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Insights beyond numbers: The role of advanced analytics in insurance

Utilizing data assets & technology for post-catastrophe recovery

Knowing and being ready for the effects of natural disasters depends on a networked ecosystem based on reliable data and analytics. To better address the most urgent requirements in the event of a crisis, restorative measures can be implemented more successfully.

With its path of devastation across the United States, Hurricane Idalia last year caused around $2 billion in total insured losses on the private market, not to mention thousands of people’s hardships.

In 2023, the United States had numerous costly natural disasters, Hurricane Idalia being only one of them. There have been 28 documented weather-related or climate-related disaster incidents in the United States so far in 2023 that have resulted in losses more than $1 billion. This contrasts with the previous five years’ average of eighteen events per year that resulted in losses surpassing $1 billion.

The financial cost of these occurrences is enormous: this year’s catastrophes resulted in insurance claims totaling $92.9 billion in losses from, among other things, 19 strong storms, two floods, one tropical cyclone, one wildfire, and one winter storm.

Insurance companies all around the United States are vital to the process of rebuilding communities and reducing the actual and relative magnitude of damage that follows natural catastrophes, especially as the business deals with the aftermath of more and more weather-related incidents such as Hurricane Idalia. Insurance companies can no longer successfully respond to rising demand and workloads using traditional techniques.

The restoration efforts of insurers can be impeded by the time-consuming and difficult nature of legacy operations. They frequently entail laborious or repetitive work, which is particularly difficult given the severe labor shortages and high employee turnover that the property insurance and repair industries are currently facing as a group.

Additionally, as more insurance companies deal with a lack of workers and an increase in storm-related claims, they must be able to rely on cutting-edge solutions from throughout the ecosystem to help them accomplish more with less. In addition to compensating for a deficiency of human resources throughout the insurance supply chain, contemporary solutions allow carriers to concentrate more on assisting the individuals making the claims.

Cutting-edge advancements

To fully integrate their processes for best performance, carriers and contractors work together to resolve claims. To this end, all parties require advanced technologies. If carriers and contractors don’t have access to the newest advancements, they run the danger of using antiquated practices and ineffective technologies, which can prolong restoration project cycles and leave impacted folks without help.

Alternatives to the conventional status quo technologies, which frequently call for extensive human interaction, are becoming more and more popular. The most recent technologies offer AI-enhanced, data-driven strategies that help impacted communities recover more quickly. By collaborating with insurtech firms, insurance providers, and restoration contractors who are pursuing these more cutting-edge approaches, they can better navigate the changing landscape that is rife with issues like staffing shortages, employee turnover, and an increase in the frequency and intensity of natural disasters. For instance, carriers can control resource deployment to reduce fraud, increase efficiency, and shorten claims life cycles by utilizing extensive data assets and intelligent AI-driven technology.

High-quality data-enabled technology also makes it possible to forecast extreme weather events more accurately, allowing property owners to better protect their properties from the effects of natural catastrophes by identifying high-risk locations.

In any situation, carriers and contractors may fulfill their commitments to policyholders and achieve their business objectives with the support of an appropriate digital environment. Professionals in insurance and restoration are not only more productive and efficient thanks to technology; it also increases their ability to provide policyholders with individualized client experiences at critical times.

The essential human element

People encounter insurers during their most trying moments. Insurance professionals who deal with the public must put people first. A human-centered insurance industry uses the most recent advancements in artificial intelligence (AI), machine learning (ML), and data analytics to provide customers with streamlined services both before and after an occurrence, including quick, focused restoration. AI-driven technology and automation also free experts from manual, repetitive chores, giving them more time to concentrate on the people who create the policies. Professionals can spend more time assisting people in rebuilding their lives if they spend less time on tedious duties like updating records, discovering networks of contractors, and going through papers.

Insurers need to provide individualized client experiences and human engagement based on specific demands when communities are devastated. This can only be accomplished by utilizing cutting-edge, contemporary technical advancements.

To have a functional integrated ecosystem, insurance carriers need to strategically implement cutting-edge technologies. To ensure that all users and stakeholders have access to the most recent information regarding each policy and claim, an integrated ecosystem is a digital architecture made up of technologies that link and share data. In addition to helping communities recover and rebuild after disasters, this helps insurers to focus their efforts and show compassion while offering individuals consistent, straightforward experiences during otherwise confusing periods. What advantages do homeowners receive from tech-forward insurance specifically? They provide innovative services.

To provide families with the prompt confidence and support they require after a tragedy, forward-thinking businesses can provide explicit service level agreements with well-defined objectives and timetables.

Preparing for disasters and mitigating losses

As crucial as it is to mobilize efficient recovery mechanisms, property owners and the insurance companies also need to be proactive in anticipating and mitigating the extent and magnitude of any severe weather-related disaster. Insurance companies with risk-aware staff members are better able to build policyholder trust and proactively prepare them for catastrophe. By comprehending risk and property vulnerability, carriers can also better design their catastrophe response protocols.

Risk reduction is aided by an abundance of property data. Examples of data from which actionable insights can be extracted are market listing, geographic, building permit, occupancy, crime, demographics, mortgage transaction, construction cost, natural hazard risk, and catastrophe modeling data.

For insurers, assembling, integrating, and validating the numerous underlying data sources is a greater difficulty than simply gaining access to the data. This is the situation when obtaining the degree of detail in data needed for individual property insurance.

Data analytics businesses have created risk models with the required level of granularity and regular updates using AI and ML, making them dependable sources of information for insurers. Insurance companies can use this information to proactively contact policyholders who are literally in the line of fire.

Insurers can obtain detailed information about the risks associated with areas by adopting a data-led approach. Having the required quick reaction mechanisms in place allows them to underwrite policies more successfully. Using AI and ML-powered technology, insurers can more effectively evaluate risk and related mitigation measures at the property level, automate and streamline workflows for maximum efficiency, maintain open lines of communication with policyholders, and comply with regulatory requirements with ease.

Prioritizing people

Meeting the evolving needs of homeownership will fall to those operating throughout the insurance ecosystem as climate risk rises. Despite the common misconception that technology is impersonal, the truth is that with the correct data and technology, providers may devote more time and resources to their clients, resulting in a truly human-centered experience.

7 shifts defining collision claims in 2024

Both the number and intensity of claims increased in the previous year. Going into the new year, auto insurance companies, collision repair shops, and automakers faced a perfect storm of uncertainty due to these trends, an already overworked parts supply chain, and the unprecedented autoworkers’ strike. What impact will 2023’s occurrences have on 2024’s collision claims? These are the seven tendencies that OEMs, insurers, and repairers need to be aware of.

1. There are more and more claims filed. As of early 2022, there has been a 1% increase in collision claims. Car owners are still getting into accidents even though there are more Advanced Driver Assistance Systems (ADAS)-equipped cars on the road. An over dependence on ADAS technology and distracted driving are the causes of several of these collisions.

2. There is an increase in the average cost of repairable claims. Repairing a car properly and safely can be expensive depending on several factors. early 2023 saw an increase of around 8% over the first half of 2022 in the average cost of a repairable claim in the United States, which topped $4,700. Annualized growth typically ranges from 3% to 5%, therefore that is a significant increase. For the foreseeable future, anticipate annual growth of 8% to 10%.

3. More cars that are involved in collisions are probably going to be fixed rather than written off completely. We predicted at the beginning of the year that the value of secondhand cars would decline. Prices are still high in part because of the United Auto Workers strike and its aftereffects on inventory. Furthermore, the average price of a new car in the United States is expensive at almost $47,000. Because of these increased costs, auto insurers now have a higher threshold for total losses, which indicates that more collision-damaged cars are probably going to be fixed today rather than being declared total losses.

4. The slowly declining repairability will continue. The materials that car manufacturers choose to use are one factor in this. While aluminum body panels can be repaired, it is more likely that the crash energy from the collision caused a pattern of damage that makes a repair unsafe due to the panel’s material qualities. Of the items on estimate, 17.5% were repaired at the beginning of 2022. It reached 17.1% in 2023. The capacity to fix parts is also being hampered by ADAS, which is now a requirement for all new cars. Consider the existence of a millimeter-wave radar sensor concealed behind a bumper cover, for example. There might be less possibilities for the expert to fix it if the bumper is damaged. Many manufacturers demand the sensor be replaced to ensure it keeps working correctly.

5. Parts now make up a larger portion of the estimate overall. About 1% more pieces are on collision estimations now than there were a year ago. A rise in the typical number of parts utilized in each repair is partly to blame for this. In the past, adding one extra part per estimate required four to five years. Now, it requires roughly a year. The fact that a replacement item now costs about $275—an additional $75 over 2020—makes that noteworthy. Although it has decreased from its peak in 2022, inflation is still partially responsible for these growing expenses, especially for aftermarket parts. Single-digit price hikes for OEM and aftermarket parts are probably in store for this year. Nevertheless, a lot will rely on how the autoworkers’ strike plays out in the end.

6. From early 2024, anticipate a modest increase in the portion of parts budgets allocated to aftermarket components. The freight problems that occurred at the beginning of the pandemic are thankfully behind us. Parts inventories were affected by the disruptions in addition to other aspects. Inventory levels for aftermarket providers are stabilizing, despite the future of consumer transit being uncertain and depending on how companies handle efforts related to returning to the office in the long run. A quarter of a percentage point more was spent on aftermarket components in the first half of 2023 than there was in the same period in 2022, with 21.5% of parts dollars going toward them. Until early 2024, the slight growth should persist.

7. By the end of 2024, 40% of calibrations may occur. 17% of repairable autos in the US have regular calibrations. That percentage is expected to rise dramatically in 2024, maybe reaching 40% by year’s end and possibly 60% by year’s end. The typical model year of vehicles that can be repaired is one factor contributing to this. In 2022, it was 2015 for the first half. Imagine that it was 2016 in 2023. It will be genuinely revolutionary when we reach the point where 2018 becomes the average model year. Every single car made in 2018 and beyond has at least one ADAS technology, which makes recalibration after repairs more necessary.

Repair frequency and costs will rise as more OEMs want calibrations for a greater range of accident scenarios. As of right now, the average additional cost for all calibrations included in an estimate is $500. While this raises the cost of repairs, collision facilities that want to keep cycle time under control and bring the work in-house may find new revenue streams as a result.

Navigating the path forward

These trends make it evident that our sector will need to be flexible by 2024. For instance, insurers need to be ready from an underwriting standpoint given the anticipated increase in calibration frequency. Collision shops, on the other hand, run the danger of losing their profit margin to a sublease unless they make the necessary investments in the tools and training to do the work internally. Carriers might also be obliged to modify their rates to strike a balance between costs and profits, given the high average cost of repairs. Furthermore, vehicle body shops ought to consider utilizing technology to accelerate crucial stages in the restoration procedure, which can enhance productivity, decrease cycle times, and regulate costs.