Vehicle salvage presents an opportunity to delight policyholders while reducing costs. Digitizing this process can accelerate cycle times and enable real-time information and tracking, all of which will improve the customer experience while minimizing storage, rental and transport costs.
Most salvage companies would freely admit that they aren’t set up to work directly with the public. In the case of a total loss, their customer is the insurance company, so they don’t directly interface with the policyholder much — if at all. Customer service metrics like NPS (Net Promoter Score), keeping policyholders informed and staying on time with appointments are overshadowed by the drive for an ever faster cycle time to support their carrier partner’s desire to close each claim ASAP.
Digitizing the salvage process can enable faster settlement of claims, improve insurers’ NPS scores and lower vehicle storage costs. But first, let’s take a look at the salvage process as it stands right now.
An antiquated process
After an accident, some policyholders will choose to have their non-drivable vehicle towed to their homes. We have all been annoyed by a three-hour window for an appliance repair technician to arrive. So, imagine how upset the policyholder can get when they’re told their vehicle is totaled and that a salvage company will be by sometime in the next three days to pick it up. Worse, without tracking or real-time updates the policyholder — and in many cases, the insurance company, as well — are left with no information. Unfortunately, this is a common occurrence in the salvage world, and it destroys the customer experience in the process.
The process is equally troublesome when a vehicle is totaled. First, if it’s not immediately evident that the car is a total loss, then it’s likely to be sent to a repair facility or a storage lot instead of a salvage yard. In many cases, these “borderline” vehicles will sit for many days and then, after wasting time and resources, will finally be identified as the “total loss” vehicles they have been since day one.
In an all too common scenario, the claims adjuster may not even know where the damaged vehicle is for several days if the tow was ordered by local authorities at the scene. The tow operator may have placed it in high-cost storage or brought it to a repair facility. In fact, in some cases, the only way the insurer ends up locating the vehicle is by tracking it down through the owner or spending hours back-tracking the entire event.
Insurance pain
The pain for the insurance carrier doesn’t end with finally locating the vehicle, because the insurer or salvage partner then has to negotiate with the storage yard to get the vehicle released. There is no standard process, and every salvage yard uses a different set of paper forms. The process includes phone calls and paperwork to determine the required notarized signatures, provide information and transfer money.
The insurer or salvage company then has to order a tow to transport the totaled vehicle to the salvage location. Towers are frequently required to provide additional paperwork and carry large amounts of cash that they may have to spend up front for the transaction. Plus, even when the insurer or salvage company finds a tower, the provider may not prioritize the pickup since there isn’t much tracking or oversight on the route during the pickup and delivery process.
A new digital model for salvage … and what it could mean for insurers
Digitizing the salvage process will be a long-term project, but with help — and a bit of pressure — from insurers, the end result could benefit everyone.
Here’s what a new, more efficient, and transparent salvage process could look like:
- Enable tow providers with AI and mobile technologies that assess a vehicle’s status on scene: Insurers’ tow provider networks can be trained on and enabled with mobile technology in their trucks. With the assistance of AI, they have the ability to collect on-scene photos and data to provide all the information the policyholder’s insurance partner needs to determine the status of a vehicle at the scene of the accident. This eliminates storage for borderline total loss vehicles because total loss vehicles are identified on-scene and immediately transported to the salvage facility. It also accelerates claims settlement. With a digital dispatching system for ordering a tow, policyholders have the transparency of tracking their tower and eliminating the need to store vehicles at their homes.
- Provide insurers with the transparency they need: Insurers require regular updates on a vehicle status to move through workflows and keep policyholders informed. Ideally, this information is communicated in the form of real-time updates to a web-based dashboard through tracking available within digitized tow networks.
- Transition salvage yard processes from paper-based to digital: Salvage yards need to move to digital technologies for dispatching, processing incoming vehicles and tracking vehicles while they are onsite. With more efficient processes, salvage yards could increase throughput and revenue, and insurers could process totaled vehicles more quickly to reduce fees and accelerate settlements. Tow providers would be more likely to take these secondary tow opportunities because they would be able to complete more jobs in less time by receiving information through technology and dropping off the totaled vehicle directly without having to stop to wait for paper stock numbers, key bags and manual directions.
- Create a more standardized process for vehicle release: This is a longer-term goal because the storage yard industry is primarily made up of “mom and pop” operations. But the industry needs to standardize procedures for vehicle release to accelerate the process and modernize towards an increasingly cashless process. Insurers will pay salvage yard owners quicker if they know ahead of time the requirements to release the vehicle and if they have a cashless way to pay release fees. In addition, storage yard owners will lose fewer storage fees to abandonment and get paid quicker for insured vehicles with a more transparent and digital payment solution.
Modernizing auto salvage and secondary towing will reduce costs, create needed capacity and open up a broader network of tow providers that will move vehicles far more efficiently than the systems in use today. The end result is happier policyholders, which improves retention rates and NPS for the insurance carriers that salvage companies depend on for their businesses.
It’s not easy to change aging but comfortable processes in the name of innovation. We’ve already witnessed a similar change in the way used cars are now moved around from consumers to reconditioning and storage yards using an almost identical digital approach. The more insurers get behind the need for this same change with their salvage partners, the faster everyone will enjoy the benefits of it.
Source: Digital Insurance
