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Predicting the future of technology, estimatics and automotive claims

estimatics

As we came to a close of 2023, we took the time to look at what 2024 might have in store, identifying the top predictions we’re expecting to see across the technology and estimatics arena, as well as for the wider automotive claims industry. Here’s what we think:

There will be more used vehicles on the road

The past 12 months have shown an incredibly unstable financial landscape for the automotive sectors and consumers. Global inflation and rising fuel costs has caused buyers to hold off on their new car purchases, looking instead for cheaper, alternative ways of getting around. As a result, more and more used cars have become the preferred choice, and it doesn’t look as though that trend is going to drop any time soon.

According to latest data from Cox Automotive for the used car market in 2024, the baseline scenario for used vehicles is predicted to be 7,350,205 transactions, equating to a 2.8% year-on-year increase.

This is thought to be shaped by issues such as a gradual adoption of used battery electric vehicles (BEVs), a moderately recovering economy and carefully managed growth in the supply of used vehicles, however the Cox Automotive report says that the  current monetary value of used cars continues to cause alarm, indicating a situation that might not be sustainable in the long term.

This is especially concerning when considering the economic backdrop, the overall cost of motoring, the increasing availability of new vehicles, and the fact that the unprecedented rise in vehicle values over the past three years has halted.

Motor Insurers will need to achieve customer-centricity

Under the new Consumer Duty FCA which came into place in July 2023, firms should be open, honest, and support others to pursue their financial goals. Under the duty, consumers should expect: 

  • Helpful and accessible customer support, so it’s as easy to sort out a problem, switch or cancel a product, as it was to buy it in the first place
  • Timely and clear information that consumers can understand, so they can make good financial decisions
  • Providers to offer products and services that are right for the consumer, rather than pushing products and services they may not need
  • Products and services to provide fair value, meaning consumers should not be unfairly charged with unexpected costs.
  • And that firms should consider if consumers are in a vulnerable situation such as experiencing financial troubles

These rules now apply to all new and existing products and services that are currently on sale, and with such a strong focus on the new Duty Rules, we made it a priority at GT Motive to adapt our working processes to ensure these rules were met.

For Insurers, this means they now have a bigger role to play in helping prevent risk, mitigating loss severity, and closing gaps in global markets, especially in the face of the growing number of what appear to be financially unsupportable risks.

To achieve this level of purpose transformation, it’s expected that throughout 2024, insurance companies may need to adopt new technology, including generative AI, to harvest actionable insights from any new data at the industry’s disposal. Industry convergence for access to more information sources, products, and services, as well as talent with the skill sets and know-how of emerging capabilities are becoming table stakes.

But this transformative change will likely have to go beyond adding new tech. More proactive insurers are also beginning to embrace enterprise-wide culture change to reduce silos, elevate their talent, and help drive a more consistent and integrated customer experience.

Car insurance costs will remain high

Motor insurance prices are expected to continue rising into 2024 as concerns grow that people could be forced to cut back on what is a key financial safety net.

According to the Consultancy Oxbow Partners, a staggering 14% overall increase has already been evident across motor insurance premiums this year (2023), with an additional 6% increase expected across the board in 2024.

This prediction is also supported by Robert Passmore, spokesperson for the American Property Casualty Insurance Association (APCIA), a trade group for property/casualty insurers, where he comments that “inflation is probably the biggest factor impacting the cost of auto insurance because inflation is affecting the cost of everything, and that includes many of the things auto insurance pays for, such as the cost of repairing vehicles.”

Mark Friedlander, spokesperson for the Insurance Information Institute also supported this, saying that “auto insurers continue to raise rates because their loss costs, such as accident claim payouts, are outpacing the premiums written.”

Ultimately, this is because when car insurance companies pay out more than what they take in, their natural response is to raise rates to try and reverse that trend, and unfortunately, the Insurance Information Institute predicts that the personal auto insurance sector will not be quick to recover in 2024.

Complex auto repairs will become more expensive

In addition to the increased price of parts and rising labour costs throughout 2023, the technology used in new vehicles has made them more difficult and expensive to repair.

In fact, the 2023 Crash Course study by CCC Intelligent Solutions predicts that the cost of car repair will ramp up even more as because:

  • Repairs need more parts, so more labour hours are required
  • Vehicle parts are more expensive due to newer material types
  • Replacing parts requires specialised labour skill sets that lead to more expensive labour costs
  • It’s harder to detect all of the damage upfront, leading to supplemental claims for the additional repair work and technician expertise
  • High demand and low supply of parts like semiconductor chips have hiked up vehicle prices, which means car insurers are paying out more for total loss claims

All of this combined means that longer repair times will leave drivers needing to keep their rental vehicles for longer periods too, contributing to higher claim payouts and compelling insurers to raise premiums even more so.

Technology will need to be embraced

As Insurers continue to pass on higher costs to customers and benefit from rising interest rates, this is predicted throughout 2024 to lead to moderate tech budget increases as well as more appetite for technology and product innovation.

Latest data from Forrester reveals that technology spending will see a 5% growth to tackle customer experience (CX) and foundational capabilities throughout the next 12 months, with Gartner also forecasting that the worldwide IT spending will grow 8% in 2024.

For Insurers, this means they will face the decision of re-investing in improving CX, increasing revenue, or reducing costs. However, technology teams are expected to invest in areas that deliver on all three priorities throughout 2024, in ways such as moving toward in-house development and exploring open-source technologies.

According to Gartner, the largest growth in technology spend will come from software at 13.8%, and IT services at 10.4%, followed by data centre systems at 9.5%, devices at 4.8% and communications services  at 3.3% throughout the next 12 months.

Future thinking with GT Motive

Moving into 2024, our goal at GT Motive is to help create a smooth process for all stakeholders by improving efficiencies throughout the entire claims journey, so your customers can experience a quick repair, and get back on the road as quickly as possible.

To do so, our cloud-based estimating solution offers complete accuracy, as we’re able to constantly update our data points to ensure our entire supply chain have the most precise data, always. This includes new vehicle models being added bi-weekly to our OEM prices, which helps us offer a 96-98% car parc coverage, making our system a highly reliable tool for a claims department.

Request your free GT Motive trial today.

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