The theme in March has been claims costs, especially Motor claims. It’s no secret that the replacement value of EVs and hybrids has rocketed in the last few years. When a battery car is damaged it’s often cheaper to write the car off than carry out a battery pack swap – if you can find one in the global supply chain. On top of that there has been a jump in labour rates across the bodyshop sector, as employees ask for more wages in respnse to the near-doubling of some household bills and foodstuff prices.
Mix in some extra claims caused by uninsured, unlicensed drivers – an estimated 2 million on UK roads – and you have a recipe for ever-rising premiums. So how can insurers keep a lid on rising claims costs? Let’s get some ideas and solutions.
FNOL DATA ANALYSIS IS YOUR BEST FRIEND
Kieron Fisher, Account Director at Percayso Vehicle Intelligence, offers these thoughts;
My advice to any motor insurance provider would be to enrich as much data as possible as early as possible in the FNOL process as it will ultimately save them thousands of pounds in operating costs and provide a much better, less confrontational customer experience. Having access to real-time and evidence based vehicle value data as early as possible in the FNOL process enables an immediate, accurate and fair valuation, vastly improving the customer experience.
Take our own Companion tool as an example. A claims handler with access to this software can simply type in any VRM or VIN to pull up an in-depth vehicle report that draws upon over one billion unique data points from DVSA, DVLA and the whole retail market. This report will give a detailed history of the claimant’s vehicle and information on like-for-like vehicles being sold in the claimant’s region – right down to mileage, colour and specification.
This transparent, unedited data and display of similar cars on the market enables the claims handler to provide their customer with an accurate value from the outset and prove their conclusion is fair, resulting in quicker settlements, fewer disputes and a reduction in complaints. This same tool is also used by the Financial Ombudsman Service to settle insurance claims disputes fairly and quickly, again showing how accuracy and transparency is key in a fair and quick claims settlement process.
And another advantage of implementing a tool like Companion early in the FNOL process is that it can help identify fraudulent activity. A claimant might have insured their vehicle as non-modified but our unique ability to interrogate previous adverts for vehicles enables an insurer to identify any anomalies.
When it comes to integrating this data flow into their systems, our powerful APIs are easy to integrate meaning quicker deployment and lower integration costs for insurance providers. Our tools let them work with large volumes so they can make the most of our data and insights with minimal manual effort.
CLAIMS HANDLERS COMPLETE 50% MORE TASKS PER DAY
Meanwhile Alps have applied a twin track strategy to the problem. First there is a Taskmaster dashboard software system, then simpler claims can be dealt with using JoBot, an AI solution. Here’s the word;
“In beta testing the claims technology has exceeded expectations. Handlers are now completing 50% more tasks per day resulting in a 13% reduction in cost per claim, and an average 13% uptick in the number of claims settled and closed per annum. In addition, the tools have improved due diligence, service level adherence, and backlog elimination, as well as generating significant time savings and improving the mental well-being of claims staff.”
For decades insurance brands have always tried to settle low value, no injury claims quickly, which frees up staff to deal more effectively with the complex, multi-injury, multi-party claims. So applying the latest AI tech to the less complex scenarios makes perfect sense.
Speaking at the launch of the Alps product, Julian Tomlinson, Chairman at Alps commented: “The FCA has urged insurance companies to get their act together and put claims right. In response, Alps has totally reimagined the claims service so that it’s frictionless, customer-centric, and relevant in the new world of work. We’re an innovative tech-led business. We might be small, but our proprietary technology is the envy of the biggest players in the market. Brokers, claimants, and our own team have been wowed by what we’ve achieved.”
VEHICLE DATA, DRIVER DATA – YOU NEED A 360 DEGREE VIEW
This commentary from Andrew Ballard, (below) Product Principal, LexisNexis Risk Solutions, sums up the value of richer data when it comes to claims. A detailed view of the vehicles involved, plus driver history is essential.
“The motor insurance market remains very challenging and repair complexity and costs are a particular area of concern. It is in response to these conditions that we’re seeing a real hunger for vehicle-centric data enrichment at the point of quote so that the market can price more fairly and accurately based on a granular understanding of the risk.
We’re going well beyond indicative mileage, make and model, to confirm the current status of the vehicle in real-time; deliver valuations based on extensive observations of actual vehicles for sale; provide insights on how the vehicle may have been maintained; and provide a timeline of information across MOT history and keeper changes. LexisNexis® Vehicle Insights will continue to evolve in line with the changing risks of the UK car parc as we gather more data points and continue our analysis to provide value to our clients.
A further specific challenge is the cost to repair more technically advanced vehicles, even though we know that the presence of Advanced Driver Assistance Systems (ADAS) can reduce claims frequency by around 31%ii. Insurance providers are grappling with this dynamic where those additional components and the need to perform calibration post repair, need accounting for.
ADAS features will vary per vehicle. We have also seen marked differences in the presence of ADAS in Electric Vehicles – even in the same make and model. It’s a highly complex area, but we can now confirm at the point of quote precisely how an individual car is equipped and the impact on claims frequency to support pricing accuracy.
Vehicle-centric data will continue to play a hugely valuable role in supporting the motor insurance market.”
TRACKING FUNDS
Philip McGrisken, CEO at Vitesse, has some insights on tracking claims settlement funds. Again the latest tech can help matters;
“In today’s dynamic insurance landscape, tracking funds as part of the claims process is crucial. By implementing robust claims processing systems, insurers can ascertain they have complete visibility throughout the claims handling process, thus increasing their control over subcontractor TPAs.
While TPAs are specialised players offering cost-saving and operational efficiency benefits to claims management, delegation comes with the risk of reduced control. Claim funds managed by TPAs can often swing between being overfunded, which ties up unnecessary capital, or underfunded, which risks delayed claim settlements while new liquidities are called for. Also, TPAs use their own bank, leading to inconsistent regulatory practices at global level. However, by actively managing these processes and creating strong partnerships with TPAs, insurers can overcome these challenges and unlock even greater efficiency. When handled effectively, funds entrusted to TPAs can contribute to smoother operations. The opportunities for collaboration and optimisation in TPA relationships are key to maximising the benefits they offer to insurers.
Innovative approaches are emerging to improve claims treasury management. For example, with Vitesse, insurers can centralise their funds in highly regulated tier-1 banks, delegate and view them in one dashboard, streamlining the process of ensuring funds are always at their optimal level and eliminating the need for cash calls. Tracking funds in the claims process not only mitigates the risk of delays in paying claimants, but also gives insurers visibility and control over their wider financial operations.
Technology is central to this approach, with TPAs and insurers utilising tech in order to efficiently track funds regularly. By embracing innovative solutions, insurers and TPAs can drive operational efficiencies, assure compliance, and mitigate risks.
At Vitesse, we remain committed to driving advancements in claims management through technology and industry expertise.”
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