Outsourcing has been a part of the insurance industry for about a decade. When people in claims hear the word it conjures up images of overseas call centers and image scanning. Several companies have experimented with the outsourcing of simple claims handling as well, but the most common use seems to be assigning tasks to a call center with lower-cost employees. However, there are some key claims tasks that are being outsourced to new channels. These are aimed at reducing costs and increasing customer satisfaction, which have always been primary goals of outsourcing. Below are two examples of this new application.
More Participation from Insureds
How about outsourcing to the insureds themselves? I'm seeing the first evidence of this in the various companies that have phone applications that allow customers to report claims, diagram accident scenes and other important first notice of loss (FNOL) tasks. The next logical step would be to have the customer take photos of the damaged vehicle. In cases where the damage is minor, those photos could be sent to an appraiser to write an estimate from the photos and pay based on that estimate.
While some states prohibit that practice and require the estimator to physically inspect the vehicle, it would be a valid way to settle minor claims in most states. The interesting thing here is that many insureds welcome the opportunity to be involved in their claim handling. Many vehicle owners take photos at the scene of the accident now and provide good documentation of the accident scene and damages.
Mobile Repair Services
The second example I've seen is to outsource the repair to a mobile service. In the U.S., we are accustomed to sending mobile services to install glass or replace stolen radios or air bags. But in the United Kingdom, insurers have bypassed the traditional collision repair shop by using a mobile repair services with paint capabilities. These mobile vans have a retractable plastic 'paint booth' that allows for panel or bumper refinishing in a reduced dust environment. The van pulls up in the customer's driveway or work parking lot and parks next to the damaged vehicle.
Like an awning on an RV, the van awning extends over the vehicle to be repaired and side curtains complete the booth. The driveway surface is sprayed down, and voilà: a mobile paint booth. Imagine the convenience of this type of repair for vehicle owners. They don't have to bring the vehicle anywhere, the service comes to them.
These basic tasks are ripe for outsourcing. They would expedite the claim handling process and increase customer satisfaction, without the need to deal with the traditional outsourcing issues of time zones and language differences.
Auto Physical Damage Trends
In the latest iteration of Mitchell's auto casualty solutions Industry Trends Report (ITR), Horn explored contributing factors in auto claims severity. He analyzed the impact parts costs have on average severity over time, noting the emphasis is too often placed on the four major cost areas—labor, parts, paint and material—which make up the average paid repairable severity.
Charting the dollar spend for parts against labor types and paint and materials costs beginning in 2005, Horn found "there was an overall decrease in average repairable severity leading into and during the recession, and a uniform increase in average paid severity afterwards," and by investigating the other components that make up the cost of an estimate, he concludes that despite the reduced number of parts per estimate, the fact that "cars have become more complex and have more painted panels, such as color-coded bumpers" is driving the increase in average repair severity for specific vehicles.
Also included in the ITR is a supplemental article written by Paul Rosenstein, vice president of claims solutions at Mitchell. Rosenstein describes how Mitchell will be changing claims estimating with 3D scanning technology and details the company's current efforts to build a database of clean 3D scans of vehicles and how that information could be used in the future to innovate with physical damage claims processing.
"We can leverage the data collected to support other workflow scenarios like consumer self-service, fraud detection and deformation-based estimating," he says.
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