How COVID-19 Will Affect Insurance Companies' Relationships with Appraisers

Since COVID-19 hit, it has had a major world impact and the insurance industry is no exception. During the first few months, the vast majority of Americans were spending most of their time at home. As time spent driving decreased, fewer auto insurance claims were filed, allowing insurance carriers the opportunity to evaluate their business model and create efficiencies through different methods of inspections.

Even with road trips picking up, the insurance industry knows the new normal demands a new way of staffing and adjusting its day-to-day activities. Insurance carriers are looking to reduce their expenses by shifting their strategies on how they work with appraisers and the way they process claims. In general, insurance companies will likely begin to outsource more claims to innovative and adaptable independent appraisal companies who are leveraging technology and changing the future of the industry. Many changes have already been put in place, and many more are still to come.

When the pandemic first hit in March, many companies across the country began furloughing or laying off staff, resulting in the highest unemployment rate since the Great Depression. To help offset this, insurance carriers began offering discounts to their policyholders for using their vehicles less frequently.

Fewer miles driven and fewer claims filed forced insurance carriers to assess their claims department staff as well. Even with fewer claims to process, carriers were still incurring fixed costs like paying salaries for their team members. To reduce those costs, many carriers had to join other companies and lower their workforce, which has set the table for a “new normal” as states start opening up and people start driving more.

Insurance carriers are reevaluating their relationships with appraisers as an opportunity to cut staff costs long-term and adapt to this new landscape. Many insurance companies have been exploring an increased use of independent appraisal companies that allow for more flexibility.

Technology has been a rising trend that companies have been using in a variety of ways to improve efficiencies. During COVID-19 technology became the go-to method for everyday interactions and a key part of companies’ successes. Offering a virtual solution to submit claims and write damage estimates with smartphone images has not only helped to speed up cycle times, but also cut out the policyholder having to make appointments and wait at auto body shops. Looking forward, technology is set to play an even bigger role in the way insurance companies interact with appraisers and policyholders. The current no-touch climate has demanded that the insurance industry quickly shift to virtual claims, whether that’s through the usage of drones, or photo or video submissions by the policyholder. Given the circumstances, the policyholder is more willing to accept the automation of the claims process just to get the claim resolved without having to physically interact with someone while social distancing orders exist.

With the clear understanding that tech innovation is important, it isn’t everything in the insurance world. Although many carriers were exploring how to utilize technology to resolve claims more efficiently before the pandemic, it came with reservations because the insurance industry is built on the relationship between carrier and policyholder. The interaction between policyholders and their insurance carrier is mostly limited to the claims process, making those personal interactions particularly important. If the carrier isn’t delivering the right support or meeting the needs of the policyholder to their level of expectation, it can come at the cost of satisfaction and retention.

Looking ahead to a post-COVID future, insurance companies will be looking for appraisers that can strike a balance between using technology while providing the same claims experience the policyholder expected pre-COVID. Appraisal companies are offering no-touch, low-touch and human-touch damage estimate experiences to ensure customers have the experience they want and deserve. In a time where everyone’s comfort levels are different, it is important to provide the policyholder with options that they can choose from and rely on.

As more policyholders use technology solutions to assess damage in the claims process, the density of field claims volume decreases. With the available pool of assignments diminishing, insurance carriers may need to shift from full-time staff to partnering with an independent company that can augment their claims team with multi-line experience and boots on the ground in those areas in a pay-per-claim model.

Having fewer field assignments for staff adjusters, carriers won’t be able to support the fixed costs at lower productivity levels. Thus, insurance companies will be looking for appraisal companies that offer innovative tools and the multidimensional resources to handle all types of claims, including automobile, property, and specialty and heavy equipment.

Insurance companies will continue to shift how they do business, and how they work with appraisers, as they continue to navigate this uncertain world. Insurance carriers will be looking for appraisers that can help them prioritize technology, provide excellent customer service, and find alternative solutions to process claims quickly without carrying unnecessary fixed costs.