When faced with changing dynamics or imminent disruption, business executives tend to respond in one of three ways:

Many will simply do more of what they've always done, putting their tried-and-true “success formulas” into hyper-drive.
Others will wait for the “dust to settle” before taking action.
A few bold explorers will seek out innovative new solutions.

“Quick fixes”

Faced with falling profits caused by rising collision repair costs, claims counts and accident severity, many auto insurers are tempted to choose Response #1. Despite the availability of modern technology platforms that can dramatically lower costs and improve adjuster efficiency, claims managers may be tempted to rely on the “usual suspects” — quick cost-cutting fixes that have worked in the past. But this time around, these quick fixes may cost auto insurers more money than they save. Worse: they may also damage customer service and retention efforts.

From 2008 to 2014, auto claims managers were accustomed to relative consistency in loss payouts. Auto insurers enjoyed relatively flat accident and severity rates, as well as decreasing loss frequency, thanks in part to high gasoline prices.

But times have changed. Starting in 2015, gas prices began plummeting, which encouraged more Americans to hit the highways and led to an increase in accidents. Add to this an increase in accident severity rates, fueled by rising repair costs, and it's hardly surprising that major auto insurance companies are now bleeding money.

So what can claims managers do?

Tech-based solutions

They can turn to modern, technology-based solutions.

Instead of relying on the same old cost-cutting methods (e.g., trying to reduce vendor fees, cutting corners and asking staff to do more with less), they can adopt modern technology that lets them unify the claims process by integrating all its vital components into one platform. Adjusters now have a wealth of data at their fingertips, allowing them to settle claims faster and more accurately. In turn, this helps them deliver better customer experiences — experiences that will encourage more customers to renew their policies.

Adopting the new platforms will require claims managers to adopt a different mindset, one that focuses on measurable, long-term outcomes instead of short-term “phantom savings.”

Caveat: Tech solutions must be intelligently applied

Although new technologies can improve both the accuracy and efficiency of adjusters, it's important to realize that the technologies themselves are not a panacea. In fact, dispatching them as cost-cutting cure-alls can produce truly disastrous results.

For example, some auto insurers are aggressively using self-service mobile apps in ways that are completely inappropriate for this method of inspection (MOI). (The apps allow vehicle owners to take their own photos of vehicle damage. Estimates are then written in-house or by an outsourced vendor.) Self-service and photo estimating solutions have their place, but using them without regard to accident severity or claim facts is guaranteed to produce bad results. It should come as no surprise, therefore, that some insurers have been drowned by tidal waves of supplements after writing almost every damage estimate from vehicle owners' photos. This is an example of why technology must be intelligently applied given the inherent inaccuracies of a photo estimate beyond simple niche type losses.

Sooner or later, every claims manager will need to embrace a modern unified claims platform. By integrating systems such as ACD's AutoLink®, auto insurers gain the ability to intelligently dispatch and route claims efficiently. Through easy-to-use modern technology, ACD is able to connect clients with the proper MOI for each claim to achieve the best outcome — every time.

It is the intelligent application of these visionary platforms that makes them such powerful cost-containment tools. And unlike the quick fixes of yesteryear, their benefits are immediate and long lasting.

Ernie Bray is the CEO of ACD.

Special Reports /

Advertorial: &ldquo;Quick Fixes&rdquo; for Rising Auto Claims Costs May Leave a Dent in Carriers&rsquo; Wallets

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