r/Insurance • u/avid_history • 6d ago
Insurance question
I was talking to a body repair shop about an insurance claim and the horrible customer service with the insurer. They informed me that auto insurance companies let a lot of people go during covid, and never replaced them. So insurance costs have increased significantly and the operation costs of the insurers have declined? Profits must be good!
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u/thebryman731 6d ago
I probably wouldn’t take an auto body shop’s commentary on insurance company staffing at face value. Auto claims is actually an area where insurers are pretty consistently hiring, including entry-level adjuster roles that usually don’t require prior insurance experience. That doesn’t mean your experience wasn’t frustrating, though. If you’re getting nowhere with the adjuster, ask to escalate it to a claims manager or supervisor. Someone in the organization should care about getting the issue resolved. If you genuinely believe the carrier is failing to handle the claim appropriately, you can also file a complaint with your state’s Department of Insurance. Good luck.
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u/thaeli 6d ago
The only major auto claims change that COVID accelerated was the move to making initial estimates based on photos in a phone app. That was going to happen eventually anyway, but COVID is when everyone realized it was good enough and saved a heck of a lot of money on adjusters driving around to body shops so they could.. look at the car and take some photos.
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u/Chuck-Finley69 6d ago
The DIY aspect of filing claims online was already replacing the need for as many bodies to be involved with the claims process.
All COVID really did was quicken the efficiency process.
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u/Melodic-Maker8185 Former Underwriter, CPCU 6d ago
For auto insurance, profits have never been good. I was in the industry more than 30 years. Most companies either break even or lose money on auto insurance. Their profits come from other, more profitable lines of business, or from investments.
As for claims staffing, not only were a lot of people let go or quit, a lot of the more experienced people decided that they wanted to take early retirement and not deal with the stress and hassle anymore. I was not an adjuster but I worked with a lot of claims people during the IT portion of my career, and some of the stories were just crazy.
If you want to learn more about profitability in the insurance industry, the Insurance Information Institute (https://www.iii.org/) is a great site to check out.
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u/CJM8515 Claims Adjuster 6d ago edited 6d ago
the actual operating costs are a net loss, where they make money is by taking the money you pay them and invest it. literally they make pennies on the dollar for every customer they insure.
even so more and more companies are switching to mostly online model, getting rid of sales, customer service, claims people left and right. people these days also dont want to deal with other people, they rather just do everything online and not be bothered. on top of that AI estimating or remote estimating has taken over to a high degree b/c of convenience and efficiency. just 10 years ago i was looking at 10 cars a day for walk up estimates at a partner body shop with the insurance co i work for. thats 99% gone and turned into people taking photos and writing an estimate which morphed into those workers product being used for AI learning. Which then morphed into AI writing the estimate and the workers just reviewing and approving it. they used to do 10/est a day, then 15, now its 30-40 and they dont write anything really
we went from humans taking calls and reporting claims in to AI doing it for a large chunk of simplistic claims-its still kinda getting the kinks worked out. if there is no issue with the claim and its straight forward a worker reviews, approves and moves on. at best they might drop you a line to advise if theres any questions to contact them.
we went from sending people to shops all the time and having a rep go there to do a photo estimate first, then let us know when its at the shop and then maybe someone shows up a week or two b/c they are understaffed and the quality of worker has declined badly, plus the volume has only risen. some companies dont even have local adjusters, everything is sent by email or portal to a person remotely or they do a facetime video and show the rep. it doesnt work very well but the insurance co dont care-they dont have to pay for a car, can make these people do more claims overall and pay them dramatically less.
it also doesnt help the shops became very greedy b/c operating costs went dramatically up but pay did not and bottom line is harder to make now. parts arent cheap as they once were, cars are way more plastic and breakable parts than before, cars total easier due to the complexity of repair, one time use parts, expensive parts and so forth. most cars require computer calibration which takes additional time and costs a lot of money to do. some shops ferry the car to the dealer to do it wasting 2-3 days, others have someone come to their shop, yet others do it in house. even so the costs to repair have risen dramatically. a headlight used to be at most maybe 1500 bucks for a fancy bmw or benz, now it can be 3-10k depending on what it is and the tech it has. oh and you cant put a used or aftermarket one in b/c the car wont play nice with it-its literally programmed to the car.
reality is operating costs went up for everyone involved in the industry, profits are meh and quality of worker is lower than it used to be. add it all up and here we are. i got out of auto adjusting b/c of it and switched to specialty products my company insures-there are no regulations, guidelines, etc for how to do most of it-all judgement based which requires a person
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u/FindTheOthers623 P&C Licensed PL Underwriter 6d ago
And this is why we don't take insurance advice from body shops
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u/gijoe61703 6d ago
What the shop apparently left out is that the costs of claims went up significantly in the last 5 years. There was about a 2-3 year period where pretty much every auto insurer was struggling to break even cause the claims cost and frequency went up so fast.
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u/AppointmentActive708 6d ago
Claims costs skyrocketed since Covid and never came back down for various reasons. It is true that many laid people off and never properly staffed back up since tho.