San Diego, California — By 2030, more than half of current claims activities could be replaced by artificial intelligence (AI) enabled automation, according to Mitchell International’s Q2 Industry Trends Report and financial research firm McKinsey and Company.
The shift toward an increased AI presence in automotive claims was no doubt spurred by the pandemic, says Mitchell, with data from April 2020 showing the use of virtual or photo-based estimating more than doubled from a few months earlier in the year. Now, one year later, LexisNexis Risk Solutions reports that virtual claims handling has settled to “a level of a little over 60 percent.”
LexisNexis also predicts that 70 percent of auto insurance carriers are seeking to embark on the claims automation journey, and that, with such technologies, appraisers can complete approximately 15 to 20 estimates per day.
Massive dollar amounts are also being Mitchell also says AI market projections are on track to reach US$500 billion by 2024—a five-year compound annual growth rate (CAGR) of 17.5 percent and total revenues reaching an impressive US$554.3 billion, according to IDC’s Worldwide AI Software Forecast.
According to a report cited by Mitchell, 87 percent of carriers are now spending upwards of US$5 million annually on these technologies; and 100 percent investing more than US$1 million. In other words, Mitchell says the “science [is] now ready to deliver on its 1950’s promises; the auto insurance industry has reached a turning point.”
Mitchell makes a point to stress the history of AI and its development within the report.
“While the use of AI may be new to the auto insurance industry, the science…was conceived in 1956.”
“Carriers can either invest in AI or run the risk of being stranded on the side of the road. Ultimately, it will be those organizations that embrace this “new” technology to deliver a digitally-driven claims experience that is best positioned to gain market share and consumer loyalty,” concluded the report.