How auto insurers can use automation to future proof

The auto insurance industry is facing major changes as costs rise, consumers shift purchasing behaviors, and automation takes over. On top of all that, the state of the economy is enough to make any organization uneasy. However, now is not the time to hunker down. In fact, it is quite the opposite; the industry is going to continue to change and if companies don’t take measures to actively keep up and stay ahead, they will find themselves behind the eight ball as we head into a tech-forward future.

For this reason, now is the time to optimize your processes and embrace technology to truly future proof your organization for whatever this changing industry throws at us next.  

There are a few large factors contributing to the massive industry changes. One such factor being the rising costs of auto insurance and manufacturing parts for the aftermarket. These costs can be attributed to accelerated inflation as the rate of inflation begins to rise once again since coming down earlier this year. In fact, for the automotive repair industry specifically, the inflation rate has averaged a raise of 20% over the past year. 

Prices are also influenced by increasing labor challenges across the insurance, manufacturing, and auto industries. For example, the shortage of skilled technicians and mechanics is driving the price of their time and expertise through the roof, leading to higher prices for customers. The lack of skilled labor has also extended repair times, further raising claims costs and worsening the customer experience. 

Changing consumer behavior

We’re also starting to see a shift in consumer purchasing behavior on a couple different fronts. For example, younger generations want to make purchases that align with their values. This could be why Gen Z and Millennials are embracing initiatives like the Subaru Love Promise. 

In that same vein, sustainability has been pushing electric vehicles, which can complicate the repairs, maintenance, and claims as auto shops and insurers adapt to this rise in popularity. The economy has also had an impact on purchasing behavior as consumers hang on to their vehicles for longer, prioritizing repairing old cars over replacing them. However, older vehicles require more extensive maintenance and can lead to higher premiums and deductibles, less coverage options, reduced collision coverage, and more.  

Additionally, consumers are becoming more accustomed to digital services. In fact, according to a Solera report, almost 80% of consumers trust – and expect – the use of artificial intelligence (AI) embedded in the claims process. Even more, 70% would switch insurers for faster digital services, and that number continues to grow every year. 

Leveraging technology to retain customers

With the demand for digital services at an all-time high and increasing still, if insurers don’t begin to adapt, the rapid changes will leave them in the dust, unable to get out from under antiquated systems that will eventually spell their doom. This is why now needs to be the time to start leveraging the technology available. By embracing emerging technology like AI, insurers can future proof their businesses and stay competitive and relevant as industry changes mount. 

A great place to start is by implementing automation which can be done in several different ways. For example, half of consumers desire full self-serve auto claims, so this is a good one to start with. By implementing automation like chatbots and virtual assistants, companies can give the people what they want, retaining customers along the way. 

Using smart mobile apps and allowing customers to upload photos from their smartphone using augmented technology, companies can give customers back a sense of control and increase efficiency, further improving the customer experience. A completely AI-driven touchless claims process can also help push sustainability efforts forward by becoming paperless. 

The industry is going to continue to change as the world around us impacts consumer behavior and expectations, costs, and labor challenges. However, we know one thing to be true: the insurance industry is undergoing a digital transformation. To successfully navigate this transformation, companies need to adopt technology – even small increments are better than nothing. And, while today’s economy continues to give pause to companies’ initiatives, now is as good a time as ever to start future proofing.