Deloitte recently forecast that the total cost of claims will continue rising over the next 10 years, fueled by more miles driven, higher accident rates (with distracted driving a major contributor), and increased severity.
In March 2016, for example, U.S. drivers logged an additional 13 billion miles over March 2015 a 5% increase. So far, cumulative travel for the year is up 4.2%.
Unsurprisingly, these trends have contributed to a recent surge in insurance rates, which rose by 6% from April 2015 to April 2016, the largest year-over-year increase since 2003.
Given these facts and forecasts, the industry appears to be facing a very perilous decade. To achieve greater efficiencies and lower loss adjustment expenses, many executives and claims managers will have to focus on new triage protocols supported by modern technologies, revamped processes, and reorganized networks of field appraisers and direct repair facilities.
Focus on triage
Efficient and effective triage is an obvious, but often overlooked solution to helping control overall loss costs and achieving optimal claims outcomes. Putting the right claims into the right hands at the earliest possible time is a proven winner when it comes to increasing customer satisfaction and reducing cycle time. In an era of higher premiums and demanding, digital-empowered consumers, the effects of great initial claims handling on customer acquisition and retention are more important than ever.
There are three tools that help a carrier provide effective triage:
1. A mobile self-service app. This can lower loss adjustment expenses and improve customer satisfaction, but should be used for only a limited range of claims. Otherwise, using this tool may end up costing insurers more money than it saves. The goal is to use the self-service app in situations where the damage is fairly straightforward with little possibility of hidden damage. Auto insurers will maximize the benefits of mobile self-service when using it for accidents in which appraised damage is cosmetic in nature and generally less than $1,500.
2. A standard field appraisal resource comprising "boots on the ground." In cases where self-service isn't the right option (and there are many such cases), carriers need to deploy an expert pair of eyes to investigate any hidden damage or confirm accident related damage whether these "eyes" are outsourced or in-house.
3. A robust direct repair or shop of choice program. Whether an insurer offers a direct repair program shop suggestion or customers choose a repair facility they already had in mind, modern technology can streamline the process. With an internet connection, almost any collision-repair facility can log into a single, unified platform to communicate with insurers, often eliminating the need for physical inspections. With an established direct repair program in place, insurers use their networks of collision-repair facilities to get fast and accurate repairs with minimal labor expense.
Finding effective solutions
In this era of massive technology-driven disruption and change, nothing will be more important than leading-edge auto physical damage triage software supported by a technology platform that integrates multiple programs "under one roof." This allows insurers to make the most informed decisions possible when a claim is first reported.
When these platforms incorporate cognitive-based artificial intelligence and historical claims data, insurers will be able to conduct triage at the first notice of loss. And in some instances, these technologies will help carriers make decisions without any human intervention.
For forward-thinking insurance executives and claims managers, the next 10 years don't have to be the worst of times. By building tech-driven triage solutions, they can actually turn it into the best of times.
Ernie Bray is CEO of Carlsbad, Calif.-based AutoClaims Direct Inc. Email him at ebray@acdcorp.com. Tom Kaschalk is senior partner at Alpharetta, Ga.-based Insurance Resources International LLC. Email him at tom.kaschalk@iripartners.com.
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