Although this challenge has been developing for some time, it is just now becoming widely apparent that police departments nationally are no longer able to respond to or document routine auto accidents.
Shrinking operating budgets, compounded by the new and higher priority demands of protecting communities from civil unrest as well as domestic and foreign terrorism, are increasingly pushing accident-scene attendance down to the bottom of police priority lists.
Not all police public relations departments would go out of their way to announce these changes in service priorities, but media reports on the withdrawal of such services have appeared in the past 18 months in Illinois, Michigan, Missouri, Ohio, Oklahoma, Nevada, Texas and Virginia. Private discussions with chiefs of police from New York to California reveal similar intentions.
In these jurisdictions, police will now respond only in cases involving serious injury, criminal activity, hazardous materials or suspicious circumstances.
However, nearly all auto insurance policies contain a contract clause that requires a policyholder to report any and all accidents to the insurer. And almost every state has a statutory requirement for all involved drivers to report accidents to police involving injury or death, hazardous materials, apparent property damage over a specified threshold (typically $1,000-$1,500) within a prescribed number of days or risk suspension of their drivers’ licenses by the state Department of Motor Vehicles for failure to report.
Additionally, insurance companies rely upon police reports to independently substantiate damage, determine fault or negligence, and other critical facts for use in adjudicating first- and third-party property, injury and liability claims. Finally, low impact, property damage-only accidents not involving injuries represent the majority of all insured auto accidents — so this is a serious problem.
To make matters worse, even when police do attend and file reports, in some jurisdictions it can take up to six weeks for those reports to become available to carriers, and a high percentage of these reports are missing all of the information required for proper adjustment of the related claim. Furthermore, most auto insurers are now intensely focused on resolving and closing auto claims in days, not weeks or months, in the pursuit of customer service excellence and retention.
Finding new solutions
So what will insurance carriers do to obtain the required accident information in jurisdictions where police have withdrawn services? Their choices today are few, expensive and fraught with risk:
- They can ask policyholders to take damage photos on scene and self-report.
- They can incur the additional costs of staff, company inspection centers or independent appraisal resources.
- They can trust collision repair shops to inspect, document, estimate and repair the damage honestly and fairly.
In other countries such as Canada, where police withdrawal of services began many years ago, public-private partnerships have evolved in which independent professionals have worked with police services and auto insurance companies to establish Collision Reporting Centers (CRC) to which all involved drivers bring their vehicles to report accidents. These CRCs are free-standing facilities in major metropolitan markets and in smaller markets are located in police stations. Trained staff record detailed accident reports from first and third parties, photograph vehicle damage, and enter all such information into an electronic data reporting system which is integrated with police, traffic engineering and insurance data operations.
Additional claims support services are made available to drivers as prescribed by participating carriers who support and fund the entire service through subscription fees, and for which their return on investment is compelling. On average, 80% of all accidents are reported in this way and the information is in the hands of police and insurers within 24 hours of the incident.
Exacerbating the impending impact of this problem is the steady growth in accident frequency and severity coming as a direct result of an improving economy and falling gas prices, which have resulted in year over year increases in miles driven of 3.4%. On top of this is the practical challenge resulting from smaller, less experienced claims adjusting resources because of an aging, retiring workforce and intentional reductions of force implemented by carriers during the protracted recession as claim counts dropped dramatically.
Whatever solutions may evolve here in the U.S., carriers should be working on how they are going to manage these auto claims once police withdraw services. It is time for insurers to begin planning alternatives as this is only the beginning, the traditional method of reporting collisions is in the past for many, and alternative methods of reporting are rapidly becoming the new norm.
Stephen Applebaum is managing partner, Insurance Solutions Group, and responsible for U.S. insurance industry relations for Accident Support Services International Ltd.
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