Nearly Three Quarters of Drivers Avoid Filing Insurance Claims. AI Can Change That, for the Better

The worst part of the experience for many drivers involved in minor accidents or fender-benders isn’t the accident itself: it’s what comes after the accident, including dealing with their insurance company. For over 70% of drivers, studies show, filing an insurance claim is not even worthwhile – and a quarter of those who did file regretted doing so. The hassle, the arguing with their insurer, and the almost inevitable rise in premium rates after filing a claim drives many clients to just pay out of pocket for repairs, or to forgo a repair altogether if the damage is just cosmetic.

That sort of defeats the purpose of insurance, for drivers – but it’s a problem for insurance companies, as well. While insurers do not have a legal responsibility to do so, they do voluntarily collect data on vehicle safety, making data on accidents important for them, and for regulators. If a certain model is involved in an excessive number of accidents, it could indicate an engineering or design problem that regulators need to know about. But insurers also need to know about accidents in order to protect themselves from fraudulent claims in the future. Too often, drivers fraudulently try to include old damage in claims, putting insurers at risk of covering unqualified damage, and forcing them to spend money and other resources to monitor for such fraud.

‍

Fraud Contributes to Higher Premiums For Everyone‍

Ironically, fraud is one of the main reasons why insurers increase rates for drivers who file claims; the higher the levels of fraudulent claims, the more money insurance companies pay out; and to compensate for their losses and expenses related to monitoring for fraud attempts, they raise rates for everyone, including honest drivers. If drivers reported all accidents, they would be less likely to face those “inevitable” rate rises. Failure to file claims thus brings about the exact consequence drivers try to avoid when they don’t file claims; instead of avoiding a rate increase, they are actually contributing to fueling that increase – for themselves and everyone else. With deep distrust clients already have for them, insurers would much rather avoid fraud than raise rates. But as long as that fraud isn’t stemmed, drivers are going to face rate increases.

‍

AI and Computer Vision Can Help Break the Rate-Hike Cycle

AI can help here–both for customers and for insurers. With an AI-powered app, drivers can take photos of their vehicles post-accident, and upload the images to systems that can analyze the damage – determining the likely cost of repair, and the likely increase in coverage rates. Drawing on databases like Ravin’s with millions of images of vehicle damage – in almost every conceivable form, for almost every make and model on the road – AI systems can quickly identify the type of damage, the likely required repair, how much that repair will cost at authorized repair shops, whether the cost will be below a client’s deductible (in which case filing a claim is irrelevant), and whether and how much a client’s premiums will rise come renewal time. Drivers can then decide for themselves if it’s worth the effort to file a claim. 

Insurance companies also benefit from embracing such apps because they give insurers access to data about damage in real time even if a customer decides against filing a claim for a particular incident. This way, when another incident occurs later and the customer does decide to file a claim, insurers will be able to access that vehicle’s previously recorded damage, quickly distinguish between current and old damage, and only cover the current damage, protecting themselves from fraud. This could ultimately decrease both the instances and the costs of fraud, allowing insurance companies to keep rates lower.  

‍

Transparency Is Transforming the Insurance Sector

Insurers will also gain increased trust from their customers, who will appreciate the transparency of the process, making it more likely they will renew their policies.   

AI is changing the world – and when it comes to auto insurance claims, it can clearly change this sector for the better. With more data on accidents, insurers can help ensure that vehicles are safer – and reduce the fraud that causes rate increases. And that AI-driven change is one that both insurers and customers will welcome. 

‍