Settlement of motor claims electronic assessment systems ensure profitability of motor insurance (best practise examples from Germany, Belgium and Poland)

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Settlement of motor claims electronic
assessment systems ensure profitability of motor
insurance (best practise examples from Germany,
Belgium and Poland)

• Dr. Richard J. Nathschlaeger
• Tashkent, April 2010

Global Innovation - Local Focus
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Agenda

• Audatex a global company with a strong focus on
  Central Eastern Europe (CEE) and Asia
• Effective management of claims processes
• Best practise examples Germany, Belgium, Poland
• Conclusions

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• 01 A Global Company with a strong focus on
• Central Eastern Europe (CEE) and Asia

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The World of Audatex
Solera
San Ramon
,
CA
Argentina, Austria, Australia, Belarus, Belgium,
Bosnia, Brazil, Bulgaria, Canada, Chile, China,
Colombia, Costa Rica, Croatia, Czech Republic,
Denmark, Dominican Republic, Ecuador, El
Salvador, Estonia, France, Germany, Greece,
Guatemala, Honduras, Hungary, India, Israel,
Japan, Latvia, Lebanon, Lithuania, Mexico,
Netherlands, Nicaragua, Panama, Portugal,
Romania, Russia, Serbia-Montenegro, Slovakia,
Slovenia, South Africa, Spain, Switzerland,
Turkey, Ukraine, United Kingdom, United States,
Venezuela
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Central and Eastern Europe (CEE) in the Audatex
World
Audatex BEFIG
Audatex-APAC
AX Ibero-America
Audatex CEE
Audatex North-America
AX Ibero - America
Audatex GAS
Audatex UISA
ABZ
BRUSSELS, BELGIUM
VIENNA, AUSTRIA
TOKYO, JAPAN
MINDEN, GERMANY
READING, UK
ZEIST, NETHERLANDS
SAN DIEGO, CA
SAO PAOLO, BR
Solera
SAN DIEGO, CA
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Audatex is the only global provider of claims
management solutions

• Revenue 600 Mio.
• Global Network of over 100.000 users
• 2.100 employees in 54 countries
• Brand Audatex now also used in North America
• Over 60 million annually in product development
  more than twice our leading competitor
• Nearly 30 million annually in database
  development four times our leading competitor

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Countries in CEE
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Audatex CEE in 2010
CZ-1994
Sl
LT-2009
AT- 1969
HU-1994
HR
PL-1997
LV
RU-2003
RS
UA-2004
BA
SK-2004
BY
EE
RO-2005
TR-2008
MD
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Local Focus Central and Eastern Europe Region
Opportunity
Action
Market Development
New Audatex CEE Region

• High economic growth region
• Demand for electronic workflow partner
• New Customer quality expectations

• Meet and exceed customers high expectations
• Respond and capture dynamic market developments
• Underline global knowledge, local focus
• AX-CEE Facts Figures
• HQ in Vienna,
• 100 employees in the region
• Product development center in Poland

Voice of our customer

• Big 5 insurers go CEE
• Allianz, AXA, Generali, Uniqa, VIG
• Manufacturers go CEE
• VW, Dacia-Renault, Kia, Hyundai, Peugeot

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Audatex-CEE Region Introduction

• Audatex in CEE consists of
• 10 local country organizations
• AT, Baltics, PL, CZ, SK, HU, RO, RU, TR and UA
• 9 countries are supported out of the established
  country organisations
• 5 Balkan countries (Slovenia, Serbia, Croatia,
  Bosnia, Bulgaria) from CEE-Headquarter - Austria
• Belarus and Moldavia from Ukraine
• Kazakhstan and Uzbekistan from Russia

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Audatex-CEE Strategy

• Audatex CEE will continuously reinforce its
  position as world class estimatics services
  provider,
• Audatex CEE will continue to build up its
  standing as a premier claims services provider
  along the entire claims value chain, delivering
  on precise value propositions and improving
  inefficient, mostly paper based workflows,
• Audatex CEE will strive to become the trusted
  partner of all our regional customers for
  identifying business improvement opportunities
  and realizing them jointly with flexible
  online-offline solutions.

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Future Countries in CEE

• CEE offers still a lot of
• opportunities for expansion
• Audatex-CEE will follow its
• customers
• Database can easily be
• localized

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• 02 Effective management of claims processes

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Largest part of premiums written goes to claims
handling activities
Product development Risk management
Repair
Network development
Sales
Claims handling
Health indemnification
0-30

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5-10
30-70
10-15
10-15




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Repair value control - example Ukraine in 2009

• 30 use professional tools
• 15 use less professional tools
• 55 use best guess principle

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Repair value control improvement

• Completely exclude best guess principle
• Use professional tools
• Sign only professional body shops for partnership
• They have knowledge know-how
• Exclude fraud
• Control everything, even the smallest claims!!!!

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Three steps to reduce claims costs effectively

• Encourage market to use one calculator for
  estimation of damage amount
• 40 years of history
• 85 manufacturers
• Customized for 52 countries
• Connect all users with offline/online solution
  which is currently
• Central database and case management
• ?ommunication between partners
• Additional documents handling (pictures, invoices
  etc.)
• Connect all users with online solution which
  will provide with
• Profound and logical system of case and partners
  management
• Claims history based on global market data
  possibility to prevent fraud
• Advantageous statistics possibilities may be
  used in underwriting

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• 03 Best practise examples
• Comparative Market Overview Germany, Belgium,
  Poland
• Market dynamics
• Basic motor claims data
• Challenges and opportunities
• Based on the market evolution insurers face
  different challenges
• How to make the claims process faster, better,
  cheaper
• Conclusions

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1. Motor Claims Handling in Germany
2. Motor Claims Handling in Belgium
3. Motor Claims Handling in Poland
4. Conclusions

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Germany - strong manufacturers position,
independent assessors and market consolidation
Key Forces _at_ work
Manufacturers acting as bodyshop operator and
dealers
Insurance carriers trying to reduce claims costs
Manufacturers are a channel for insurance policy
distribution
Manufactures trying to prevent margin erosion for
after sales
German Market
Strong position of independent assessor
organisations
Market consolidation reducing number of bodyshops
and assessors
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German Market
Source Audatex
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Insurers face constant pressure to improve
service at a lower cost

• Several steps have been taken by the market
  participants to increase efficiency
• Reduce severity
• Standardized electronic estimate is required for
  every claim
• Implement the research results of AZT for
  painting and repair
• Increase the accuracy of the estimate through VIN
  vehicle identification
• Automate and rationalize the communication
• Between assessors and insurers
• Between repairers and insurers
• Involving all other parties towing and rental
  companies
• Waste and fraud reduction
• Automatic SLA management
• Automatic dispatching and review via Claims
  Filters
• Electronic handling of paperwork, photos, etc.

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1. Motor Claims Handling in Germany
2. Motor Claims Handling in Belgium
3. Motor Claims Handling in Poland
4. Conclusions

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Belgian Market

• Insurers
• 34 Insurance companies
• Assessors
• 265 Assessors
• 199 independent
• 66 affiliated with insurance companies
• Repair Shops
• 2909 Repairers
• 1791 brand tied repair only specific brands
• 1118 no brand
• Wreck Buyers
• 497 Wreck buyers
• Importers
• 30 Importers

• Car Parc
• 4,929,284 cars
• 523,161 vans
• 152,505 trucks
• 355,933 motor bikes
• Claims
• 650,000 Claims per year
• 56,575 total losses
• 1.12 million Audatex calculations
• Some of the lower repair averages in Western
  Europe
• All claims are estimated and handled through the
  Audatex platform

Source Audatex
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The Audatex platform enables fully electronic and
flexible process for everyone
Insurers
Experts
Repair Shops
Audatex Platform
Total loss buyers
Importers
WAN
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Prerequisites for the Belgian model

• Full cooperation among the insurers
• All have implemented the World Audatex Number
  WAN
• WAN allows the process to start with any of the
  partners
• WAN facilitates the settlement on TPL claims
• All vehicles are identified through VIN
• Single independent provider of claim services
• Audatex does not take sides
• Constant innovation together with all partners
• All big partners sit on the Technology Advisory
  Board
• Independent monitoring of partner performance
• Non-compliant partners are excluded from the hub
• Rules based automation of the workflow
• Automatic approval based on claim size and
  complexity
• Intelligent routing of jobs (to assessors and
  shops)

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1. Motor Claims Handling in Germany
2. Motor Claims Handling in Belgium
3. Motor Claims Handling in Poland
4. Conclusions

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Poland a market in transition

• PZU today controls 40 of the motor insurance
  market
• Direct insurers are opening up and growing fast
• Heavy competition has translated into a price war
• Insurers are focusing on closer cooperation with
  their partners to create competitive advantages
  and ensure higher satisfaction for the policy
  holders
• Reduce the number of non standard manual
  estimates
• Move toward automated workflow with the
  repairers, assessors
• Optimization of the internal workflow through
  removing redundant processes
• Developing incentives for selected partners

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Poland - Market Statistics
- Rapidly growing car parc - Decline in
severity in 2005/6 due to large influx of
old cars from EU
Average Claim Amount (USD) 2,144
Source Audatex
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Poland - typical old mistakes

• Internal mobile assessors were sent to inspect
  every claim
• Only 30 or less of repairable claims go to
  Preferred Repair Networks (PRN)
• No control over the non PRN repairs
• 70 of non PRN claims took up to 10 times more
  time to settle
• Shops were forced to lower labor rates
• High attrition among PRN shops
• Authorized shops avoid PRN contracts
• No way to verify the compliance of the rates used
  to the contractual ones
• Questionable quality of repair gt negative impact
  on customer
• 50 of claims were paid out without proof of
  repair
• High levels of fraud same damage claimed at
  several insurers
• Large number of manual estimates

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Poland - Recent Improvements

• Reduced work for the insurer
• Estimates are required in standardized and mostly
  electronic form
• Reduced number of process steps
• Internal assessors focus on real challenges
• Opportunity to automate process steps through
  software tools
• Ability to sell the PRN from the beginning
• Learn about the claim as soon as possible
• Drive more work to the shops
• Involve shops (PRN) from the early stage to
  reduce rework
• Control labor costs in the estimate
• Increase the of controlled repair to control
  fraud
• Apply policy to control non PRN repairs

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1. Motor Claims Handling in Germany
2. Motor Claims Handling in Belgium
3. Motor Claims Handling in Poland
4. Conclusions

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Best practices summary faster, better, cheaper
claims management

• Standardize the process deviations create waste
  
• Use standardized electronic estimating tools
  (Audatex is customized and operating in 18
  countries in CEE)
• Analysis shows savings potential of a minimum of
  8 to 10 of the total repair cost
• Involve all relevant parties in a structured
  electronic way
• Create PRNs if market dynamics allow
• Steer the claim to the PRN to get best service at
  lowest cost
• Drive more work to trusted shops
• Involve shops (PRN) from the early stage to
  reduce rework

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Best practices summary faster, better, cheaper
claims management

• Employ tools to reduce severity
• Manage fraud by reviewing every estimate in an
  automated way
• Electronically control all SLAs
• Increase accuracy of planning
• - Reserve assignment, reinsurance, statistics
• Improve customer satisfaction at lower cost !

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Thank you !