $211.7 million, up 10% from prior year period, according to CCC Executive Vice President, CFO and Chief Administrative Officer Brian Herb.

“Overall, we feel good about the operating leverage and the scalability of the business model and our ability to deliver against our long-term adjusted gross profit target of 80%,” he said. “In terms of expenses, adjusted operating expense in Q2 2023 was $90.2 million, up 10% year-over-year.”

In a news release published prior to the earnings call, Ramamurthy said, “CCC delivered strong second quarter results, highlighted by 10% year-over-year revenue growth and 38% adjusted EBITDA margin. The strong performance in the first half of 2023 included multiple large renewals and relationship expansions that reinforce our confidence in our ability to deliver on our strategic and financial objectives.”

CCC says it added nearly 1,000 repair facilities so far this year bringing its customer count to more than 35,000. More than 29,000 customers are repair shops plus over 4,500 parts suppliers, 300 insurers, and 13 of the top 15 automotive OEMs.

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