Times are Changing
There’s no getting around it; today’s vehicles are fundamentally different when compared to those we remember from the past. Vehicles were seen as machines to get people or goods from A to B. A vehicle rolling off the production line today however can be better described as an entire ecosystem of overlapping technologies. From simple cruise control all the way up to cutting-edge ADAS, complex protective aluminium and full electrification, modern vehicles are more the sum of their technologically advanced parts than they are individual machines. This has a profound impact on the insurance industry and associated networks, requiring a corresponding level of innovation to cover new features.
An unintended side-effect of turning traditional vehicle parts into connected devices that facilitate driver safety, are the substantial repair and replacement costs. An ADAS-enabled windscreen on a Ford Focus can cost £770 to replace when damaged, while the costs of repairing high-end electric vehicles spiral immediately due to the inability for many of them to be conventionally towed. All in all, the repair costs of many vehicle parts have more than doubled in recent years, according to Thatcham Research. Even with all the funds and time necessary, finding repair centres capable of fixing connected vehicles can be a challenge. This is emphasised by the $250,000 investment repair centres must make in order to operate on aluminium vehicle parts – a barrier to entry that may lead to a significant shortfall in market-ready body shops. Fleet operators and insurers are therefore charged with finding methods of mitigating such unpredictable and ever-increasing costs.
Unfortunately, the answer isn’t simple. Connected cars are here to stay, and some costs will remain inevitable. Prevention, of course, is better than cure, so reducing incidents that lead to expensive repairs and replacements from occurring in the first place should help to manage the issue.
Big Data: The Key to Closing the Cost Gap?
Today’s high-tech vehicles produce massive amounts of data. Advancements in technology, alongside legislation such as eCall, means almost all new vehicles sold from 2020 will include connected-car technology. Such technology was previously only seen in telematics devices. At Concirrus, we believe that data is the key to reducing the maintenance and repair costs associated with connected vehicles. The data produced from existing telemetry can give operators and insurers the tools they need to better understand and act on individual driver risk. Profiling drivers based on their data and early intervention can prevent costly incidents from taking place.
With our Fleet platform, we’ve given insurers and operators the tools they need to realise proactive and automated risk management. By providing a suite of options, ranging from automated advisory texts to automatic policing of policy restrictions, fleets and insurers can handle dynamic risks. This includes the management of variables such as speeding, mileage and excessive driving time. We’ve found this proactive, scalable approach to risk management can reduce total incidents by as much as 10%. When even the most basic repairs can cost thousands, reducing a tenth of all incidents can be an invaluable asset to your bottom line. In fact, our actuarial research suggests these tools can improve an operator’s loss ratio by 12% or more.
Finding a Repairer Network
Proactive risk management may save a significant amount on your bottom line, but some incidents will of course slip through the cracks. When the worst does happen, ensuring you have a repairer network in place that is as prepared as you are for the growing number of high-tech vehicles is essential to saving time and money on repairs. Assuming your current repair shop of choice is fully prepared may be a mistake. Many body shops struggle to source the parts and expertise necessary to repair or replace advanced vehicle equipment. By partnering with a larger repairer network that can prove its capacity to repair such parts, you’re less liable to be faced with nasty surprises when the worst does happen.
In short, making sure your chosen repairer network is prepared for potentially complex repair jobs is an essential element in reducing the impact on your claims costs and the downtime of your vehicles.
A vehicle rolling off the production line in 2019 is safer than ever before, but when rare accidents do happen, escalating costs can be a real challenge. Making sure you have access to a holistic view of risk and the right network of partners can reduce exposure. The challenges associated with repairs for advanced vehicles can’t be avoided completely, so insurers and their networks must adapt to respond effectively.
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