Why full automation is short-sighted

Why full automation is short-sighted

This interview was first published by Insurtech Insights.

Ernie Bray is passionate about technology – he understands why there is so much potential behind AI, machine learning and video estimating. But, he cautions, there is a time and a place for tech. The touchless utopia some in the industry are wishing for has downsides, too.

Bray says:

  1. Investing in digital is essential, but it doesn’t mean everyone should buy into the hype of AI
  2. Virtual estimating also has a time and a place – it doesn’t work in every scenario
  3. Too much self-service could create resentment from customers

What industry ‘pains’ put ACD on the idea of helping insurers succeed with claims in the digital age?

I spent seven years in the auto side of insurance working for a few major carriers and the one thing that struck me was how inefficient the auto claims process was. There was the use of old technology, there was fragmentation – I knew there had to be better way, so I set out on connecting all the pieces.

The pain points insurers have really come down to finding ways to remove needless steps and administrative tasks that bog down the adjuster. This delays the claim as adjuster are spending an inordinate amount of time doing tasks that aren’t core to their job.

ACD’s goal is to help insurers drive efficiency in their operations. We see ourselves as consultants to our clients as my team brings decades of industry knowledge to the table. We like to sit down and analyze each client’s process to see where we can add value.

We often find ourselves collaborating with a vice president of claims, innovation director or an auto physical damage manager, strategizing how to effectively optimize the entire claims process.

ACD serves as an extension of a client’s team, working toward the common goal of delivering a streamlined workflow which ultimately leads to an exceptional customer experience. The key for any great partnership is flexibility. Carriers often use more than one technology or service provider for a number of reasons. That’s why it’s vital for third-party vendors to collectively work together through APIs, open workflows and mutual collaboration.

Pre-pandemic, many insurers were tentative in moving toward digitizing the claims process. They often felt the cost and time wasn’t worth the effort but when everyone had to move to a work from home model, the scramble to find digital solutions that deliver was pushed into overdrive.

I think in many ways, minds were changed due to necessity, but now digitization has shifted to become a priority. But in my mind, it’s critical to maintain flexibility. Insurers who have fragmented their process by patching a network of virtual estimating companies, various field appraisers and desk review firms end up managing a Frankenstein-type workflow. Instead, insurers need a unified platform with built-in intelligence that can determine the best course of action and shift seamlessly, when needed to avoid delays.

How has ACD leveraged technology to ease and speed up the auto claims process?

Over eighteen years we’ve tapped into the collective brain trust of our customers, clients and vendor partners, in combination with our vast subject matter expertise, to really build something that we feel delivers a superior technology platform for clients to manage the auto damage appraisal process.

We look at the auto claims process as a whole, but we’re focused like a laser on the “material damage” niche. With our technology platform, adjusters can submit damage appraisal assignments for field appraisals as well as upload photo estimates and desk reviews. This is where the magic happens – where high-level of communication and live real-time updates are found. With intelligent dispatching and routing algorithms, the right appraisal resource is identified based on a pre-screened vendor qualification vetting process. When you can be ultra-effective with the match, claims are processed faster by adjusters and the quality is better.

When I think about it, ACD is delivering a unique technology-powered vendor management matching service. Add to it our consulting expertise and support staff, and you have a very innovative technology solution that allows insurers to quickly drive efficiencies and digitize a process that previously was exceedingly labor intensive.

What do you think are some necessary realizations insurers must come to, in order to succeed in the digital age, and during COVID-19?

I feel strongly that insurers need to realize that investments toward digital or virtual claims are absolutely essential. Those who lag behind risk losing market share and simply being unable to remain competitive compared to those who embrace digitizing the claims process.

Today’s consumer and policyholder demands personalized service yet one that allows for a digital experience. For insurers now it’s nearly an assumed requirement to meet their customer where they want to be met and have a process that can flex throughout the claims process. If insurers aren’t able to work with people in multiple ways with digital as the backbone during the “moment of truth” (the claim), those folks will likely search for a new insurance company after the claim is completed. Knowing this is a make-or-break moment, insurers who embrace digital solutions are increasing the chances of a better experience for their customers.

Another risk some insurance carrier adopters need to be mindful of is not to buy into the hype of digitization beyond what can really drive results today. Remember, most insurers can make huge gains without worrying about artificial intelligence (AI) and machine learning. AI sounds exciting and I’m very passionate about it myself, but much of the AI hype won’t really move the needle for a traditional claims operation at this time.

Another fallacy is the belief that photos or virtual estimating, basically touchless, is the wave of the future. Virtual estimating is a great solution for the extremes – minor, low-complexity losses (without injury) or obvious total losses where simply documenting the extent of damage is required. But for those claims, where the vehicle sustains heavy damage, liability is contested and injuries are present, photo estimating isn’t the solution. Often times, a claim requires precise measurements that are key to the defense of a litigated claim and relying soley on an untrained eye and a standard set of photos could jeopardize the outcome.

ACD strongly believes that photo estimating, when used correctly, is the right solution. But all too often we’ve received assignments from insurers where they chose virtual estimating and it failed miserably. In the end, a field appraiser was needed to go out and do clean-up.

In what other ways is technology being used to reduce friction in the auto claims process, and where do you see the demand for such technology evolve among insurance carriers?

Anytime you can use technology to augment the decision-making power of an adjuster or appraiser in the claims industry, you’re exponentially increasing the productivity of your staff, and at the same time, speeding up the claims cycle time. These drivers all serve to increase the chances of a better customer experience. Just imagine if you can instantly decide whether to total a vehicle or move it to a shop for further inspection. You cut out wasted time, the customer is informed quickly, and you trigger the routing of a file and start the associated tasks that will ultimately lead to resolving the claim.

I think the demand for more and more workflow efficiency focused tools will rapidly accelerate as insurers realize that wasted manual task expenses can be minimized or reduced. And here’s what you gain – technology when properly meshed with highly trained claims personnel can deliver a much better experience to the customer. Policyholder retention will grow and the investments made will pay off. The key to all this happening is that insurers take the steps to roll out technology that makes sense to their unique company.

Looking forward, how do you think technology can be used in a more efficient way for ensuring a smooth claims process? And how is ACD planning to evolve going forward?

ACD sees technology, AI and the digital process as tools to modernize, enhance and augment the expertise of the adjuster and the appraiser to help drive those better decisions.

Having the right information at the right time is key during the claims process and if you look at ways to leverage technology to accomplish that, you’re headed in the right direction.

As passionate as I am about technology, I think there’s a huge risk in pushing a completely touchless claims utopia that I see out there. Trust me, when I’m at my local home improvement store and I’m using a scanner to check out while the employee stands and watches, I ask myself, “Why am I doing their work and paying them?” I think too much self-service and automation in the claims world can lead to resentment from the customer/policy holder. Especially when they’re paying large premiums and are now dealing with a claim which is one of the most stressful times for a person. I think the thought of eliminating humans from the process as much as possible is short sighted.

Ernie Bray was interviewed by Kristoffer Lundberg, CEO at Insurtech Insights.