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The new battle ground in automotive claims: humans v. technology

balance

With the evolution of claims management technology, the Canadian insurance industry is experiencing a major shift from manual to automated claims processing. However, the battle between humans and technology does not have to be a zero-sum game. A recent article titled Leakage published in Claims Canada, argues that failures in existing processes (automated and manual claims management) cause inefficiencies, resulting in greater dollars lost.

Claims Canada defines “leakage” as “the difference between what an insurer should pay in claims under a contractual policy, and what it actually ends up paying.” I believe the solution to controlling claims is much more complex than investing in new technology to reduce overhead costs. Rather, I believe the solution is finding a harmonious balance between automated and manual claims processing.

When it comes down to it, a computer or software program, thinks faster than a human can. It rarely makes mistakes, and has a larger and more reliable memory. It never gets tired, and it creates a linear, streamlined claims management process. However, a computer is unable to talk to customers and to make expert judgement calls. There is always an element of human intervention needed to help insurance companies accomplish their objective- getting customers in the position they were in prior to the loss.

In the era of digital disruption, customers have become accustomed to high-quality,personalized service. Thus, manual claims processing is largely out of date in today’s environment. Insurers must keep abreast of customer needs in order to streamline the automotive claims process and get their customers back on the road faster.

The priority of an insurance company is to manage claims quickly and efficiently. In order to accomplish this, they either use independent appraisers or staff appraisers (both in the field or through an “image desk” with accompanying technology). A staff appraiser still needs the same tools, software, and technology to prepare estimates. An independent appraiser comes in hand when geography and volume are far too high for staff to fill, or when specific expertise is needed to handle a claim.

In both cases, appraisers require the use of software solutions to manage claims and make accurate and fair judgement calls. Technology alone, however, does not help insurance companies make a valuable judgement as to the state of certain claims, and no two claims are alike. The right balance between technology and human intervention needs to be achieved when there are larger claims with more money at stake. This requires management and expertise to steer the claims in the right direction.

Newly embedded vehicle technologies are providing for significant decreases in the frequency of automotive physical damage claims. A recent report shows auto-braking vehicles have cut claims by 45 per cent. While we may see a decline in the number of “minor” claims, there is a trend of higher-severity claims due to the costs of newer vehicle technologies. As a result of these trends in frequency and severity, insurance companies need to refine their processes accordingly. New technology is not the only solution for streamlining automotive physical damage claims.

Striking a harmonious balance between claims management technology and human intervention could be the win-win solution for avoiding claims leakage. Manual processing techniques are out of date, and automated processes cannot provide value judgements.

When appraisers use technology to streamline the claims process in a way that reduces human error and inefficiencies, we move closer to minimizing claims leakage. Insurers seek a consistent and sustainable claims handling practice but must also understand that there will always need to be some degree of flexibility. It is a harmonious balance between people and technology that will allow the claims process to meet ever-changing customer demands.

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Vic Wiwchar has over 30 years’ experience in multiple areas of the Canadian insurance industry including claims, underwriting, pricing, business development and strategic initiatives. He has performed in both a front line and senior management roles in both a regional and a head office environment with leading insurers and insurance service providers. Vic’s educational background includes aChartered Insurance Professional designation, a graduate degree from U of T, executive-level courses at Queens University as well as specialized training in several insurance disciplines. He has also chaired and participated in various Insurance Bureau of Canada sub-committees. Vic currently works as a Director of Business Development at Audatex Canada.



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