There has been quite a few changes impacting many industries in the past several years through mobile technology. The leading example is the Uber based business model and it’s sharing economy. This business model also made its way into insurance. But not in the way of ordering a taxi, but rather a single way of ordering a service through technology that delivers network effects. In insurance, these business models lead to powerful disruptive changes.
Traditional Appraisal Business Models
If you think disruptive word is pretty overused, let’s look at some common business models of claims organizations in the past.
An insurance carrier had several relationships with field claims organizations providing field appraisal services for automotive claims. Each of the appraisal organizations had their own set of independent appraisers belonging to the network. When a claim assignment arrived, the independent appraisal organization selected the right resource in the field who can handle the appraisal process by looking up a zip code and forwarding the assignment to document the loss and prepare the report.
This business model worked very well for appraisal businesses until the new emerging technology of smartphones and their apps arrived. These apps delivered an easier way to collect visual information in the form of photos, completely bypassing the appraisers in the field and allowing the inside appraiser to receive pictures directly from the consumers to write the estimate virtually.
Over several years, there were quite a few arguments about the accuracy of the estimate that can be written from a picture without in-person visits. Turns out, this can be pretty effective, especially since the appraisal process is broken in two phases, the initial appraisal and the supplement. Eventually, as more customers acquired mobile devices and became comfortable with the concept of self-service claim reporting capabilities, the market for field appraisers began to shrink. But, this opened opportunities for new appraisal business models to emerge.
New Appraisal Business Models
I’m sure everyone is familiar with two great companies out there that found excellent opportunities to recognize the technology trends - Snapsheet and OnSource. Snapsheet business model is built around the concept of providing customer self-service apps directly to the insurance carriers and with these apps acquire the pictures of damages from the policyholders directly to Snapsheet's team of inside damage appraisers for remote appraisal. OnSource has a different concept. As described on their website, OnSource provides a network of people in the field that can go out and capture pictures of the damaged vehicles for remote appraisal. Hence, OnSource delivers Uber-like capabilities of acquiring a field resources to get the visual information necessary to get the job done.
These models obviously take away from the traditional appraisal business models, leading to fewer assignments, especially since these business models are rather easy to scale regionally, nationally, and even internationally. If you run your own appraisal or adjustment network, or oversee operations of your internal material damage teams, you’ve probably already seen the effects of these models on your business in reduction of incoming claims.
The market is shrinking by transferring the appraisal claim volume from traditional approach to a scalable inside appraisal operation model. So, how does an IA network stay competitive? Appraisal networks are not software companies and simply do not have adequate resources or experience to build mobile solutions that can be delivered to insurance carriers to duplicate and compete with business models of Snapsheet and OnSource, especially fast enough to catch up to the rapid change. So, what are your options?
Disruptive technology by definition is the one that shrinks or eliminates one market and creates another market. The evidence of the current trend points in the same direction for IA networks. Fewer assignments and more automation, smaller margins, and fewer experienced people in the field. All of it points to the need to solidify in-house operations to deploy much more productive inside remote damage appraisal teams. This also point to the need to have leaner and significantly more responsive field assignment capabilities.
At Livegenic, we built an award winning real-time visual collaboration platform for insurance, specifically to solve this challenge – to provide solutions that connect every part of the claims ecosystem for claim collaboration. For appraisal networks, this means delivering tools for customer self-service, field documentation, and even live video streaming interaction through a single easy-to-use cloud based platform. Why worry about the challenges of managing an IT team when you can focus on the strength and experience of the business and its service model you already have? Just sign-up online and get the functionality you need to remain relevant and competitive in the marketplace.
In the words of an executive from one of the leading National Appraisal companies, “IA is only as good as the last estimate.” This means consistently delivering on the speed and the quality. But, in life, it’s often too easy to get caught solving the challenges of working in the business, to miss the right time and opportunities to work on the business. The time is now to take a deeper look in where the industry is headed. But don’t be shy, give us a call and learn how we can help.