A refreshingly different viewpoint and focus on vehicle claims- addressing the needs, motivations and challenges of the body and repair shops that actually get policy holders's vehicles back on the road.

This reflects the impact of supply chain and other disruptions I wrote about in A Perfect Storm is Brewing in the Auto Insurance Industry

Tower chief claims officer Steve Wilson is quoted in Insurance Business NZ : -

Insurers cannot take supply chain partners for granted. Not just in auto insurance but also home & property. Even Rolex and other luxury watches are facing supply chain shortages and HNW policy holders and insurers can expect delays and claims inflation.

“As an insurer, we know what our needs are for our customers’ vehicle repairs,” noted Wilson. “From a traditionalist sense, that meant that we would need to get assessors involved, to go out on-site and negotiate with the repairers what the right cost and method of repair is, and then authorise those claims. And that can be quite a bottleneck for the customer, but also for us as an insurer and the repairer. So, what we’re asking for is for the repair industry to tell us, ‘What are your thoughts on how this should work?’

“And we know things are changing in that network as well. There is a change in the vehicle claims that come through – we saw through COVID there was a reduction in claims. But, also, vehicle technology is changing quite rapidly. The vehicle change that we would all recognise is things like PHEVs (plug-in hybrid electric vehicles) also being recognised by the government and rebated. We’ve seen a 60% increase in what we’ve insured for PHEVs as well.”

With more modern vehicles coming on the market, said the chief claims officer, also required are better skills, better training, better tools, and a stronger technical capability.

He highlighted: “Some of that is to do with the electronics of repairing EVs, but for most of it it’s actually just about the repairability of the materials. Because there are different types of steels now, and you do need to know which steels can be heated or which need to be cold-repaired. This changing technology is adding costs to repairers to keep training up… So, by going out to the repair industry, we’re asking them, ‘How do you want it to work? What’s your best way to do this?"

Wilson shows an awareness that the supply chain cannot be taken for granted. 

In December last year a major supply chain partner for home insurers in the UK described the challenges he faced and he he would be selecting the insurers he worked with based on TRUST.

"Home Claims Challenges are interlinked and include:

  • Covid on staff, mobility, and economic impacts
  • Supply chain restraints and delays internationally and nationally
  • Materials and components shortages and backlogs
  • Price inflation on goods, materials, and labour
  • Large projects still playing catch-up
  • Climate change, severe weather damage and claims resilience
  • That specific UK issue- Brexit

The CEO of the Gelder Group (Insurance Repair and Renovation & Construction) , Steve Gelder, painted a picture of how these factors interlink and impact contractors, insurers, policy holders.

Take tradespeople who are leaving contractors and specialists to take advantage of increase labour rate offered elsewhere. They can get more money elsewhere and it is so much harder to retain vital skilled people. Sub-contractors are just about coping but squeezed by labour and materials price inflation, difficulties making cash as debtor days extend and more money tied up in extended work-in-progress (WIP). Many are reducing their insurance exposure making matters worse for home claims.

Schedules of Rates- always more dynamic in the UK compared to the USA- are obsolete as price inflation rockets and instability will extend into 2022. Cost-plus pricing becomes a norm and claims price inflation is rampant.

Gelder has set a policy to deal with those companies his people can respect, like and trust.  New customer or supplier? Think again. That has an enormous impact for the insurer’s supply chain team.

Gelder had a dramatic image to share- the number of touchpoints for a property claim which seem to have multiplied and create confusion, delays, and extra cost. Pity the poor Contract Manager he said- the worse job in property restoration and repair.

Gelder asked insurers to: -

  • Reduce the number of people managing each claim
  • Dynamically update schedule of rates
  • Deal in fact (reliable data)
  • Improve payments timing"

Full article: -

Home Claims, Industry Challenges and the role of Technology discussed at 'I Love Claims' Conference

Steve Wilson of Tower has taken that to heart in his plans to partner with the repair networks. How many others are taking the same approach?