Yep, it’s true, the hassle involved in transferring a vehicle title in the USA can be huge. But there is a better way. The time and money spent on vehicle title transfers in the US have long been a problem for insurers and a major headache for CFOs. Shane Bigelow, CEO of insurtech Champ Titles, explains the challenges of the current antiquated process and how tech can help save days and dollars.
Title transfers following the total loss of a vehicle in the US are painfully slow, taking more than 50 days to complete, and hold up the claims process. It is a huge problem for large insurance carriers who spend more than $100 million a year on title transfer.
The main issue is that title transfer does not happen at the federal level and there are 51 jurisdictions across the states and Washington DC, each with its own titling methodology, so processes are not consistent nationally.
As well as cumbersome state rules, traditional paper-based processes further slow the transfer of vehicle titles. Among the many problems, there are mailing delays, and often forms are not filled in correctly and must be returned. As a result of all the money a carrier outlays in a total loss, the cost of capital burden on profits and premium rates for the insurer carrier is significant.
Here is what happens in the event of a road accident. The vehicle is towed (paid by the carrier) to a collision shop where the damage is analyzed at the expense of the insurance company. A car is then rented for the policyholder – again at the expense of the carrier. Once the car is determined to be a total loss, it is taken to a salvage yard, where it sits for an average of 50 plus days. This hold-up is due to the slow and cumbersome processes carriers endure in a paper-based world to transfer titles with state motor vehicle departments. To make matters worse for the carrier, they often outlay the cost for a new vehicle while this effort is taking place, further burdening the cost of the transaction.
Another problem is that customers lose patience with the amount of time it takes for their claims to be settled, and often the insurance company is blamed for the delay – when it has nothing to do with them. Delays can, in fact, be caused by the owner of the vehicle. A car accident is traumatic, and the last thing they want to do is fill in a pile of unfamiliar paperwork sent by FedEx. Customers are angry at having to do what they consider is the insurer’s work – and they will ask “what are we paying premiums for every month?”.
Some carriers try to reduce this pain point by sending out agents to the policyholder’s home to help them fill out the forms. But the claims agent might not be an expert on titling and can struggle to complete the forms correctly, particularly if the accident has taken place in one state and the owner lives in another. Mistakes are made because the claims agent has no way of verifying the data on the spot, and often the state rejects the document. It is a flawed and antiquated way of capturing and verifying information.
Champ Titles is an insurtech that was launched in 2018 and has created a solution to fix this archaic, outdated, and paper-heavy vehicle transfer system. Champ uses a combination of blockchain and Software as a Service (SaaS) technology to solve a problem that has until now caused insurance carriers this heavy financial burden.
Champ digitizes the process so there are no more mountains of paper, reducing the time it takes to create, manage, and transfer a vehicle title from 50+ days to just one day, at a fraction of the cost carriers spend on traditional title processing. Digitization makes for faster processing of the total title transfer, and there are no delays, fewer errors, and no mailing costs.
The speedier recovery of funds leads to operational efficiencies for insurance carriers, allowing them to drive down policyholders’ premiums. It also helps carriers manage their reserves, from which money for a total loss claim is spent.
Further, Champ helps carriers manage their data by keeping a record of every transaction on its blockchain, which enables a much clearer data set to be leveraged in the future by insurance companies using the product and allows them to underwrite and price risk more accurately.
There is also an environmental benefit as around 900 million pieces of paper are produced in the US every year just for titling. Additionally, vehicles will not spend so much time sitting and leaking fluid into the ground in salvage yards instead of being 100% recycled.
When Champ was set up, it was created with the intent of reimagining title processing in a digital form for carriers, lenders, retailers and, ultimately, the state. The timing could not be better as digitization has sped up over the last 18 months due to more people wanting less human contact with government processes.
Customers are tired of completing endless paperwork and of waiting in line at the Department of Motor Vehicles (DMV). The faster, more efficient, and simpler digital titling process means the policyholder has a much better experience. It is a great example of insurance using technology to improve the average consumer’s life, the job of a proper insurtech.