Insuranceciooutlook

Connected Auto Claims: A Smoother Road for Drivers and Insurers

By Dawn Mortimer, AVP-Product Management, Verisk–Insurance Solutions

Dawn Mortimer, AVP-Product Management, Verisk–Insurance Solutions

Tech is disrupting and rapidly transforming all aspects of insurance, not least in the claims process. When it comes to reporting, filing, and managing an insurance claim, customers are better able to have their claims handled effectively, providing closer engagement at one of the customer’s most stressful times. Imagine a claim filed within minutes of a car accident—with the customer consenting to an insurer obtaining information right from the vehicle, combined with policy and claimant information pulled from linked databases. That essential data can then have analytics applied, including predictive analytics, to help identify fraud or process a claim as quickly and efficiently as the customer expects, almost at the point of claim.

"It’s now clear that digital technology, telematics, and machine-to-machine connections enabled by the Internet of Things (IoT) are disrupting traditional insurance business models"

Such technologies will also transform first notice of loss (FNOL) into instant notice of loss (INOL). When FNOL becomes INOL, first adopters will be rewarded with successful customer acquisition and retention. Insurers that are first to market with prompt settlement will likely become a threat to the rest of the field. Speed and efficiency should lead to reduction of claim operating costs as well as better damage assessment and improved claim outcomes—all critical to reducing insurers’ loss ratios.

Analytics: Key to data

It’s now clear that digital technology, telematics, and machine-to-machine connections enabled by the Internet of Things (IoT) are disrupting traditional insurance business models. The capture, transmission, and analysis of real-time data for losses support insurers’ efforts to reduce loss costs, lower loss adjustment expenses (LAE), and increase consumer satisfaction. To reach that point, analytics and predictive modeling need to be applied to the data. Without analytics, insurers will probably struggle with interpreting data and may fail to maximize use of models that enable them to streamline processes, modernize workflows, and implement straight-through (no-touch) claims processing—the ultimate goal.

With rising accident severity and major catastrophic weather events squeezing already-thin profits, insurers struggle to allocate capital to IT initiatives, including FNOL. Yet, developing FNOL solutions and making them operational are critical to leveraging automation, improving claims triaging andcustomer satisfaction, and reducing expenses.

From coverage verification and accurate loss reserving to claim settlement, subrogation, and litigation, FNOL is where property or casualty insurers get the best information pertaining to the loss. For example, if two cars were to collide, upon impact, one vehicle’s onboard sensors and computers would begin gathering critical information, reaching back to the seconds before the crash and blending those data points into a precise digital narrative of the event. Throttle and braking inputs; changes in the car’s direction, orientation, and speed; points of impact; deployment of airbags—all this and more would begin to guide the insurer’s claim process.

People as priority

The priority should be the well-being of the people in the car. Depending on the severity of impact, a vehicle’s built-in sensors would activate an automated response system and prompt an automaker’s call center to notify first responders, based on GPS-determined coordinates of the crash. The vehicle engages a call center to assist the driver with any medical emergency or accident needs, such as ambulance, police, and towing services. If the driver is safe and uninjured and the car is matched to a participating insurer, the automaker’s call center then can offer the driver an immediate transfer to the car’s insurer to initiate the claim.

In the background, much more is in motion. An insurer mobilizes partners as soon as it learns of a loss. GPS data guides dispatch of the insurer’s local towing partner to recover the car and bring it to a preferred repair facility. If a customer needs temporary transportation, another partner of the insurer (potentially a local rental car agency or car sharing service) is sent to the accident scene to help the driver get back on the road promptly. Sensor data projects the nature and extent of damage, providing insights for physical damage and injury triage, assignment of an appropriate adjuster, and whether the car is likely to be repairable. If so, parts ordering can begin within minutes. If a total loss appears likely, the car is towed directly to storage or a salvage yard.

Tapping into the “black box”

Sensors also record where the car’s occupants were seated, which seatbelts were fastened, which airbags deployed or nearly deployed, and what forces may have impacted the driver and passengers. All of this, joined with models and historical claims data, gives an insurer a head start on injury triage, estimating appropriate injury payouts, and reserving accurately for the incoming claim. Readings stored in the car’s electronic data recorder (EDR), or “black box,” are joined with photos, video, and weather and traffic data to begin reconstructing the accident and guiding the apportionment of liability.

In the recent 2018 State of FNOL: Industry Claims Report from ISO (a Verisk business), respondents identified that such information is collected both through decision trees (31 percent) and through a more automated rules engine embedded in their claims system (4 percent). But the majority of respondents (38 percent) used scripts, which are considered the least efficient information collection technique. Despite the reductions in cycle time that could be gained from implementing FNOL efficiency solutions, the majority of respondents (48 percent) currently have no plans to do so within six months to a year.

For insurers seeking a new solution, FNOL prefill (14 percent) and IoT ortelematics (9 percent) were among the innovation investments. With taxed IT resources and limited investment dollars, insurers may be struggling to move forward with FNOL efficiency solutions. Even so, insurers should consider that telematics represents a growth area that will bring exceptional efficiency and accuracy when connected car data from automakers and usage-based insurance (UBI) programs transform acquisition of claims information.

While insurers have made some strides toward increasing efficiency and accuracy, much needs to be done to prepare for the future of INOL, which requires fast and efficient claims intake and processing.

A fully automated claims process isn’t for every insurer, but it doesn’t have to be an all-or-nothing proposition. Telematics-based services can be layered to allow each insurer to choose the level of service it provides or to take a stepped approach toward increasingly sophisticated models that deliver top-notch customer care. All along the way, collaboration is critical—with data exchange partners, automakers, telematics service providers, and the on-the-ground vendors that interact with customers alongside the claims adjuster. From the heart of these partnerships will come timely and reliable multisource data.

Read Also

A Partnership Designed to Support High-Performance Analytics

A Partnership Designed to Support High-Performance Analytics

Scott VanValkenburgh, Sr. Director Alliance Management, SAS
Why Your Next Insurance Claims Processor Could be a Robot

Why Your Next Insurance Claims Processor Could be a Robot

Rod Dunlap, Director, AlsbridgeReducing Costs and Boosting Efficiency through Robotic Process Automation Against the backdrop of rising healthcare costs, insurers seek to optimize the use of technology to automate critical tasks and improve efficien
Business Continuity and Disaster Recovery - Business Technology Insurance

Business Continuity and Disaster Recovery - Business Technology Insurance

Martin P.Rose, CIO, Pinellas County Government

New Editions