Report Mulls ‘Year of Generative AI’ and Auto Claims

January 15, 2025

This is set to be the year generative artificial intelligence significantly starts to change how Americans live and work, most notably in the property/casualty industry as companies strive to balance efficiency and costs with investments in systems, training and management.

That’s according to a trend report from Enlyte, which queries industry leaders on the growing utilization of gen AI and data analytics as well as strategies they are eyeing to address clinical and auto challenges across the claims landscape.

Related: AI Used for Good and Bad — Like Making Trickier Malware, Says Report

Enlyte’s 2025 Envision Trends Report examines challenges and strategies, including:

  • The Year of gen AI: Professionals in every field will feel the impact of advancements to keep pace with the rapidly evolving landscape.
  • Impact of 2024 election: What will the second Trump Administration and changes to state legislative bodies mean for the P/C industry?
  • Collision claims update: carriers face headwinds when it comes to vehicle complexity and its effect on severity and cycle time. The report’s authors discuss four trends auto insurance industry leaders should watch.
  • Provider shortages and creative solutions: The P/C industry faces challenges due to projected physician shortages, particularly in specialties crucial to workers’ compensation.
  • Impact of mental health on workers’ comp claims: Traditionally, mental health has been viewed as a claims pariah in workers’ comp. New data shows ignoring psychosocial issues early on is the real issue.

The report asked industry leaders what their biggest challenges are: 34% answered “Operational Efficiency and Performance,” 32% answered “Cost Management and Containment,” 18% answered “Technological Advancements and Integration,” 15% said Workforce and Talent Acquisition” and 1% answered “Customer Service and Satisfaction.”

A majority (65%) said AI and technology innovation were the opportunities that most excite them. A fifth said operations and outcome improvements were the most exciting opportunities this year.

Related: Global Electric Vehicle Sales Up 25% In Record 2024

“Change management is crucial for successful gen AI adoption, particularly in risk-averse industries like ours, but I think the strong desire for efficiency and automation can overcome adoption challenges,” stated one industry leader surveyed. “I’ve seen a lot of shift in mindset towards embracing technology solutions over the past 12–18 months.”

Auto claims will continue to be a challenging environment. Carriers and collision repairers continue to face headwinds when it comes to vehicle complexity and its effect on severity and cycle time, the report shows.

Related: Rising Number of Older Workers Brings New Considerations for Insurance Adjusters

As vehicle values drop and demand for new automobiles continues to ease, total loss frequency is increasing and is expected to continue on an upward trajectory into 2025. However, total loss market values will likely return to where they would have been historically had we not had the COVID distruption. By May, the average total loss market value is expected to be: 8.5% above historical average growth in the U.S., and 13.2% above historical average growth in Canada, the report shows.

A mild winter likely drove a reduction in claims, possibly aided by the prevalence of advanced driver assistance systems and insurance affordability prompting consumers to chose higher deductibles and therefore file fewer small first-party claims.

Severity, however, is on the rise.

“Despite fewer claims, average severity for repairable vehicles increased by over 5% in the first half of 2024 compared to the same time in 2023,” the report states. “Historically, that number has risen at a rate closer to 3% or 4%. A primary reason for the growth in repairable severity is the increase in automobile complexity. Between 2019 and 2024, the average number of replacement parts listed on a damage appraisal jumped 15% and these parts now represent more than 51% of the overall repair cost. Since 2019, the average number of estimate operations has also risen by 20%.”

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