Solera’s vice president for industry relations tells Insurance Times why increasing inflation is dangerous for claims 

Inflation and the cost of living crisis has impacted claims in motor insurance heavily, according to Solera vice president for industry relations Bill Brower.

Speaking exclusively to Insurance Times at Insurtech Insights Europe in London, Brower said: “The number one challenge [in motor] is inflation – it’s increased so rapidly. I describe it as kryptonite for the insurance industry.”

He explained that customer premiums provide the capital for insurers to pay for claims, but that – if inflation builds too rapidly – premiums earned will not cover increased claims costs, especially if policies were written six months to a year ago.

“Supply chain issues are making the inflation issue even bigger,” he added.

This is because of an ongoing shortage in car parts – compounded by inflation – are increasing the cost of motor claims payments.

For example, Brower noted the average number of days rental cars had to be supplied to claimants while they waited for repairs was 11 days in the US last year, but had now reached an average of 19 days.

“That gives you an idea of how large the issue is,” he said.

Brower has worked in insurance for more than 30 years and previously worked for the likes of LexisNexis and Liberty Mutual.

Touchless claims north star

One way to improve the motor claims sector could be the increased use of technology in the process, according to Solera’s Artificial intelligence is the future of the automotive claims journey report, published last year (May 2022).

The software supplier’s report found that 79% of consumers would trust automotive claims powered entirely by artificial intelligence (AI) – this was up by 7% year on year.

Meanwhile, a third (34%) of respondents said they had completed a motor claim without ever speaking to a human and more than half (55%) had taken photos of vehicle damage and uploaded them to an insurer’s platform.

On a similar note, 69% would choose a repairer using AI to minimise the risk of error in claims and 49% would like a fully digital self-serve motor claims experience.

A further 43% said they would like a hybrid of human and AI when dealing with a motor claim.

Solera surveyed more than 2,000 consumers, original equipment manufacturer dealers, repairers and insurers on AI technology in 2022.

Commenting on the report’s findings, Brower said that frictionless claims should represent a guiding principle for the sector. 

He explained: “Touchless claims are more of a north star – it’s more of where we should be going. [The question is] how do we leverage software technology to give customers an Amazon-like experience?”