I have good news and bad news. The good news is that 2020 is behind us. The bad news is that 2021 brings with it several business and technology trends that will continue to challenge and disrupt the collision and property and casualty (P&C) industries.
In this article, I will share my thoughts on how six business and technology trends will affect the collision and P&C industries in 2021 and beyond. The six trends are:
- “Virtual” claims technologies
- ADAS technology
- Vehicle electrification
- AI (artificial intelligence)
- Consolidation and specialization
As I write this article in November 2020, there are at least 40 COVID-19 vaccines in clinical trials around the world, with two or more in the U.S. scheduled to be distributed in December 2020. Most experts expect that a majority of the U.S. population will be vaccinated by this summer.
While these vaccines will bring back some sense of normalcy, the pandemic has changed the collision industry and P&C industries for the foreseeable future.
One of these changes is the work-from-home trend. This trend means less miles driven as well as changes in traffic and congestion patterns. Work from home also means the continued use of virtual business meetings, virtual meeting tools like Zoom and Microsoft Teams, and less business travel. This trend will lead to a reduction in accident claims, collision repairs and lower attendance at industry events such as NADA, SEMA, CIC and other industry events.
The COVID-19 pandemic has changed the collision industry and property and casualty industries for the foreseeable future.
Speaking of industry events, future events will be designed as hybrid events offering live and virtual attendance. The COVID-19 pandemic has provided this industry with a glimpse of the future – the future being a reduction of claims due to ADAS systems and technologies.
Another permanent COVID-driven trend will be worker and consumer safety and sanitation protocols. Business and vehicle sanitation processes will remain in place while pickup, delivery, claims and other “contactless” processes will become the norm.
Virtual Claims Technologies
COVID-19 also forced insurance companies to “fast-track” the implementation of multiple technologies. These technologies will change the way claims are handled by insurers and collision repairers.
One technology that will grow quickly is photo-based estimating. While insurers and repairers both agree that this technology does not provide 100%-accurate results, depending on the vehicle damage, the consumer wants to use it. It also reduces costs. Like any technology, photo-based estimating will continue to improve and ultimately become the dominant initial vehicle damage documentation process.
In addition to photo-based estimating, other virtual claims processes will grow quickly. The use of video as a tool to communicate additional damage after an initial photo-based damage assessment is one of these new processes. Solutions like Allstate’s “Virtual Assist” platform that is used to request and verify supplements will be picked up by other insurers, driving the use of video into more collision repair facilities.
Additional virtual claims processes that will grow quickly are digital signatures and digital payments. Digital signatures will become the default way to approve claim payments, repair and supplement approvals and more. Digital payment processes will expand from PayPal, Stripe and Venmo to payments via text and social media platforms.
As more “connected cars” enter the car parc, their telematic systems will generate data that will allow OEs to offer insurance coverage based on driving habits. These telematic systems will also change the way the FNOL (first notice of loss) is handled. Connected car telematic systems will begin generating INOI (instant notice of incident) that will direct the INOI to certified repair facilities.
As we start 2021, there are more than 73 million ADAS-equipped vehicles on the roads. These vehicles will be involved in accidents and will continue to change the way the collision industry identifies, inspects and repairs them. The increase of ADAS-equipped vehicles will drive the industry to create and implement new repair processes, tools, technologies and training solutions in 2021 and beyond.
Let’s start with new repair processes. These ADAS-equipped vehicles will require repairers to implement better and different processes, tools and technologies to accurately identify ADAS technologies on a damaged vehicle during the repair planning process if they want to decrease supplements and increase the number of required calibrations these vehicles need.
Speaking of calibrations, the industry can expect more and more calibration equipment solutions to enter the market. Equipment suppliers see the future ADAS car parc and view calibrations as one of the fastest-growing service items in 2021 and beyond.
I believe the industry will also see dramatic growth in calibration centers and mobile calibration providers because, in my opinion, a majority of repairers will not perform their own calibrations due to lack of space, improper lighting, the investment required and lack of personnel. The increasing ADAS car parc will also lead to a dramatic increase in the use of repair procedures as well as the formalization of pre-repair ADAS and safety system inspections and post-repair/calibration test drives and system validations.
If you have not heard, OE manufacturers plan to release more than 400 new EV models by 2025. Last November, GM announced it was increasing its EV budget to $27 billion dollars while moving up the release of 30 EVs by 2025 and making Cadillac models 100% electric by 2030. In addition to GM, VW wants all of their 300 models electrified by 2030, and Ford expects more than 20 EV models by 2025. Combine these trends with new EV manufacturers such as RIVIAN, LUCID, NIO, Polestar and others and you are looking at an EV tsunami!
This EV tsunami will require the collision repair industry to implement new repair processes and new safety procedures, as well as new training and education solutions. EVs will also create new certified repair networks, an increase in parts restrictions, new tool and PPE purchase requirements and, in my opinion, EV-focused collision repair facilities.
I-CAR and other training and education solution providers will be challenged to quickly create high-quality, EV-focused solutions to meet the needs of the industry.
AI (Artificial Intelligence)
Another technology that will affect the collision repair industry in 2021 is one you really can’t see or touch: artificial intelligence, also known as AI. It is my belief that AI will affect all aspects of the collision and P&C industries in 2021 and beyond.
It is my belief that AI will affect all aspects of the collision and P&C industries in 2021 and beyond.
Let’s start with the vehicle. Today, AI is already being used in most ADAS systems such as emergency braking, cross traffic detection, blind spot monitoring and more. It’s also being used in data collected from vehicles for driver risk assessment and driver monitoring, and during photo-based estimating. Finally, it’s being used as a way to improve total loss processes.
The year 2021 and beyond will see AI being used in all aspects of the industry such as repairer and insurance administrative processes, scanning, diagnostics, estimating and more.
Consolidation and Specialization
Two other major trends that will continue to disrupt the collision and P&C industries are consolidation and specialization. Today, there are about 32,000 collision repair facilities participating in a $38 billion industry, while more than 90% of the insurance market is dominated by the top 10 insurers. Out of the 32,000 repairers, there are more than 100 MSOs with less than 3,000 locations capturing approximately $16 billion, or more than 40% of industry revenue.
Whether we like it or not, the big will continue to get bigger, franchising, OEM-certified repair networks and banner networks will become more attractive because independents will need to become part of something bigger to compete and win.
I also believe specialization will increase in 2021 and beyond because of increasing vehicle complexity and technology. We will see the largest consolidators and other MSOs designate specific locations as OEM-certified or EV-certified in certain markets, while independents will be forced to decide what vehicles they can/want to repair and new car dealers will be forced to open collision centers or partner with specialists to service their vehicles.
In addition to the six major trends outlined, other trends such as OEM certification, big data, augmented and virtual reality will also have an impact on the collision and P&C industries in 2021 and beyond.
Like any other new year, we all will face change and challenges. Anytime there is change, there is opportunity. As you enter 2021, evaluate these trends and how they will affect your business and how your business can grow and benefit from them by implementing new processes, tools technologies and training.
Remember, if a business is not growing, it is dying. Make 2021 a year your business grows its revenue, its employees, its opportunities and its capabilities!