How OEMs may soon be eating insurers’ lunch on claims services

A world is coming in which auto manufacturers will be nibbling away at typical claims services offered by the insurance community, a collision repair expert told delegates attending the National Insurance Conference of Canada (NICC) last Monday.

Speaking at a session on auto insurance, Flavio Battilana, chief operating officer of CSN Collision Centres, said Original Equipment Manufacturers (OEMs) are already developing claims-style services that rival those offered by insurance companies. He predicted a day when insurance companies won’t even see the claim until the damaged cars are already at OEM shops.

“When you look at first notice of loss, you [in the insurance industry] believe you’re the first people to find out about that accident,” Battilana said. “That privilege will go away.”

He said OEMs already have the capability to do many of the things that insurers are doing now during the first notice of loss stage. “Their car will send a signal to their call centre,” Battilana explained. “There is a code system in the vehicle that will reach out and move that customer to the front of the line, so that they [in the call centre] will see you are in accident and will need emergency assistance.

“If you [the driver] do not reply, they will bring a tow truck in the future and they will bring a rental car to the scene of the accident. They will influence your policyholder.”

They will also influence how insurers manage their repair costs, Battalina observed. As cars get more sophisticated, OEMs will become more influential in how the repairs are done. This is changing the evolution of collision repair shops, he noted, which in turn affects where insurers send their vehicles for repairs.

“There is a separation among the good shops — those going down the road of specialists, and those who are the generalists,” Battalina said. The specialists, he added, are prepared to fix the high-end vehicles. “The more complicated the vehicles, the more complex the repairs,” he said. “It is really important to get the right vehicle into the right shop, because you don’t make any money when you do things twice.”

Battalina believes the insurance companies will need to forge a closer collaboration with OEMs in the future. “OEs are starving for your attention,” he told insurers attending the NICC session. “They have information and education that they want to share with you. They want to tell you about buying and building their magnificent vehicle and all of the details about it. The more educated your staff is, the better your management strategy around costs. Every time you get into a situation when someone is not up to speed on what’s required for that vehicle, it creates delays. It creates supplements. Those things do not help us in being efficient.”

While most in the insurance industry are well aware that repairs costs are on the rise, Battalina shared some specific numbers with his audience about the cost impact of advanced safety systems. In short, insurers could be spending up to $7,650 extra in repairs for safety features in a single vehicle.

Here’s how the additional costs for safety features break down:

Front Camera Sensors: $1,900

For automated braking, adaptive cruise control and lane departure/keeping

Front Radar Sensors (in the front bumper): $1,300

For automatic emergency braking, adaptive cruise control

Side Mirror Sensors: $1,100

For around-view monitoring

Ultrasonic sensors (in the back bumper): $1,300

For parking assistance 

Rear radar sensors: $2,050

For blind side monitoring and rear cross traffic alert