[In-Depth Review] The Future of AI-Integrated Car Quotation Systems in the Post-Corona Era

Non-life insurance companies have been facing significant difficulties in business operations due to deteriorating profitability caused by soaring loss ratios in automobile insurance over the past few years. The automobile insurance loss ratio, which was 80.8% in 2017, worsened to 91.4% last year. Considering that the appropriate loss ratio for automobile insurance is 77-78%, current insurers are essentially bearing losses while fulfilling the role of public insurance.

The unexpected outbreak of the novel coronavirus disease (COVID-19) has paradoxically played a role in preventing the worsening of automobile insurance loss ratios. However, the issue now is how the automobile insurance market will change in the post-COVID era and how to respond to those changes.

Compensation in automobile insurance is an area that requires significant time and cost. The repair process of vehicles involved in traffic accidents involves many stakeholders, including policyholders, insurers, repair shops, and rental companies, leading to frequent disputes from the occurrence to the closure of accidents. Disputes between insurers and repair shops over repair costs also continue to arise.

Moreover, if repair or medical costs increase, insurance premiums will rise, directly burdening households. The key point is the need to establish a fast and accurate repair cost estimation system that all stakeholders can acknowledge.

An artificial intelligence (AI) estimation system utilizing Fourth Industrial Revolution technologies is expected to be a good solution to this problem. By simply photographing the damaged parts of the accident vehicle with a smartphone, the AI-based system calculates the necessary repair methods and costs. Overseas insurers such as Allstate in the United States and Mitsui Sumitomo Insurance in Japan have already started commercializing automatic estimation systems. China Ping An Insurance processes more than 10,000 accident cases daily using an AI estimation system.

The Korea Insurance Development Institute has also developed an AI image estimation system (AOSα) and is distributing it to 12 non-life insurers, 6 mutual aid associations, and repair shops. When a repair shop photographs the accident vehicle and sends it via an application, the AI immediately calculates the repair cost and notifies the insurer, supporting prompt loss assessment and insurance payment. This is expected to positively impact not only the efficiency of accident handling but also the reduction of customer complaints.

In particular, for minor accidents, the estimated repair cost can be immediately communicated to the driver, allowing them to decide whether to proceed with insurance claims. In the long term, the entire process of preparing and submitting repair details could be fully automated.

This is expected to be even more prominent in the post-COVID ontact (online non-face-to-face connection) era. It is similar to telemedicine services where patients are examined via video calls or monitored through wearable devices, with information transmitted for diagnosis. As society moves toward voluntary isolation and preference for non-face-to-face services, demand for convenient tools that drive service transformation will inevitably increase.

Successful application of new technologies in real life requires infrastructure support. It is encouraging that mobile communication and internet network technologies, necessary for functions such as real-time large-volume photo transmission, are rapidly advancing. AI will become more sophisticated through self-learning and speed up task processing. Furthermore, proactive decision-making and continuous dialogue and cooperation between the insurance and repair industries are necessary to determine how to apply and utilize AI in automobile insurance accident handling and repair services.

Not everyone faces the same crisis. If non-life insurers improve their work processes by adopting AI systems in the face of the crisis of rapidly rising loss ratios, it will be a golden opportunity for the development of the insurance industry. It will also contribute to enhancing the mutual benefits of stakeholders involved in automobile repair costs. We hope that by using new technologies to remove mutual distrust, a day when everyone becomes a winner will soon become a reality.

Seil Park, Head of AI Compensation Lab Team, Korea Insurance Development Institute

This content was produced with the assistance of AI translation services.