Settlement of motor claims electronic assessment systems ensure profitability
of motor insurance
(best practise examples from Germany, Belgium and Poland)
Dr. Richard J. Nathschlaeger
Tashkent, April 2010
Global Innovation - Local FocusGlobal Innovation - Local Focus
Agenda
• Audatex – a global company with a strong focus on Central & Eastern Europe (CEE) and Asia
• Effective management of claims processes • Best practise examples – Germany, Belgium, Poland• Conclusions
•
• 01 A Global Company with a strong focus on Central & Eastern Europe (CEE) and Asia
The World of Audatex
Solera
San Ramon, CA
Argentina, Austria, Australia, Belarus, Belgium, Bosnia, Brazil, Bulgaria, Canada, Chile, China, Colombia, Costa Rica, Croatia, Czech Republic, Denmark, Dominican Republic, Ecuador, El Salvador, Estonia, France, Germany, Greece, Guatemala, Honduras, Hungary, India, Israel, Japan, Latvia, Lebanon, Lithuania, Mexico, Netherlands, Nicaragua, Panama, Portugal, Romania, Russia, Serbia-Montenegro, Slovakia, Slovenia, South Africa, Spain, Switzerland, Turkey, Ukraine, United Kingdom, United States, Venezuela
5
Central and Eastern Europe (CEE) in the Audatex World
Audatex GAS
SAN DIEGO, CA
Audatex CEEAudatex North-America
VIENNA, AUSTRIAMINDEN, GERMANY
Solera
SAN DIEGO, CA
Audatex UISA
READING, UK
ABZ
ZEIST, NETHERLANDS
AX Ibero - America
SAO PAOLO, BR
Audatex BEFIG
BRUSSELS, BELGIUM TOKYO, JAPAN
Audatex-APACAX Ibero-America
Audatex is the only global provider of claims management solutions
• Revenue: 600 Mio. $
• Global Network of over 100.000 users
• 2.100 employees in 54 countries
• Brand “Audatex” now also used in North America
• Over $60 million annually in product development – more than twice our leading competitor
• Nearly $30 million annually in database development – four times our leading competitor
Countries in CEE
Audatex – CEE in 2010
AT- 1969
PL-1997
HU-1994
SK-2004 BY
RU-2003
CZ-1994
RO-2005 EE
LV RS
SlHR
BA
MDTR-2008
UA-2004
LT-2009
Market Development
Local Focus :Central and Eastern Europe Region
Voice of our customer
• Big 5 insurers go CEE
• Allianz, AXA, Generali, Uniqa, VIG
• Manufacturer’s go CEE
• VW, Dacia-Renault, Kia, Hyundai, Peugeot
• High economic growth region
• Demand for electronic workflow partner
• New Customer quality expectations
New Audatex CEE Region
• Meet and exceed customers high
expectations
• Respond and capture dynamic
market developments
• Underline global knowledge, local
focus
AX-CEE: Facts & Figures
• HQ in Vienna,
• 100 employees in the region
• Product development center in
Poland
Opportunity: Action:
Audatex-CEE Region Introduction
• Audatex in CEE consists of:• 10 local country organizations
• AT, Baltics, PL, CZ, SK, HU, RO, RU, TR and UA
• 9 countries are supported out of the established country organisations:• 5 Balkan countries (Slovenia, Serbia, Croatia, Bosnia,
Bulgaria) from CEE-Headquarter - Austria• Belarus and Moldavia from Ukraine• Kazakhstan and Uzbekistan from Russia
Audatex-CEE Strategy
• Audatex CEE will continuously reinforce its position as world class estimatics services provider,
• Audatex CEE will continue to build up its standing as a premier claims services provider along the entire claims value chain, delivering on precise value propositions and improving inefficient, mostly paper based workflows,
• Audatex CEE will strive to become the trusted partner of all our regional customers for identifying business improvement opportunities and realizing them jointly with flexible online-offline solutions.
Future Countries in CEE
• CEE offers still a lot of opportunities for expansion
• Audatex-CEE will follow its customers
• Database can easily be localized
• 02 Effective management of claims processes
Largest part of premiums written goes to claims handling activities
Product development & Risk management
Network development
Sales Claims handlingHealth indemnification
Repair
5% 5-10%10-15% 10-15% 0-30%+ + + + 30-70%+
Repair value control - example Ukraine in 2009
• 30% use professional tools
• 15% use less professional tools
• 55% use “best guess” principle
Repair value control improvement
• Completely exclude “best guess” principle• Use professional tools
• Sign only professional body shops for partnership• They have knowledge & know-how
• Exclude fraud • Control everything, even the smallest claims!!!!
Three steps to reduce claims costs effectively
1. Encourage market to use one “calculator” for estimation of damage amount• 40 years of history • 85 manufacturers• Customized for 52 countries
2. Connect all users with offline/online solution – which is currently:• Central database and case management• Сommunication between partners • Additional documents handling (pictures, invoices etc.)
3. Connect all users with online solution – which will provide with:• Profound and logical system of case and partners management• Claims history based on global market data – possibility to prevent fraud• Advantageous statistics possibilities – may be used in underwriting
•
• 03 Best practise examples
• Comparative Market Overview – Germany, Belgium, Poland– Market dynamics– Basic motor claims data
• Challenges and opportunities– Based on the market evolution insurers face different challenges– How to make the claims process faster, better, cheaper
• Conclusions
19
1 Motor Claims Handling in Germany
2 Motor Claims Handling in Belgium
3 Motor Claims Handling in Poland
4 Conclusions
20
Germany - strong manufacturers’ position, independent assessors and market consolidation
German Market
Manufacturers are a channel for insurance policy distribution
Market consolidation reducing number of bodyshops and assessors
Insurance carriers trying to reduce claims costs
Key Forces @ work
Manufacturers acting as bodyshop operator and dealers
Manufactures trying to prevent margin erosion for after sales
Strong position of independent assessor organisations
21
German Market
Source: Audatex
Motor Claims
8200
8300
8400
8500
8600
8700
8800
8900
9000
2004 2005 2006 2007 2008 2009
Year
# of
Cla
ims
('000
)
Number of Claims per Year ('000)
Average Severity EURO
2850
2860
2870
2880
2890
2900
2910
2920
2930
2940
2950
2960
2004 2005 2006 2007 2008
Year
Average Severity (AXDE)
22
Insurers face constant pressure to improve service at a lower costSeveral steps have been taken by the market participants to increase efficiency
• Reduce severity:– Standardized electronic estimate is required for every claim
– Implement the research results of AZT for painting and repair
– Increase the accuracy of the estimate through VIN vehicle identification
• Automate and rationalize the communication– Between assessors and insurers
– Between repairers and insurers
– Involving all other parties – towing and rental companies
• Waste and fraud reduction– Automatic SLA management
– Automatic dispatching and review via Claims Filters
– Electronic handling of paperwork, photos, etc.
23
1 Motor Claims Handling in Germany
2 Motor Claims Handling in Belgium
3 Motor Claims Handling in Poland
4 Conclusions
24
Belgian Market
Insurers• 34 Insurance companies
Assessors• 265 Assessors
– 199 independent– 66 affiliated with insurance
companies
Repair Shops• 2909 Repairers
– 1791 brand tied – repair only specific brands
– 1118 no brand
Wreck Buyers• 497 Wreck buyers
Importers• 30 Importers
Car Parc• 4,929,284 cars• 523,161 vans• 152,505 trucks• 355,933 motor bikes
Claims• 650,000 Claims per year
– 56,575 total losses– 1.12 million Audatex calculations
• Some of the lower repair averages in Western Europe
All claims are estimated and handled through the Audatex platform
Source: Audatex
25
The Audatex platform enables fully electronic and flexible process for everyone
Audatex Platform
Experts
Insurers
Repair Shops
Total loss buyers Importers
WAN
26
Prerequisites for the Belgian model
• Full cooperation among the insurers– All have implemented the World Audatex Number – WAN
– WAN allows the process to start with any of the partners– WAN facilitates the settlement on TPL claims
– All vehicles are identified through VIN
• Single independent provider of claim services– Audatex does not take sides– Constant innovation together with all partners– All big partners sit on the Technology Advisory Board– Independent monitoring of partner performance
– Non-compliant partners are excluded from the hub
• Rules based automation of the workflow– Automatic approval based on claim size and complexity– Intelligent routing of jobs (to assessors and shops)
27
1 Motor Claims Handling in Germany
2 Motor Claims Handling in Belgium
3 Motor Claims Handling in Poland
4 Conclusions
28
Poland – a market in transition
• PZU today controls 40% of the motor insurance market
• Direct insurers are opening up and growing fast
• Heavy competition has translated into a price war
• Insurers are focusing on closer cooperation with their partners to create competitive advantages and ensure higher satisfaction for the policy holders:
– Reduce the number of non standard manual estimates– Move toward automated workflow with the repairers, assessors– Optimization of the internal workflow through removing redundant processes– Developing incentives for selected partners
29
Poland - Market Statistics
Average Claim Amount (USD) 2,144 - Rapidly growing car parc
- Decline in severity in 2005/6 due to large
influx of old cars from EU
Source: Audatex
Motor Claims
1'200
1'250
1'300
1'350
1'400
1'450
1'500
1'550
1'600
2004 2005 2006 2007 2008 2009
Year
# of
Cla
ims
('000
)
Claims Frequency - Average Number of Claims per Year
Average Severity
2'080
2'100
2'120
2'140
2'160
2'180
2'200
2004 2005 2006 2007 2008 2009
Year
USD
('000
)
Average Severity (claim amount)
30
Poland - typical “old” mistakes
• Internal mobile assessors were sent to inspect every claim
• Only 30% or less of repairable claims go to Preferred Repair Networks (PRN)
– No control over the non PRN repairs– 70% of non PRN claims took up to 10 times more time to settle
• Shops were forced to lower labor rates– High attrition among PRN shops– Authorized shops avoid PRN contracts– No way to verify the compliance of the rates used to the contractual
ones– Questionable quality of repair => negative impact on customer
• 50% of claims were paid out without proof of repair– High levels of fraud – same damage claimed at several insurers
• Large number of manual estimates
31
Poland - Recent Improvements
• Reduced work for the insurer– Estimates are required in standardized and mostly electronic form– Reduced number of process steps– Internal assessors focus on “real” challenges– Opportunity to automate process steps through software tools
• Ability to “sell” the PRN from the beginning– Learn about the claim as soon as possible– Drive more work to the shops– Involve shops (PRN) from the early stage to reduce rework– Control labor costs in the estimate
• Increase the % of controlled repair to control fraud
• Apply policy to control non PRN repairs
32
1 Motor Claims Handling in Germany
2 Motor Claims Handling in Belgium
3 Motor Claims Handling in Poland
4 Conclusions
33
Best practices summary – faster, better, cheaper claims management
• Standardize the process – deviations create waste – Use standardized electronic estimating tools (Audatex is customized and
operating in 18 countries in CEE) – Analysis shows savings potential of a minimum of 8% to 10% of the total repair
cost
• Involve all relevant parties in a structured electronic way
– Create PRN’s if market dynamics allow
• Steer the claim to the PRN to get best service at lowest cost
– Drive more work to trusted shops– Involve shops (PRN) from the early stage to reduce rework
34
Best practices summary – faster, better, cheaper claims management
• Employ tools to reduce severity– Manage fraud by reviewing every estimate in an automated way– Electronically control all SLA’s
• Increase accuracy of planning - Reserve assignment, reinsurance, statistics
Improve customer satisfaction at lower cost !
Thank you !