June 2, 2021
Key to Transformation for Auto Claims
by John Goodson
AI is critical to processing and assessing all inputs and removing friction. Yet AI alone cannot deliver transformation.
The word “transformation” is overused, and yet here in the auto insurance claims industry there is no better word for a process that is being changed so dramatically from beginning to end, and at every step in between.
But real transformation, while claimed by many, is in reality only enabled by the exceptional few. That is because transformation occurs through a collective, inclusive effort, not a silver bullet technology. And complete transformation requires the active participation of the end-user, to ensure higher levels of acceptance and satisfaction. Transformation must be good for the business and the customer, or it will likely not take hold at all.
Foundational to Success
Digital transformation is the essential driver behind how companies will add value and deliver services to their modern customer, a customer who expects and trusts digital interactions. AI is critical to processing and assessing all inputs and removing friction. Yet AI alone cannot deliver transformation.
Let me explain.
We know data availability is increasing rapidly across multiple dimensions – volume, velocity and variety. In the last two years, more data was created than in the entirety of human history. This is a fraction of the data that will be available in the near future as connections continue to multiply, becoming increasingly bi-directional and informing virtually everything. Right now, there are more than 50 billion connected devices in the world, and connected cars are emerging as an important digital platform.
Artificial intelligence is the only way businesses can leverage the tremendous amounts of data available. AI synthesizes all of this data. This is positive and necessary. But AI output is often delivered to humans, reviewed offline and paused before actions occur. Companies have to eliminate this pause and disconnect in the process to transform their operations. AI decision-making must be digitally connected to operating systems or consumer interfaces or both to drive action and to create a truly elevated, digital experience.
See also: Transforming Auto Claims Appraisals
Relevant mobile technologies, network connection management and industry-specific workflow applications are required to activate AI, automating tasks based on that data to speed up and simplify lengthy and complex processes. The auto insurance claims process is an ideal candidate for such transformation. Our industry needs to connect AI to technologies that drive action.
Here’s an example of how a transformed auto claim experience can look to your policyholder when AI gets put into action with mobile and network technologies:
- Pat enters his vehicle in the morning. The app on his phone activates and begins tracking his trip so that his auto insurance policy premium is calculated for only the time he is in transit, based on the policy he selected upon enrolling.
- On arrival at his employer’s office parking lot, Pat accidentally scrapes the side of his vehicle on a pillar.
- His vehicle and app automatically detect the incident and offer Pat the opportunity to submit the incident to his insurer to determine if a physical damage claim should be opened.
- Pat decides to proceed and immediately receives a text link with instructions about how to take a few smartphone images of the damaged area and text them to his carrier.
- Pat is immediately notified by text that the damage is minor and that the car can be safely driven but that the repair cost likely exceeds his policy deductible by at least $500.
- Pat decides to file the claim and receives a text with a list of nearby repair facilities, including consumer ratings, shop certifications or specialties and availability.
- He taps a few links and schedules the repair, and once he arrives a pre-arranged temporary rental car will be waiting for him.
- Pat continues to receive status updates from his insurer until he is advised what time his vehicle will be ready for pickup or delivery, as preferred.
Note that the steps described above begin and continue with AI-enabled decision-making and workflow management. Out of view of the policyholder, AI and digital connections are powering the parts ordering process, and the repair facility is digitally paid by the insurer within hours of the vehicle being delivered. Without these enabled technologies, a digital end-to-end experience would not be possible. But when combined with the other elements, the result is transformative, completely digital.
Sourcing the Data That Powers AI and Drives Decisions
The relationship between the ability to reliably predict outcomes and the absolute volume of historical claims data leveraged to train the software is directly proportionate – the greater the amount of relevant data used, the better the outcome. We frequently hear from our insurance clients of all sizes that the volume of data needed to develop reliable algorithms is greater than even the largest insurers have available. CCC has processed more than $1 trillion of claims-related data, which we put to work to develop hundreds of actionable AI models. And while data relevancy is essential, another key difference in AI efficacy is the use of a combination of AI disciplines. Deep and machine learning and business rules combine to deliver the most reliably predictive, comprehensive results for faster, smarter resolutions.
Deep learning is an AI method that uses historical data to inform which action is likely to lead to which outcome. Let’s take photo-estimating as an example. To train an AI model that can review smartphone images from a collision and predict whether a vehicle is repairable versus a total loss, the AI model needs to learn from historical data: photos of other car crashes, as well as the claims data that accompanies those photos regarding the parts, labor, cycle time and medical assistance needed for each claim. The question is: Does the AI model have enough historical data to make that prediction actionable? A few hundred images are helpful, but decades’ worth of wrecked car images and related metrics make the AI model far smarter. Another question: Can the AI model sort out the anomalies from the requisite data set? Can it learn from them?
Another key discipline is machine learning, which allows historical data to be influenced by behavioral or pattern changes that might make recent actions more likely to occur again. Let’s say you have been a Facebook visitor every day for the last five years, but more recently you’re only visiting Instagram. In this case, the majority of data would say you’re going to visit Facebook again, but recent activity would suggest Instagram is a better prediction. Why does this matter? Vehicles and parts are not static. New cars and parts are introduced continuously; if an AI solution is going to be effective, it needs to base predictions on data that can account for recent behaviors, not just historical data.
A less sophisticated, yet foundation disciple, includes the use of rules. A rules-based approach can offer helpful predictions when historical data is not available or recent activity is not accurate enough to ensure a reliable prediction. Suppose that an inbound technical support email contains the word “urgent” in the body. A rule is triggered, and that email is forwarded to someone who can immediately act on it. These types of rules can get into extremely complex decision points, leading to hundreds of potential rules, some of which may even conflict with each other. This is why rules-based AI is an incomplete approach that can fall short in accuracy and reliability. Yet, because data and domain experience aren’t required to create rules-based AI, it is a helpful starting point that can assist companies to begin the journey of automating complex workflows such as auto insurance claims.
See also: Auto Claims: Future May Belong to Bots
When It All Comes Together – A Reimagined Insurance Experience
When the claims experience is working in harmony as a result of automated, AI-enabled decisions and all the needed inter-company, inter-industry integrations, not only will the insurer’s customer’s experience be maximized but real hyper-personalization can be achieved, meaning that each insurer’s individual customer will enjoy an exemplary service experience in the manner and method that they expect and prefer.
Industry transforming technology is here and ready to be combined in time to meet consumers’ evolving expectations. Insurers are in a position to connect AI, mobile and network to transform what’s possible.