The challenges facing the collision repair industry over the past few years seem to keep rolling in like waves lashing a beach during a storm. The industry was already facing labor shortages caused by a flood of retirements and career changes. Then it was overwhelmed by the global COVID-19 pandemic, Russia’s invasion of Ukraine, exploding energy prices, and the highest inflation in the U.S. in more than 40 years.
Solera’s artificial intelligence (AI)-powered technology is here to help. The company’s AI tools Qapter® Intelligent Triage and Intelligent Estimating are helping industry players offset skilled labor shortages, optimize parts ordering, and reduce carbon dioxide (CO2) emissions, all while improving and expediting claims and repair processes for customers.
Skilled Labor Shortages
Before the pandemic, unemployment was solidly in the single digits and many industries were experiencing mass labor shortages. A Newsweek magazine article quoted data from the U.S. Bureau of Labor Statistics which set the unemployment rate at about 3.6 percent in September 2019. As COVID-19 swept across the world’s workforce and shut down a huge portion of the automotive and insurance industries, thousands of employees – across everything from insurance companies to repair shops – retired and left the industry. Now that the pandemic restrictions are lifting, the industry is struggling to backfill skilled labor positions.
In July 2022, the unemployment rate hit 3.5 percent, even lower than in 2019. In fact, Autobody News cited representatives from Universal Technical Institute who predicted that “a wave of retiring baby boomers will create 100,000 auto technician job openings over the next decade or so.” Further, the Bureau of Labor Statistics is projecting a “four percent decline in employment in the overall auto technician field through 2029.”
Enter Qapter’s suite of AI-powered solutions. These tools leverage the latest AI technology, are fueled by Solera’s vast data lakes, and are backed by trained and experienced data scientists and industry experts. Qapter Intelligent Triage, one of the solutions suite’s primary pillars, was designed to improve the speed and accuracy of triage decisions following the first notice of loss (FNOL). This service alleviates labor pressure on estimators in two critical ways.
First, Qapter Guided Image Capture empowers the policyholder to launch the claim process and submit photos of vehicle damage following FNOL. Then, using the latest image processing technology and machine learning algorithms Intelligent Triage detects total losses, repairable vehicles, or advises further inspection by an assessor. The solution’s ability to manage the process with minimal human involvement reduces workloads for insurers; and, by identifying a total-loss vehicle at FNOL, the tool eliminates the added workload and cost of towing a totaled vehicle to a body shop and thus later incurring additional towing charges to get the car to a salvage yard.
Eliminating unneeded tows can reduce repair shop workloads and drive serious cost savings. Consider the savings on 10,000 claims in the U.S., where average towing fees run about $109 for a single trip. That means the total towing bill from those 10,000 incidents would cost just over $1 million. If the vehicle must be transported twice – once to the body shop for evaluation and then to the salvage yard as a total loss – it would cost the insurer more than $2 million. According to these numbers, Intelligent Triage can help companies potentially eliminate unnecessary towing of total-loss vehicles to the body shop and instead deliver them straight to the salvage yard, saving more than $1 million.
In other markets, such as Mississauga, Ontario, Canada, a tow to a single location costs about $400 and taking a vehicle to two places (body shop then salvage yard) costs about $750. The same aforementioned example of 10,000 claims would generate savings from about $2.5 million to more than $4 million in that market. If one were to extrapolate those savings across the industry, the savings would be staggering.
Beyond FNOL and triage, another pillar of Solera’s suite of AI-powered tools called Qapter Intelligent Estimating is helping insurers overcome estimator skillset shortages by automatically advancing the claims process. After the insured submits photos of the damage, the platform automatically creates a preliminary repair estimate based on those images in under three minutes. The initial automated estimate eliminates the need for veteran adjusters to develop outmoded manual reports and empowers the less-experienced insurance adjusters and estimators to initiate and advance the job confidently. The previously required veterans of their respective industries can now be freed up to focus on more complex claims and heavily damaged vehicles.
According to the U.S. Bureau of Labor and Statistics, the U.S. inflation rate increased by 9.1 percent for all urban consumers over the course of 12 months immediately prior to June 2022. Globally, rates also increased to similar levels. This was the highest reported 12-month inflation increase in the U.S. since November 1981 – more than 40 years ago. The cost of owning and maintaining a vehicle at those levels therefore skyrocketed. According to the same report, prices for new and used cars and trucks jumped 11.4 percent and 7.1 percent, respectively. The parts and equipment for those vehicles increased 14.9 percent, and the cost of the gasoline to make them all go grew by 59.9 percent representing the largest 12-month increase since March 1980.
These combined inflation increases have had widespread impact, especially on the insurance industry. According to GEICO, a top-five auto insurer, rising used-car prices and auto parts shortages resulted in increased claims costs and thus higher underwriting losses than the prior year.
Inflation combined with the shortage of auto parts translates into significantly higher repair prices for insurance customers. According to James Davies, CEO of research firm, We Predict, the annual average of repair cost inflation for 2021 was 11 percent.
Qapter Intelligent Estimating can help insurance companies and repair shops limit the impact of inflation by optimizing repair decisions to help reduce the demand for new parts. The platform looks at damages objectively and recommends the most optimal repair operation using real repair research data.
Sustainability and the reduction of greenhouse gases (GHG) are a clear focus for most industries and consumers right now. The automotive industry is embracing the global effort to achieve an 80-percent reduction in carbon emissions by 2050. Accordingly, Solera is identifying ways it can help the collision repair industry meet its environmental, social, and governance (ESG) objectives. By introducing AI-powered technologies into the mix, companies can play a meaningful role in the collision repair industry by helping to limit global warming and responding to the impacts of climate change.
Qapter Intelligent Estimating’s ability to autonomously create an accurate, detailed list of required repair parts also helps address the GHG emissions issue. According to research published in 2018 by the International Journal of Automotive Engineering Japan, the average CO2 generated across the entire journey from manufacturing to installation to replace an external body part is about 1.125 kilograms in Japan.
Tools that help repair shops limit parts ordering to only the exact ones actually required to complete a repair can have a big impact. Suppose Intelligent Estimating can reduce the unnecessary use of a single external body part across 10,000 repair claims in Japan using the above metrics. In that case, the solution could reduce the production of more than 11,250 kilograms – or over 12 tons – of CO2 emissions.
As referenced previously, Qapter Intelligent Triage can help reduce the number of unnecessary tow truck trips, thus reducing costs and shortening key-to-key times for both the insurance company and the consumer. The environmental benefits are also significant: Tow trucks have a substantial carbon footprint, especially when towing vehicles. Using technology to eliminate what could add up to thousands of unnecessary towing assignments could prevent tons of excessive GHG emissions from entering the environment.
The combined GHG reductions generated by eliminating unneeded tow truck trips and optimizing repair-parts purchasing across the 6 million vehicle accidents in the U.S could significantly impact the industry’s goal of 80 percent reduction in carbon emissions by 2050.
Technology is unquestionably revolutionizing the vehicle insurance and repair industries. Qapter’s AI-driven technology backed by trained experts creates competitive advantages for leading companies from start to finish. Technology empowers organizations with tools that help impress customers with a hassle-free experience and revolutionize the adjustor-to-repair process. Qapter’s AI and machine-learning features help them overcome labor challenges, offset the impact of inflation on the bottom line, and achieve industry environmental goals of reducing carbon emissions by 80 percent by 2050.
As the collision-repair industry continues to weather the ongoing repercussions of the pandemic and the impact of inflation, Solera Qapter is here to help. For more information on our suite of Qapter technology-driven solutions, visit our website – www.qapter.com.