A CAT is defined by a predefined cost, a certain number of eligible policyholders and the number of insurers affected by one event. The Insurance Council of Australia (ICA) is responsible for deeming an event to be a catastrophe.

Common catastrophic events include cyclones, severe storms, tropical storms, floods, earthquakes and bushfires.

We explore some of these significant events, the challenges of dealing with CATs for insurance providers and how they can prepare for this hectic time of year.

CAT events in Australia

Insurance industry leaders and team members are all too familiar with changes to business-as-usual arising as a result of a catastrophe declaration by the ICA.

Such a declaration escalates and prioritises the insurance industry’s response to support policyholders affected by the natural disaster that triggered the declaration. Claims from affected policyholders are prioritised and triaged to direct urgent assistance to property owners most affected.

ICA specialists are mobilised to work with government agencies, businesses, local communities and emergency services to expedite assistance on the ground. Meanwhile, an industry task force is established to address insurance, claiming and other issues.

It’s important to note that a CAT doesn’t only cover the date of the event. Insurance customers have up to six years to lodge a claim under their policy and still dispute the claim in court.

For example, following 2020’s Halloween hailstorm in Queensland 2020, 1.08 billion dollars worth of claims were incurred in 12 months, comprising 44,000 claims. Insurers had received around 26,000 claims by the end of the first week from the day of the storm – less than 60% of the expected total number.

Recent Insurance Council catastrophic events

Widespread CAT natural disaster events have occurred across the country in recent years, with a heavy concentration on NSW and Queensland communities, particularly the Gold Coast, Brisbane, and north and northeast NSW.

Each designated catastrophe is allocated a number by the ICA, with claims data recorded for each on the ICA website.

According to the Insurance Catastrophe Resilience Report 2021–22, the economic impact of the 2021-22 year alone was $6.41 billion (up by $3.9 billion from the previous year), with 380,760 insurance claims.

Here’s a summary of the significant CAT events that have occurred in Australia in recent years.

CAT223: Victorian, NSW and Tasmanian floods

The ICA declared a significant event which was then changed to an Insurance Catastrophe in October 2022 following heavy rainfall and a subsequent flood emergency in Melbourne, central western NSW and Tasmania. Thousands of residents were evacuated. To date, the ICA reported 22,000 claims lodged to a total value of $698 million.

CAT221: Catastrophic flooding event, Australia’s east coast

The ‘rain bomb’, as weather experts described it, first struck Maryborough in South East Queensland and slowly travelled south through Northern Rivers in New South Wales. Three separate weather systems combined to cause devastating flooding in northern NSW and beyond, resulting in loss of life and property.

More than 14,000 houses and over 10,000 commercial properties were damaged from late February to early March 2022, with 241,000 claims lodged. Labelled “Australia’s most expensive flood” by the Insurance Council of Australia, these devastating floods have so far cost the insurance industry $5.28 billion alone.

CAT216: Severe storms in Victoria, parts of South Australia and Tasmania

Winds of up to 100 kilometres accompanied by hail and lightning left a trail of destruction across multiple states in October 2021, with $848 million in losses reported by the ICA for 2021-2022 year.

The role of insurers in Australian natural disasters

Insurers provide rapid response, support and action to support their members to safety and security in extraordinary circumstances. The extent of response and support provided by insurance companies can vary depending on the company’s policies, the extent of the disaster and the terms of individual policies.

Insurance companies provide crucial protection against financial loss, facilitate post-disaster reconstruction, help affected individuals, families and communities recover and mitigate the impact on public resources and government budgets.

But they do much more than that. Dedicated hotlines or emergency response teams are established to help policyholders in immediate need. These teams provide guidance, answer questions, organise repairs and assist with emergency services like temporary housing and repairs.

Customers and members are often distressed, and the kind, caring, considerate and compassionate voices at the end of the line offer clarity and aid when it’s most needed. They are true heroes in every sense of the word.

In recent years, many insurers have also begun sending warning notices to customers when the Bureau of Meteorology forecasts potential emergency events so people have time to prepare their homes and businesses.

Understanding CAT season and its challenges for insurance providers

Insurance companies face several challenges during disaster events, which can impact their ability to respond effectively. Here are some common challenges they may encounter:

High volume of claims. This can lead to operational challenges, including strained resources, processes and systems. Insurance companies must handle a large number of claims efficiently and provide timely assistance to policyholders.

Complex claims assessment. Assessing the extent of damage and calculating appropriate compensation can be challenging in the aftermath of a disaster. Disasters often cause widespread destruction, making it difficult to determine the cause of loss or assess the pre-disaster value of properties.

Catastrophe modelling and risk assessment. Accurately predicting the frequency and severity of natural disasters can be challenging due to factors such as climate change, evolving weather patterns and limited historical data.

Legal and regulatory frameworks. Laws governing insurance operations may differ across regions and states. Insurance companies must navigate complex regulations and comply with specific guidelines while providing assistance and settling claims during disaster events. This can lead to additional administrative burdens and delays.

Fraud. During times of chaos and distress, fraudulent claims may increase. Insurance companies must be vigilant in detecting and preventing fraudulent activities.

Insurance companies can overcome these challenges by investing in disaster response capabilities, leveraging technology for claims processing and risk modelling, collaborating with industry stakeholders, and continuously enhancing their disaster response strategies.

6 tips for improving your insurance team CAT processes

CAT events demand a well-organised and streamlined approach to mitigate damage, help policyholders and facilitate recovery. Efficient CAT season processes play a pivotal role in the insurance industry’s ability to respond effectively to natural or man-made disasters.

Most insurers have a well-defined CAT plan that outlines the entire team’s roles, responsibilities and workflows. Here are some valuable tips to enhance your CAT season processes and optimise disaster response efforts.

1. Establish robust staff policies and procedures

Establishing robust staffing policies and procedures is crucial to ensure a smooth transition into CAT mode when disaster strikes. Consider cross-training staff from other areas of the business, enabling them to back up and expand the CAT team during peak periods. This flexible workforce can provide additional resources and expertise to handle the increased workload efficiently.

Develop backup staffing plans to address potential workforce shortages. Identify critical roles and cross-train employees to ensure coverage in case key personnel are unavailable.

2. Clear reporting lines and authority

Clearly define reporting lines and decision-making authority during a catastrophe. Ensure that employees know who to contact and how to escalate issues or concerns. This clarity helps streamline communication and decision-making processes, enabling a more efficient response.

3. Streamline claims management

Efficient claims management is essential during CAT events. Implement processes that prioritise speed and accuracy.

Leverage technology solutions that automate workflows, facilitate efficient data entry and simplify documentation requirements. Arnie’s advanced automated workflows enable total control over the claim management process, reducing double-handling and labour.

This enables claims adjusters to handle higher volumes effectively while ensuring accurate assessments and prompt settlements for policyholders.

4. Redirect systems and processes

During CAT events, it is vital to redirect systems and processes to optimise resource allocation and workload distribution.

Motor claims management solutions, such as Arnie, are designed to improve systems to spread the load in times of need. Insurers are then able to expedite processes, such as organising an assessment, by proactively having their repairers contact the customer to arrange an inspection.

This allows the insurer to continue managing incoming enquiries and lodgements without delaying the claims handling process for other customers.

5. Specialised operators for different CATs

Develop a team of specialist operators with in-depth knowledge and understanding of specific CAT events.

Assigning dedicated experts to handle different types of disasters, such as storms, bushfires or floods, ensures that claims, repairs and customer support are managed by professionals well-versed in the unique challenges of each type of catastrophe.

6. Automated customer communications

Implement automated customer communication systems to enhance engagement and provide timely updates during CAT events.

Consider sending text message alerts to customers when severe weather warnings are issued. These alerts can provide important safety information, claim filing instructions and other relevant updates. Additionally, leverage system workflows that trigger notifications and updates to keep customers informed throughout the process, promoting transparency and customer satisfaction.

Be prepared with disaster strikes with Arnie

Critically thinking about your CAT processes, both from the people and systems perspective, can ensure your organisation is well prepared to rise to the occasion with disaster strikes.

The general industry plays a pivotal role in managing natural disasters and catastrophes by demonstrating empathy, care and compassion alongside simple, smart software solutions.

Arnie claims management software can automate processes while maintaining quality control and allows staff and suppliers to collaborate in real-time to deliver the best results for your clients. Contact us to book a tour.

Originally published 08 November 2021. Updated June 2023

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The future of the motor claims industry in 2023 and beyond

In 2021 I wrote about tackling the issues in motor vehicle claims in 2021 and beyond, and as we see the headlights of 2023 coming (puns absolutely intended), I reflect on how we have progressed since and the challenges we face in 2023 and beyond.

Common themes were advancing technology, regulatory change and compliance, customer experience, complaints and the rising costs of claims handling and operations. The themes remain; although the individual problems to be solved are becoming clearer, and collaboration with Arnie partners, customers and their service providers is proving to create mutual benefits.

The insurance customer’s view

Complaints relating to a lack of transparency and service are still at an uneasy high. Those who have been involved in recent regulatory change will know the flavor of fair, honest, and transparency is in demand. So what are we doing to demonstrate this to the insurance customer?

Customers are still asking:

• How do I make an educated decision as to whether or not it is worth my making a claim?
• What information are you using to determine the outcome of my claim?
• Where, when, who, and why is this assessor looking at my car in my driveway, and what’s next?
• How long will my car be in the repair shop and when can I expect to hear back?
• How does the hire car option work on my policy?

The insurers’ and authorized service providers’ view

Insurance execs, how’s your digital transformation going? Overwhelming? Budget blowing out? Is the scope going wide? Dependencies are a spider web and a trip hazard? On countless occasions I’ve heard “I want to avoid APIs and integration with that system because it’ll never happen or it’ll cost us an arm and a leg and it’ll never be approved.” When in reality, the alternative is often manual processes, band-aid solutions, impractical workarounds, while excluding the right problem-solvers who could solve the root cause.

Building the automated insurance claims ecosystem

It’s a very simple solution. Connect your software providers and enable them to form a technical and professional relationship so they do the heavy lifting using automation and integration. Systems should be designed to talk to one another. The reality of having a ‘one size fits all’ is slipping further and faster away, and it is imperative that software providers remain open-minded to join forces with experts in other areas. Your insurance customers will thank you for providing an open, transparent and seamless process. Even if the timelines exceed their initial expectations, they’ll feel involved and informed.

Enterprise software providers are able to set themselves apart from many software teams as industry experts and aggregators. I feel fortunate to have a seat at the virtual table when invited to solve our customers’ and partners’ problems alongside them. Often it costs nothing and pays dividends through a deeper understanding of your business and objectives and the ability to share aligned initiatives and innovation.

Here’s a deeper dive into motor claims challenges for insurers in 2023:

Parts

Parts are harder to source and more expensive and experts are even less confident in authorising quotes. We are thinking outside the (insurance) box when finding partners to work with us on this global issue and keep ahead of the game moving forward. Insurance experts including Finity reported in OptimaLite 2022 “inflation on some parts – particularly lampware, grilles, external trim and panels – [are] significantly outstripping CPI inflation in recent years.” The industry predicts inflation will continue into 2023 as we continue to experience vehicle parts and repair labor pressures world-wide.

Second-hand vehicle market

Vehicles are still tough to locate in the complex second-hand vehicle market. Car Concierge services are provided via Arnie as the central platform and platform partner service providers such as AutoGrab enable your customers to get back on the road.

Changes to the repairer landscape

Repairers are under the pump with a shortage of repairers and a higher number of advanced tech vehicles on the road requiring a new set of skills and tools to do the job. There are ways to make the repairers’ job more efficient and less painful when dealing with insurers, which is only going to benefit everyone in the long run. Get your system and process ducks in a row to improve their daily operations while also improving yours.

Moving away from manual claims processes

Service providers and insurers are still handling an obscene number of manual processes to handle claims, including paper documentation, hand-written quotes, email exchanges and an unnecessary third-party software systems for niche tasks. Often a handful of ‘quickwin’ software functionality implementations can transform the process – that’s the nature of continuous improvement.

Automated assessing solutions

Labor and paint times remain inconsistent across insurers and repairers. Insurers are supporting their repairers to introduce systematized and simplified, scientific ways of estimating and quoting repair jobs. With claims and assessing solutions adapting to the same methodologies, manual processing and human intervention will become a thing of the past for hundreds or thousands of quotes and invoices.

Insurers rely heavily on the expertise of motor vehicle assessors to progress with the outcome of a claim. Assessors’ worklists are long and often tasks are time-consuming and labor-intensive. Arnie brings together many sources of assessing evidence to take the repeatable work out of manual research and consolidation of findings. Assessors are able to do what they do best – assess the complex jobs with less administration.

Cyber security

Cyber security is non-negotiable. For software providers and our customers, there are strict governance controls and measures that increase the need for documentation, testing, reporting, evidence and assurance. Cyber security processes and safeguards protect business and customer data, ensuring confidentiality and business continuity.

Repair methods

All repairers, assessors, insurers and their customers want and need to assure all vehicles are repaired to manufacturer standards. As of July 2022, manufacturers must provide these methods to repairers to make the process more accessible for insurance assessors to hand back the keys knowing they are doing business with reliable, safe and sound repairers. Even better, systems can audit and store the information to support it.

Summary

Execution is key in 2023. We have had years to consult, discuss, digest, interpret and deeply understand the problems and impacts. Now we are taking action. With data-driven decisions and leaders to implement change, 2023 shines as a bright year for advancing technology, continuously improving compliance, improving customer experience and reducing customer complaints. Costs will likely continue to be an external force outside (for the most part) out of our control, but what is in our control are many operational efficiencies with cost-saving and other measurable benefits in the interim.

Contacting the Arnie team

The Arnie team would like to connect with you this year to discuss your thoughts on the transformation of the insurance claims industry. Please don’t hesitate to reach out to discuss any aspect of your motor claims process.

The post The future of the motor claims industry in 2023 and beyond appeared first on Arnie Software.

What does it mean to create exceptional customer engagement? Customer engagement is where customers are connected with their services and their service providers. Customer engagement is a defining factor in measuring the strength of your relationship with your customers, whether it be at more regular points of engagement, brief connections or even difficult situations of conflict, complaint and negotiation.

Customer engagement has never been more important in the competitive landscape of insurtech as the customers’ options become more expansive. Our technologically advanced world teeters on the edge of becoming less humane. “Most companies must realize that they are no longer competing against the guy down the street or the brand that sells similar products,” said Dan Gingiss, author and “Experience Maker”.

Of course a customer’s experience will vary by the product, service, person, purpose, location and other factors. Engagement could take place at marketing, sales or service interactions.

We dive into claims handling, analysing the customer engagement gaps and opportunities that exist today. These may be measured by Net Promoter Score (NPS), insurance contract renewal and retention rates, no-touch engagement or selfserviceability (sometimes known as the customer or service agents level of effort required), and my personal favourite, the first contact resolution (FCR) rate; “Was your enquiry solved in your first contact?”

In ASIC’s Information Sheet INFO 253, in respect of providing [claims] services efficiently, honestly and fairly, ASIC states ‘..subscribing to and complying with a relevant industry code of practice…is a strong indicator of your commitment to raised standards that complement the legislative requirements.’ We will therefore reference the GI Code of Practice to demonstrate how the Code can be a value-add to customer engagement [Source: Insurance Council of Australia]. This is not an exhaustive list of obligations and we encourage you to seek professional advice for the purpose of meeting compliance requirements.

The power is very much in the customer’s hands when it comes to the success of claims handling operations. Here are 10 ways Arnie says you can increase customer engagement when handling claims:

1. When lodging a claim

Put yourself in the shoes of the person who suffered a loss. A demonstration of true empathy, attentiveness, responsiveness and support is hard to emulate digitally, but not impossible.

Balancing technology and customer experience is something many insurers have top of mind continuing their customer interactions by phone and face-to-face for this very reason. Our roadmap introduces a claims lodgement platform for customers via mobile to self-service and lodge their own claims and track the status for simplicity and less stress.

General Insurance Code of Practice

Paragraph: 59. If you make a claim, then we will tell you:

A. about our claims process;

B. about any excess amounts you have to cover or pay in relation to your claim;

C. about any waiting or no cover periods that need to finish before we start paying you under the policy; and

D. how to contact us regarding your claim.

Paragraph: 68. If you make a claim and we need further information or assessment, then within 10 Business Days of receiving your claim we will:

A. tell you any information we need to make a decision on your claim. We will use our best endeavours to do that in one request;

B. if necessary, appoint a Loss Assessor or Loss Adjuster to assess your claim; and

C. provide our estimate of the likely timeframe and process for us to make a decision about your claim.

2. When estimating the value of loss

The time between lodging a claim and receiving a response on the outcome from the insurer is often emotional for the customer, with anger and frustration routinely expressed as customers are left in the dark. Our customers see this as an opportunity to keep their customers informed, educating them on the process and what to expect, in turn, gaining further trust and credibility in the very early stages of the claim.

Recent changes require insurers for retail clients to explain and provide evidence to support to a customer at claim settlement where there are settlement options available at law. We understand the risks and repercussions of manually processing these claims and have developed automated solutions to create the consistency, transparency, fairness and accuracy insurance customers and regulators long for.

General Insurance Code of Practice

Paragraph: 76. Once we have all relevant information and have completed all enquiries, we will decide whether to accept or deny your claim and tell you of our decision within 10 Business Days.

General Insurance Code of Practice

Paragraph: 59. If you make a claim, then we will tell you:

A. about our claims process;

B. about any excess amounts you have to cover or pay in relation to your claim;

C. about any waiting or no cover periods that need to finish before we start paying you under the policy; and d. how to contact us regarding your claim.

Paragraph: 77. Our decision will be made within 4 months of receiving your claim, unless paragraph 78 applies. If we do not make a decision within that time, we will tell you in writing about our Complaints process.

3. When explaining what to do next

Think of the additional cover options or product benefits the customers may be paying for as part of their premium. By explaining in plain language if and how this may benefit the customer in this particular situation,trust is built as the customer doesn’t have to dig up their PDS and policy documents and read from end-to-end to figure out how they’re going to get to work in the interim.

Providing accurate information at the time of a claim, reduces calls to retail and product teams and reduces the fragmentation of the customer experience. Centralising your systems and using a source of truth which integrates with other key sources and systems is pivotal when relying on information to share with the customer. Arnie brings together repairers, assessors, policy systems, tow companies and other third parties including hire car companies to achieve just that!

General Insurance Code of Practice

Part 9: Supporting customers experiencing vulnerability

4. When allocating experts and professionals to your claim

It’s common practice for a claim to be assessed either virtually or in person by an expert in the field, usually a loss adjuster or motor vehicle assessor. Insurers rely on the expertise of in-house or outsourced trusted partners.

This is a convenient time to reassure and educate the customer about the process and how it benefits them for the highest quality control and best claim outcome.

General Insurance Code of Practice

Ref: 72. If we appoint a Loss Assessor or Loss Adjuster, then within 5 Business Days we will tell you that we have appointed them and what their role is. An appointed loss assessor or loss adjustor may be an Employee.

General Insurance Code of Practice

Paragraph: 73. If we appoint an Investigator or Employee to investigate your claim, then within 5 Business Days we will tell you that we have appointed them and what their role is. When we appoint an Investigator or Employee to investigate your claim, then the investigation process will comply with the Claims Investigation Standards (see part 15).

General Insurance Code of Practice

Part 3: (General) Obligation to you (the insurance customer)

Paragraph: 70. We will tell you about the progress of your claim at least every 20 Business Days.

Paragraph: 82. If you ask for information or for copies of any Service Suppliers’ or External Experts’ reports that we relied on, then we will give you that information or report within 10 Business Days, as set out in part 12 of the Code.

General Insurance Code of Practice

Paragraph: 204. At least every 20 Business Days, we will update you about the investigation’s process

5. When tracking the progress of the claim

Our real-time claim status tracker enables customers to access a secure portal that provides a real-time status update on the progress of their claim, including repairer allocated, repairs commenced, completed and ready for pick-up. Customers can also subscribe to receive SMS and/or email updates when the status of their claim has progressed.

6. …even the delays and ETAs

Not all bad news needs to create disappointment, complaints or poor experience. We like to see these as opportunities to learn and engage with the customer. After all, we are all human. When unplanned events occur and unforeseen delays impact the progress of customer claims, we understand the importance of being kept in the loop.

General Insurance Code of Practice

Paragraph: 70. We will tell you about the progress of your claim at least every 20 Business Days.

7. When fulfillment is complete and the customer gets their keys back

This may be an obvious one, but can be something to boast about! Your customers are looking forward to having their own vehicle back and putting this claim behind them. Creating the excitement and providing simple instructions of how, where, when and what they need to do from here, including any payments or excesses they may be due for, can really put the icing on the cake at the end of a simple, seamless and fully informed process.

8. When the claim is handled and the customer has had a chance to breathe

There is nothing worse than receiving a survey request when you have just walked in or walked out of a store, unless it’s a sanitized smiley face button at the door of the service station, then that is just simple and super effective real-time feedback. When it comes to gaining feedback from the customer’s experience and how their claim was handled, it doesn’t have to end when they have their keys returned and monies are settled.

Ask your customers by their channel of choice (phone, email, SMS) how it really went.

General Insurance Code of Practice

Paragraph 21. We, our Distributors and our Service Suppliers will be honest, efficient, fair, transparent and timely in our dealings with you.

9. Throughout the lifecycle of a product (even if they haven’t had to claim)

At Arnie, we are fully aware of the insurance product lifecycle, not just the claim. Data insights and intelligent systems now have the ability to let us know when market values of vehicles change, or when the weather is bad and they should take precautions to mitigate loss.

Claims are the tail that wags the dog. With a large range of variables, actuaries, product and pricing teams regularly analyse, parts, labour, material, vehicle technology and other rapidly evolving automotive advancements to inform underwriting

10. Service and complaints handling

Integrating systems with service suppliers and other third parties who have the authority to handle claims on your behalf should create rapid access to lodge or share complaints and feedback with the insurer.

General Insurance Code of Practice

Ref: 26. If you make a Complaint to one of our Distributors, about either us or their conduct, then the Distributor must tell us about the Complaint within 2 Business Days. If your Complaint is about a Retail Insurance product, then your Complaint will be handled under the Code’s Complaints process.

General Insurance Code of Practice

Paragraph: 27. Our Distributors must notify us within 2 Business Days of any Code breaches by them when acting on our behalf.

General Insurance Code of Practice

Paragraph: 36. If you make a Complaint to one of our Service Suppliers about either us or their conduct, then the Service Supplier will tell us about the Complaint within 2 Business Days. Your Complaint will be handled under the Code’s Complaints process.

General Insurance Code of Practice

Paragraph: 37. Our Service Suppliers must tell us within 2 Business Days about any breach of the Code that they are aware of when acting on our behalf.

General Insurance Code of Practice

Paragraph: 71. We will respond to your routine enquiries about your claim’s progress within 10 Business Days.

Part 11: Complaints

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Arnie dives into the issues and opportunities in solving “funny time, funny money” between insurers and repairers.

Try explaining in simple terms what “funny time, funny money” means to someone who hasn’t been along for the ride with insurers and repairers since 2007. And no, there isn’t a punchline.

There’s an opportunity to standardize the way repairers quote their labour rates when it comes to repairing vehicles, for motor vehicle claim repairs. There is currently no consistent calculation of labour rates or times for repairers or insurers to us when estimating and quoting for a vehicle repair.

For example, an insurer could send a quote for repairs to ten different repairers, and receive ten different estimated labour times from each shop. Each of these labour times are then possibly calculated at a different hourly rate per shop depending on the arrangement between the bodyshop and the insurance company.

We break down the pros and cons as the discussions rise to the surface again after several years of negotiations across the trade.    

For insurers today

We have said it before; no one truly knows the cost of a claim. The relationship between the insurer and repairers is pivotal in maintaining profitability, trust, fairness and a foundation for growth. Both parties share the same end customer lodging the vehicle claim, and they pay premiums and excesses which are often driven by the end (claim) cost.

For insurers to price their products and premiums competitively, while fairly supporting the growth of the business, pricing needs to be data-driven. For businesses and systems to be data-driven, the input needs to be high quality, accurate and justifiable. Actuaries are constantly evaluating the risk of customers making a claim, and the opportunity to manipulate the product and pricing for strategic decisions.

With an inconsistent approach to repairers rate quotes, insurers are limited to their own statistical data within their own repairer network. For some, this suits perfectly. For others, comparison and transparency across the industry would strengthen relationships with repairers, providing a wider network to service their claims customers and highlighting deviations from industry standard, not just historical standards for your business or your agreement with the specific repairer. This would be a proactive approach for an ever-evolving industry where labor shortages and technological advancements are increasing the need for industry readiness.

Some insurers have set a rate for every repairer in their network. Some insurers have set rates per repairer, set by the repairer and approved by the insurer. Some insurers have even partnered with an endorsed calculator by an external accounting party to present a fair and reasonable rate per hour. The industry has been unable to agree on a set method to calculate the hourly rate of a repair shop for consistency across the Australian industry. An expected time or effort for repair is sometimes available directly from the manufacturer when relating to panels and reassembly, however other elements of vehicle repairs are still up for debate when standardizing or benchmarking the time for repair. This poses an issue with identifying estimates from repairers which are not fair or reasonable, as this is subjective by both insurers and repairers.

For the repairer today

In order to work with repairers, insurers have to accept a fixed rate per hour of labor. This is acceptable if the rate matches your professional experience, productivity and helps you meet the needs of operating expenses. If not, your performance and business success is somewhat dictated by the insurer, if you decide to join their network and accept business.

If not, you’re limiting your customers as insurers simply may not authorize repairs for the vehicle in your shop.

Particularly as claims handling is not regulated as a financial service, and all insurers are authorizing their representatives to handle claims on their behalf. This means they are liable for any work the repairer completes that does not meet the obligations of the code or legislation.

Like any business, running a repair shop creates overheads including floor space to rent, workshop space, and storage to meet the capacity of the shop. Productivity varies based on the number of staff, their skill level, qualifications and experience, as shops are able to turn around vehicles more efficiently with a highly skilled workforce. Wages aren’t just the cost for the technician to repair the vehicle, there’s estimating costs and general operating costs for the body shop which are not always taken into account.

Another key factor for repairers is the type of repair. Are we talking paint? Parts? Entire panel repair or replacement? Or all of the above? This is why it may not be the best option to apply a blanket rate or time. Some repairs are simpler than others. Further, manufacturers will soon be required to share their method of repairs. This ensures a vehicle is repaired by manufacturer’s warranty specifications. Not to mention when sublet repairers are required to complete the job. For example, when calibration of ADAS technology is outsourced to a separate technician and skillset.

Those repairers who have experienced stagnant labor rates for a long period will benefit from being rewarded for their performance, productivity and skill levels. Particularly as we see the environment for vehicle technology ramp up, requiring repairs to stay engaged and developing their own expertise.

Realistically, any operating repair shop should have a reasonable understanding of their profit and loss, and already be using management programs enabling them to measure their performance, efficiency, cycle time and reinforce quality of repairs. The need to calculate operating and retail rates should only empower the repair shop to better manage their business profitability. It is most likely to be the poor performing and low productivity repair shops who suffer from a loss of insurance business, as the hourly rate will blow out without a set repair time, or they will be spending more on wages than the insurer will have to pay. Thanks to other large insurers in Australia implementing real time, real money back (RTRM) in 2007-2009, there are accounting backed calculators for repairers to access and apply.

How do we find a balance between a profitable repair shop, continued business from insurers, and maintaining the expected level of quality and customer satisfaction while keeping repairs local, convenient and trusted? Arnie demonstrates functionality to manage both, from external data to repairer management.

Real time real money

The Motor Trade Association (MTA) recommends the change from what’s known as today’s ‘funny time’ (inconsistent times), ‘funny money’ (inconsistent rates) to a ‘real time’ (the actual time it takes for the repair), ‘real money’ (the actual cost for the repair business, backed by science and evidence.)

The intent is to find a reasonable expectation for both insurer and repairer to better the opportunity for all repairers to receive business from insurers, and for insurers to control their relations with repairers and highlight the outliers, creating benchmarks for the industry.

NRMA transitioned to RTRM between 2007-2009 across their entire repairer network. Their approach sees repairers submit their repair rates using endorsed calculators by industry stakeholders and accountants, and times directly from the manufacturer, or if unavailable from the manufacturer, sourced by industry professional research centers with evidence-based methods.

The potential for the industry to implement these across the board becomes more viable and beneficial as manufacturers are bound to make their methods of repair available following the introduction of the Competition and Consumer Amendment (Motor Vehicle Service and Repair Information Sharing Scheme) Bill 2021, effective s of 1 July 2022. Currently, there are databases available that centralize this information, plus offer advanced insights for vehicle technology advancements.

With approximately 3,000 repair shops in Australia, and electric vehicles and other technology taking the market by storm, the need for standardization is more important than ever. We are excited to systemize this approach once the industry comes to an agreement so our insurers and repairers can reap the benefits of greater visibility and process automation, simplifying what is now a complex realm for quoting and authorizing repair jobs.

The funny thing is

There are many variables and edge cases to consider. There are significant reasons there has not been a simple negotiation across the automotive industry. These variables include:

• Methods of repair: this information is available from manufacturers, but is optional to adopt and not currently enforced, although some insurers will audit repairer quotes against information.
• Paint: this information is also available from MTA who developed a manual with insurers and repairers and is maintained by the industry. This is also optional to adopt and not currently enforced.
• Labor: there is no standard approach to repairers setting their labor rates for insurance dealings.
• Parts and materials: creates complexity when attempting to acquire parts catalogs, industry standard prices for OEM and secondhand parts, warranties, parts numbers and images, although the industry is getting a grip on this data in parallel.

Arnie integrates with external sources of data that are trusted by industry leaders. Arnie also provides a historical view of repairer times and rates for an alternative, hybrid approach. We are currently developing a solution to support and simplify this change.

The future and how we can help

The MTA is dedicated to protecting and growing the automotive retail, service and repair industry. They’ve recognized the opportunity and have been advocating for change and uniformity in labour rates and times for years.

Insurers are reluctant to change their existing models, unless it is a cost neutral change between insurer and repairer, meaning not grossly marked-up by repair shops.

Repairers want a cash positive model which protects their business profitability, while remaining competitive in the insurance market. Many repairers have remained at the same rates for years, even as the economy and other environmental factors have caused costs to rise exponentially. While there are barriers on both sides of the fence, the benefits of collaboration in real time, real money are profound. Change will rely on industry partners guiding and facilitating discussion and solutions between parties to find a mutual ground.

Through integrated systems and extensive data, an ecosystem is formed to enable a view of a claim from end-to-end. Processes are automated for operational efficiency and we open doors for further machine learning and artificial intelligence.

Arnie simplifies the complex service of motor claims from end-to-end using a cloudbased platform and industry expert consulting and partnership. Arnie supports a landscape where insurers and repairers are working in unison, claims are transparent and streamlined and the end customer is satisfied. We envision our industry where motor claims are sleek and simple; from the customer, insurer, assessor and other third-parties, right through to the repair and finalization of the claim.

Arnie strives to lead the industry as a motor claims expert and partner with insurers, repairers and other industry champions. We understand the issues for insurers, repairers and their shared customers and we look forward to working collaboratively with key players in the industry to produce mutually beneficial changes, supported by Arnie claims management platform.

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The challenge

In the last financial year, Australian Financial Complaints Authority (AFCA) reported a staggering number of complaints from motor insurance customers, relating to the service of claims handling. Over 25% of complaints escalated to AFCA were for general insurance for motor claims. This is up to 2,000 unsatisfactory customer experiences!

AFCA highlights the top five contributing issues:

• Inadequate claim amount
• Denial of claim due to exclusions or conditions
• Full denial of a claim
• A delay in the handling of a claim
• Poor service quality

At Arnie, we know the future of motor claims is accelerating fast, and with the right combination of technology and customer experience (CX), we see through our crystal ball these and other significant industry opportunities will evolve.

The future

Some requirements will never change, such as quality. Quality assurance for damage assessments, repairs and post-repair assessments are becoming more accessible, efficient and more consistent. Artificial intelligence is able to scientifically aggregate complex datasets to minimise the number of manual assessments required by motor assessors and repairers. In the near future we will see a significant rise in the number of claims processed that are no-touch, and as a result, a reduced number of complaints due to delays in claim handling and poor service quality. It’s not all robots and web chats; automation will be carefully articulated to meet the business and customer needs, balancing brand and reputation standards which are commonly communicated through conversation.

Impatient people are forced to be patient everyday, and this could not be more true when it comes to an insurance claim. To be award-winners in customer satisfaction, the future of claims will see insurers providing self-management tools for insurance customers that enable them to take a peek at the status of their claim, predict when they’ll get back on the road, and even keep them informed at the moments that matter without having to ask, creating efficiency honesty and fairness.

Fingers are on the pulse for a significant growth in Insurtech, Fintech and automotive technology as a wider industry. Car subscription services are on the rise, usage-based insurance products are preferred by many, with the pandemic changing the way we drive and own vehicles indefinitely, and with electric vehicle technology becoming more prevalent. Insurers, their claims teams and service providers will develop new ways of working together.

Our roadmap

Arnie’s roadmap is paving the way for no speed restrictions or traffic control for our insurers and repairers. We recognize the opportunity to join the dots to flatten and reduce the curve on claim costs, including the time it takes to handle and settle a claim, which creates high insurance renewal retention rates following a positive claims experience, and builds insurer-repairer relationships.

Our roadmap focuses on key themes to shape the future of motor claims while holding onto the authenticity and power of an excellent customer experience. These themes include:

• Using predictive analytics to augment processes with artificial intelligence at first notice of loss, assessments and repairs, right through to the settlement of a claim, to the customer and reconciliation of claim costs for insurers and repairers
• Controlling the cost of a claim with industry benchmarking to better inform decision-making abilities
• Reinventing the way we inform insurance customers at the moments that matter
• Further automating processes to create operational efficiencies that free up humans for more complex claims handling and forward-thinking
• Optical character recognition (OCR) for detection of key data and automatic processing of information from external sources

At Yarris Technologies we pride ourselves on being people-focused, supported by robust security systems and protocols, industry knowledge and expertise to lead the change, and the experience of a long-standing SaaS company combined with the passion and innovation often seen in start-ups.

We’re electrified by sharing new technology and scalable solutions with our customers who are saving time and money, and in turn, delighting their customers.

What does this mean for insurers?

Insurers will be equipped with the best available information to benchmark the true cost of a claim and contain their costs whilst not skimping out on customer experiences, quality, compliance and security. Actuaries and Business Intelligence teams will have capabilities and insights to what has been some of the claims and repairs ‘black holes’.

The balancing act of technology vs customer experience will no longer require ‘circus tricks’, as system solutions are defined and refined to meet requirements and exceed customer expectations, leaving the claims handlers and repairers to solely focus on the human interaction when it matters.

What does this mean for repairers?

Australia is heading towards a streamlined, regulated method of operations between insurers and repairers. For many decades, disconnected governing bodies complicated the need for customers to be treated fairly and consistently, no matter the insurance company, or the state.

Some insurance companies are leading the way on how they expect their customers to be treated, utilizing company-owned repair shops to deliver outstanding customer experience throughout the repair process, while achieving cost containment.

For independent repairers to excel moving forward, there needs to be a complete mind shift by insurers and repairers, to create an environment of mutual trust and respect. This is the only way for the customer to be the winner and to build a sustainable industry.

This requires the repairer to adopt industry leading systems and processes to integrate with the insurer and assist them to run the shop. These systems enable the repairer to effectively manage their workflow, process and quality, and drive efficiency in the workshop enabling the shop to become more profitable. In turn this enables the repairer to invest in their staff and capital equipment.

What does this mean for insurance customers?

Insurance customers will have the ability to lodge their own claim in the palm of their hand. They’ll be able to retrieve and receive real-time updates that won’t even allow the thought, ‘I wonder how my car insurance claim is going’ to surface.

Insurance customers will see vastly reduced timeframes from their first notice of loss to key return. They’ll be ecstatic with their simple and successful claims experiences, and they’ll be telling their family and friends about their insurance company’s new process. It’s also likely that the happy customer will remain a long-term, loyal customer for many renewal periods to come.

A quick recap of the facts

• Over 25% of complaints received by AFCA last financial year for general insurance were motor vehicle claims
• Claim handling time and service quality are two of the top five issues when it comes to insurance complaints raised and escalated to AFCA

A successful future for motor claims has equal space for human interaction and software solutions and technology. To combat known issues, bring clarity to uncertainty and be prepared for what is likely to come, it’s time to work with partners who understand that there’s a balance needed between the two for greatest growth and retention of your customers and providers.

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My name is Denis Svilicic. I’m the Claims Manager at RAC Insurance. I manage supplier relationships, and act as the conduit for the operational areas of motor and home insurance. We want to make the relationship or the transaction between ourselves and the supplier as efficient as possible, while obviously maintaining those great services back to our members.

The growth and transformation strategy

RAC has had a period of intense and rapid growth enabled by technology, to help us improve efficiency and provide a better client experience. We want the customer experience to be faster and quicker, and also to create an environment that’s self-enabling. The Arnie team offered us flexibility and several innovation initiatives that we’ve driven from RAC.

Working with Arnie

I’ve been working with the Arnie team now for just over eight years. Early on was just gaining an understanding of Arie’s capabilities, but over time it’s become a workflow solution for our operation. We’ve expanded some of those connection points outside of the pure assessing, including our component around invoicing and authorities. We built our workflow capabilities through quality management, through referral, add on services, right through to connecting other suppliers on the platform by leveraging the data.

We’ve recently completed the referral process workflow connecting to the external supplier. Feedback from the supplier has been positive. The hire car process, our most recent new workflow has further supported that seamless experience, which is benefiting our members. We keep refining workflow processes to create a better experience.

Measurable outcomes

Arnie’s integration capability is a big plus. Reducing all of those repetitive click box exercises that frontline staff had to do, which offered value delivered savings in administration costs, by re-deploying those 8-9 staff on more value-added activities. Another measurable outcome was a referral process we created, a total loss integration, which delivered further efficiencies and reduced our time to sell a total loss from four days right down to same day settlement.

We experiment together to test new workflow processes. One outcome we believed was going to give a great experience back to a member didn’t deliver that experience, so we pivoted, creating a different referral process, which not only corrected that, but also enhanced the member experience by another 10%.

Working together, sharing operational knowledge, leveraging off each group’s capabilities to move quickly, and delivering on new systems initiatives has worked really well for both parties.

Business benefits

Automation has delivered the greatest business benefits. The company’s growth has been substantial, from eight years ago to today, almost double in size, but certainly we’ve increased the book size by another 50-60%.

Delivering on ideas and initiatives to automate and simplify have enabled to make sure that we’re very stable and at the same time, managing our costs.

Automotive workflows

Automation of the automotive workflow has been the key, so we don’t need people sitting there performing repetitive functions. The other critical key is the speed of service. Our point of differentiation is that we genuinely believe in giving back to the member in the form of a better experience.

User response

Arnie users are generally positive. The last improvement we delivered was the elimination of a repetitive task that was managed by the call center. They were positive, with comments such as “This is amazing”, “This is great. Can we do more?”, “When’s phase two coming?”

The suppliers also had some very laborious tasks with little visibility of the processes that RACi that were managing. We made improvements to enable them to measure themselves, and provide transparency and reporting.

RACi and Arnie are planning for the AI/ML future

There’s a lot more work to be done around machine learning and artificial intelligence integrated into the platforms that we use. Our plan is to automate workflows and find new ways to explore our historical data to guide decision-making. We’ll be working with the Arnie team on the AI/ML image recognition on the Arnie product roadmap. The images will be another core data set we can use for decision-making. We’re hoping to be an early adopter.

We’ve worked on a multiple complex workflow process initiatives together and the Arnie team has been supportive throughout. Usually, tech companies promise the world and eventually deliver. The Arnie team has routinely executed within an agreed timeframe and cost.

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Arnie OCR digitizes the insurance industry

Insurance companies have an enormous number of documents to manage, store and execute daily. In doing this manually, there is too much room for human error, time wasted in claim processing and the hourly cost of skilled claims handlers are spent on organizing and identifying key information from documents to enter into systems.

Thousands of estimates, Invoices, supporting ‘Proof of Loss’ information and other documentation are sent to Arnie which are currently managed manually by our claims handlers and other key players. Our clients have seen claims volumes increase exponentially in the past 10 years, but they have also seen a reduction in operational expenditure to manage the claims as a result of digital claims management solutions.

As part of Arnie’s process automation solutions we solve these challenges by incorporating Optical Character Recognition technology (OCR). OCR is a tool that optically recognizes text-based and image-based content and transforms the information digitally through data capture and automated data entry. Insurers can execute data analysis, customer services, and other tasks quickly and effectively using this automated data extraction software.

The benefits of automated data capture

Automated data capture enables the processing of large volumes automatically rather than manually. The benefits include:

• Reduced working hours and cost – streamlining information processing and significantly reducing the manual data entry and processing
• Improved customer experience – by cutting time required to process claims as data capture and manual processing is significantly reduced or removed entirely
• Increased compliance and auditability – by reducing manual data entry and improving accuracy from machine-learning
• Scalability of operations – by automating data capture you prepare your claims handling team, operations and customers for the ebb and flow of claims handling demand
• Enable further insights and data analytics – improve and manage repairer and third party relationships, data processing and reporting

Arnie OCR in action

Our clients use OCR technology to:

• receive external invoices and estimates
• automatically capture the information
• to analyze images and characters in images
• populate key claim and vehicle information to progress the claim Arnie’s OCR technology paves the way for future self-service that instantly improves the user experience. To find out more, visit our website and contact us for a demonstration or discussion.

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The challenge

Following an accident, customers want support for their car repair or a quick notice of total loss. The process is daunting and confronting, and can take weeks to conclude in some cases. Many insurance companies produce very low levels of customer satisfaction following the protracted auto claims management process, which in turn causes customer churn.

There are many factors challenging the provision of consistent, accurate and informed estimates on vehicle repair costs, including low levels of automation and lack of availability of car parts data.

Reducing the time to quote

Arnie auto claims management software attempts to tackle this problem. Arnie’s\ AI Repair Estimator is driven by artificial intelligence to automate part of a motor claims vehicle assessment that currently demands excessive time and administrative effort for an accurate estimate of repairs or claim outcome.

Arnie’s new module reduces the number of days to receive a quote for repairs from the first notice of loss, offering best value for money on repairs completed to industry or manufacturer standard. Using scientific and historical data to inform decisions, save time, manual effort and reduce the possibility of human error or unknowns, Arnie transforms the way repairs are estimated with AI.

Estimates vary when left to manual processing, due to:

• Incorrect assessment on repair cost or total loss based on current market value
• Limited exposure to current list pricing for parts, paint or labour
• Insufficient details on a claim, such as images, documents and the accident description
• Variable experience and research

This costs insurers in the long-run, but also costs the insurance customer when claims costs are reportedly on the rise and insurance customer premiums are increased to compensate.

Insurers currently require quotes to be completed by repairers before they are able to complete the vehicle damage details. In just six months, an average of just over 50% of motor vehicle claims had the damage details completed. This means that almost half of motor vehicle claims do not have the necessary damage details to assess, classify and estimate the cost of repairs on a claim. This can result in creating additional follow-up and time delay for insurers and their customers before an assessment can be made. That’s where the Arnie AI Repair Estimator comes in.

The Arnie AI Estimator

By working with key suppliers and thorough research, Arnie automatically identifies objects in images, including damage and identification numbers to identify patterns in large datasets and predict the cost of repairs, ultimately providing the claim outcome; repair or total loss. If the repair estimator deems damage to be repairable, it will even provide a recommendation on the most suitable repairer in accordance to the damage that needs to be repairer, including parts required, the make and model of the vehicle, location and repairer availability.

What does this mean for insurers?

Arnie significantly reduces the need for manual assessment when completing a simple, routine assessment, including the need to navigate and follow-up missing information to complete an assessment. Insurers then control their costs for not only assessments, but the cost of repairs, knowing the estimates are more accurate.

Insurance customers will also see a significant reduction in the time it takes for their vehicle to be ready for repair or deemed a total loss, following a real-time assessment and repair estimate at first notice of loss. This frees claims handlers and assessors to handle more complex scenarios requiring human intervention.

What does this mean for repairers?

Many workshops are now part of an insurer’s approved network, and their performance is evaluated against a range of criteria, with the most common metrics relating to cost, productivity and quality.

Insurance companies evaluate workshop performance by:

• The average cost per repair
• Vehicle turnaround time
• A quality score for all repair work undertaken
• The percentage of jobs requiring rectification
• A customer recommendation score
• Other or no formal measures of measurement

Improved repair estimates from the early stages of a claim effectively manage insurers and the customers’ expectations, providing relevant information to the workshop on the repairs to reduce turnaround time.

The Arnie AI Repair Estimator uses artificial intelligence to improve the consistency and accuracy of repair estimates, reducing the time it takes to manually assess a vehicle and significantly reducing the variables of a manual assessment to provide more accurate costs for the right claim outcome right at the start of first notice of loss.

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