Using tech to take the anxiety away from car insurance claims
On a typical day, about 80,000 U.S. drivers have accidents serious enough to warrant calling their insurers. After the initial shock comes a predictable sequence of worries: Was anyone hurt? Am I at fault?
The driver’s first call is often to the insurance company, which leads to the next questions: How long will it take to get an estimate, get my car into the shop and then get it back on the road?
The time it takes to settle auto insurance claims is being shortened, and the accuracy of initial estimates is improving, because U.S. insurers now use artificial intelligence to generate repair estimates.
The latest technology powered by AI is much different from the “virtual claim” you might have filed after your last fender-bender. About five years ago, photo-based estimates became increasingly common. Insurance companies sometimes had customers download an app that helped them provide consistent photos, but some insurers just told customers to attach pictures to an email.
Insurance companies liked photo-based estimates because appraisers who could average only four in-person estimates a day could complete as many as 15 virtual ones by staying in the office and scrolling through customer-supplied photos on a computer monitor. However, once damaged cars got into body shops, those estimates proved far less accurate than those done in person. Insurance companies were bedeviled by costs that surpassed estimates — called claim supplements — sometimes running as much as 50% higher. Customers were frustrated by unexpected delays. And body shops hated being caught in the middle.
Now, customers can download phone apps through their insurers to guide them through the process of taking and uploading photos that can be evaluated by AI, producing a near-instantaneous damage estimate. The apps are not yet in wide U.S. use, but their time is coming.
The algorithms are trained in image classification, and they identify damage and hand off the claims to companies like Mitchell International, based in San Diego, that price out parts and calculate labor costs. The best algorithms already provide estimates in a few seconds that are as accurate as those produced by experienced human estimators. The pandemic has made AI-powered estimating even more attractive because the technology reduces or even eliminates the need for face-to-face interaction between drivers and insurance adjusters.
By eliminating the need to make appointments with appraisers or make a separate trip to the body shop for an initial estimate, these apps take days off the “cycle time” — how long it takes to get customers back into their cars.
One of the leaders in this “insuretech” market is Tractable, a company based in London that was founded in 2014 by entrepreneur Adrien Cohen and two computer vision experts, Alex Dalyac and Razvan Ranca. Since then, Tractable has received more than $50 million in venture capital funding and grown to over 100 employees in London, New York and Tokyo. Major insurers in Europe and Asia have used Tractable’s AI to settle more than $1 billion in claims.
“These algorithms are very different to how people used to do computer vision, because you actually get the algorithm to figure out the right patterns in the object,” Dalyac said. “Instead of telling the AI, ‘This is what a front bumper looks like; look for a corner like this and pixels like that,’ you feed the algorithm millions of images. Some contain a front bumper and some don’t. On a rainy day, a dark day, or a sunny one; an undamaged bumper; or one that needs three hours of repair. And the algorithm itself figures out the best combinations of pixel patterns that give it the most accuracy.
“It’s kind of magical, but it’s very data hungry.”