Technology a Driving Force in Auto Salvage

Editor's Note: This article has been contributed by John Kett, president and CFO of Insurance Auto Auctions (IAA).

Thirty years is a long time. In 1982 when IAA began, the salvage industry was defined by who showed up at auction; what they needed; and, ultimately, the number of vehicles sold. A great deal has changed since then. 

Auto salvage is a dynamic and global business. It is impacted by several macroeconomic factors -global economy, auto sale price, driver behavior, weather, metal prices, and the U.S. dollar, to call out just a few. The complexity of this industry is evident when trying to understand how its influences are linked together. 

Complexities aside, one factor has become a driving force for our industry, and that is technology. As with all other industries, technology offered us many avenues to become more efficient in the way we do business and offer more and better to our customers. 

Impact On Marketing Vehicles
Today, technology is driving how salvage auto auction companies market to buyers and providers, as well as how vehicles are sold at auction. It is also playing a significant role in how salvage providers measure their performance with respect to returns and cycle time. 

Insurance providers can reap significant benefits from salvage auto auction companies' investments in technology when it comes to managing claims and the disposition of their salvage vehicles. 

First, technology can enable insurers to be more nimble and provide them streamlined channels to conduct their business. For example, using title procurement technologies helps to minimize IT spend, while reducing rental and staffing expenses. Another potential benefit is faster payments, which not only can translate to significant per file savings, but also heighten customer satisfaction. Importantly, such technologies can help to reduce the length of time it takes to settle a total loss claim on vehicles with or without a lien, which results in significant savings and enables insurance companies to reallocate key resources to other important tasks in servicing their policyholders. 

The Dual Vehicle Auction Advantage
Second, online auctions also expand the exposure for total loss and salvage vehicles to a much broader domestic and global buyer base, putting more "eyeballs" on the vehicles insuring the optimal return. Today, insurance companies have the benefit of showcasing their vehicles to a global marketplace spanning hundreds of countries across several continents. Imagine the ability for someone in Ghana to participate in an auction and an insurance representative managing salvage inventory from anywhere, at any time. All of this was unheard of in the not-too-distant past. 

Here, I would like to address a question that is asked often: "Does an online only auction model provide buyers the best buying experience?" In response, I believe a dual platform, live and online model works best. This is what we offer at IAA, and this mirrors the method used by the virtually every other salvage, used car, and heavy equipment auction. To use IAA as an example, our auction facilities are armed with technologies such as Auction Center and I-Bid Live which allow us to provide customers both a live and live-online auction platform. This combination is intended to offer buyers the option to participate in an auction when it is most convenient for them. Additionally, it provides them with the opportunity to view the auction vehicle live before purchase. 

Faster CAT Response
Third, technological advancements have enabled insurers to reduce their response times during catastrophic events caused by weather disturbances. Each year, severe storms and natural disasters, including hurricanes, tropical storms, tornadoes and floods, place an enormous strain on insurance providers who are tasked with responding to a surge in vehicle claims requests. For insurance providers, being prepared for events such this is critical. Natural catastrophes often cause extreme damage, resulting in hundreds of thousands of vehicles that are deemed total losses, which can prove to be highly costly and time intensive for insurance providers. When faced with a high volume of claims requests, insurance providers must balance customer service with costs incurred during a catastrophe management event all within a very short span of time. The pressure to deliver the best support to meet policyholders' needs is great 

At times like this, a salvage auto auction company can provide the necessary real estate,  network support and access to hardware equipment that will enable insurers to continue to operate seamlessly  during a catastrophic event. At my company, we can rapidly deploy all the necessary computer hardware and associated equipment to have a temporary site up and running within hours. to assist  in initiating the recovery process as quickly as possible.

Another transformative technology is mobility. Because of the growing ubiquity of mobile devices, there is no single industry that could not benefit in some way from implementing mobile technology. For the salvage industry, mobile technology continues to be a driving force in garnering additional buyers for thousands of vehicle auctions throughout North America. Increasingly buyers desire to be able to bid while "on the go." As a result, the technologies to enable this capability can play a crucial role in a salvage company's overall growth strategy. IAA, for one, has enjoyed exponential growth in buyers using its mobile technology since we were the first in the industry to launch a mobile app and website over two years ago. 

For example, we have recently enhanced our mobile offerings based on buyer feedback and now offer buyers the ability to see what they need to pay for, pick up, as well as a history of what they won and lost during auction. We believe this can enable them to better manage their inventory after auction. The salvage auto auction industry's ability to provide more flexible tools can ultimately attract a significantly larger buyer base. Again, good news for insurers.

While it is relatively easy to talk about technology, another key element of a salvage auctions model must be the service delivery for both buyers and insurance companies. But that is a subject for another day!