The Future of Claims Management
Connected car technology has the power to revolutionize the way the collision repair industry handles accidents. Many private and commercial vehicles now offer connectivity via systems such as OnStar, Toyota Safety Connect and Fleetmatics.
Sean Carey is the president of SCG Management Consultants and has more than 30 years of experience working with all sectors of the automotive claims industry. He has a unique understanding of the needs of insurers, repairers, OEMs, rental companies, technology providers and supply chain vendors. Carey recently discussed with FenderBender the effect that connected car technology could have on the claims process.
How will connected car technology change the way our industry handles accidents?
Because we all want to get in our cars and throw our phones on the passenger seat and continue to be connected to our daily lives, be it as simple as streaming music or as complex as operating functionality that exists in the home or the office, the car is becoming more of an extension of our willingness to have this connected lifestyle.
To this point, the OEMs are working hard to make all of those things happen by adding more and more connective tech into the vehicle. The insurers are looking to extend into that area by connecting to the everyday life through their applications. And to some extent, that includes claim fulfillment. They’re also moving into usage-based insurance. What we’re getting is a convergence of the technologies to a point where we can have all of the technologies that reside in the vehicle make the claim.
What might the claims process look like in the future?
To date, we look at claims in a very linear way. Event A happens before event B happens before event C happens. It starts with notifying the insurer and rental car company, going to get your estimates, waiting for the car to be repaired.
What I’m predicting and what I’m suggesting exists at 90 percent capability today, is a very seamless claims process. Thanks to the car’s sensors, telemetry and communications (such as 4G), the car could today send up messages to a data center of choice or necessity and then pass all that data and send it onward to all of the relevant members in the claims process.
For example, it would start with a message to the insurance company with a data-rich first notice of loss. That would include demographics, geographics, genesis of the accident, what happened a few seconds before and afterward, what part of the vehicle has been damaged, which sensors aren’t working.
At the same time, it can send a message to the rental car company. It will also look at the geographics and the demographics of the vehicle and vehicle owner and search for a body shop. The way it would do that is bounce pertinent vehicle information off a data set to generate an initial estimate. For example, let’s say the vehicle is a red Toyota. It would search a database of hundreds of thousands of red Toyotas repaired and conclude that red Toyotas with this level of damage are likely to cost $2,000 to repair.
Given that information, the system is going to search in the locality and says the shop that best repairs red Toyotas with $2,000 worth of damage is Fred’s Body Shop. The system will then send a message to the body shop that says, this car is on its way to you. It can also send a message to the claimant and says, given all the factors, we think Fred’s is the best place to get this repaired unless you want to take it somewhere else.
The system can also send a message to parts companies that says, this red Toyota that crashed has this much damage and requires these parts. It can also send a message to the paint company by linking the VIN code to the paint code and then send the paint codes and color match directly into the shop’s mixing scheme.
Finally, it can update the customer by continuing to monitor the repair through the shop’s management system, can tie in all of the paperwork that’s come from that, complete the CSI and effectively close the claim book.
How soon do you see this happening? Where are we today?
This all may sound far fetched but the fact of the matter is that all of those component parts exist today. However, nobody is pulling them together in one single place, full start. What I’m predicting is that it’s likely that we’ll have new entrants in our industry. Those entrants will be data managers. There are a variety of telematic service providers out there right now that have the ability to connect all of these parts.
“There are two places where, as consumers, we give up more information than any other area: to be insured and to get repaired, either physically ourselves or our things.”
—Sean Carey, SCG Management Consultants
More likely, however, is that one of the tech giants will become involved. If we look at those, Apple has Carplay, Google has Android, and Microsoft has Sync. These tech giants are highly capable data organizers. Google already has an insurance company and sells insurance through an online brokerage in the U.K., it has cars, and it’s just recruited Alan McNally, the former director of Ford Motor Company, to its board of directors. My suggestion is that this is a company that is looking at the car business, the auto industry and the extensions thereof with great interest.
If they were to enter into the claims world, they would do so on the business model that says there’s a ton of data on the consumer coming from this car. We know about their needs. At a critical moment of their lives, what services can we direct at them at this time? If you think about that, there are two places where, as consumers, we give up more information than any other area: to be insured and to get repaired, either physically ourselves or our things.
Do you think that this claims process is likely to catch on?
Tomorrow’s consumer will expect the convenience and instant gratification that this brings. Whereas I might have been prepared to go get three estimates, my daughter will be completely disinterested in this. As an older generation, we think workflow and the younger generation thinks data flow. We have created a complex claims and repair ecosystem. They will look at it and say, why on earth is it this complicated?
On the insurance side, this kind of technology is on their minds but still only on the horizon. The OEMs, on the other hand, are certainly giving it consideration. What will happen is that someone will make a breakthrough with it and it will become a demanded consumer service. I think as the younger folks start to understand the capabilities the mobile landscape provides them, it won’t be long until there is a breakthrough.
How will this change in the claims process affect collision repair shops?
I think it changes the current influence that the insurers have over shops. That’s because with scorecarding and shop performance values, the shops doing a good job will typically be those that score well. If you’re good at repairing red Toyotas, you’ll come to the top of the list. It won’t be necessary for the insurers to manage costly DRP programs because they will have the scores and details of every shop in the country, not just those that they have chosen on a geographical or historical basis. The data will tell them where it’s best to repair them, not just data based on their limited number of DRP shops. If I’m in an accident and turn to my DRP program, they probably have one or two shops in my locality. If you think of a six mile radius, there are probably 20 shops in that radius. It levels the playing field for all collision repair shops.
As an independent repair shop, all you can do is do a good job every single time you get a car in. If the measurement is going to be all 20 shops in your area, not just the two on a DRP, then you have to be the best shop. They have to stay on top of the latest training and education. It’s very real.