New technologies allow more accurate damage recording but co-operation between OEMs, LSPs and insurers is crucial in the face of rising insurance premiums.

The damage claims and insurance industry is always seeking ways to improve the accuracy and speed of damage incident reports and claims processing, as well as collecting and analysing data. While the sector has long relied on the internet and communication tools for this process, it is also one of many in the vehicle logistics supply chain increasingly turning to electronic proof of delivery (ePOD) systems. Such systems make use of cloud-based software and storage, together with mobile phones, tablets or other handheld devices, to record and file insurance claims and damage inspections.  

These systems offer opportunities to record damage, determine blame and causes, and ultimately to increase the response time of repair or insurance claims. However, as with any new technology, the industry must make sure operators use it appropriately and that the data it provides is understood correctly. 


Some providers maintain that human expertise in assessing damage and reading data is still the most important part of the process. However, the ability of technology such as ePOD to speed up processing times and reduce costs could be critical at a time when insurance premiums are on the rise. In the wake of recent natural disasters, including the so-called ‘super storm’ Sandy last autumn in the eastern United States, there are signs that extreme weather is having knock-on effects for insurance prices. With carmakers and logistics providers anxious to reduce costs in response – and decreasing their insurance coverage as a result – the claims sector is working to ensure there is enough capacity in the system to process claims promptly. But it’s an issue that will require coordination across all supply chain stakeholders. 

The ePOD movement 

More OEMs, logistics service providers and insurance companies have started using web-based technology to perform vehicle inspections – with the inspection record often recorded electronically and uploaded to a website. One example is TES Automotive and Claims Management Services, which has set up an interface between its own database systems and those of OEMs, underwriters and logistics service providers. When carrying out inspections, staff members use a web-portal and PDT (portable data terminal) system that includes a VIN (vehicle identification number) reader and camera to record inspection results, mainly during ‘batch surveys’ such as those on reception from trucks or vessels.

According to Willem de Lange, managing director at the Netherlands-based TES, the main advantage of such systems is the accuracy and efficiency they provide when registering damage and exchanging damage and claim information. However, he warns that the method is sometimes a poor substitute for face-to-face communication. “Information becomes quite clinical between the different involved parties. Once in the system, it becomes its own self-fulfilling prophecy based on numbers only. Any nuance coming from the personal involvement is lost,” he says.

“We put very much effort into automation, including the easy sharing of data [and] information, but this is as a tool to make things happen more transparently, efficiently and smoothly, not as a solution to problems that could not be solved in the first place,” de Lange adds.

UK-based inspection company Sevatas carries out all its inspections on specialist data capture units. Information recorded at the inspection site is uploaded to the company’s own bespoke database, called Vision, which is available online for clients and OEMs. Matt Holmes, director at Sevatas, agrees that technology like Vision makes the inspection process much simpler, but warns that complications remain – including the fact that, for some routes, users may need to refer to multiple websites to ascertain the full vehicle inspection history.

Holmes points out that some carmakers are moving towards ‘full ownership’ of the inspection history, requiring logistics service providers to upload data to existing OEM systems, such as vehicle tracking systems, which he believes will further simplify the process. Even so, he highlights a number of ongoing compatibility issues, including the fact that not all inspections are performed in a way that allows data to be uploaded to a third-party system.

For Holmes, though, the advantages outweigh the disadvantages; he praises the speed of such systems and the way that they provide immediate knowledge of exactly what the dealer has signed for. He also believes that an agreed e-copy at the time of delivery can help improve the allocation of blame for damage incidents. 

"Automation is a tool to help things happen more transparently, efficiently and smoothly, not a solution to problems that can not be be otherwise solved" – Willem de Lange, TES

“Presently we have two copies of the same document, which on rare occasions will differ,” says Holmes. “A paper copy can be amended after the delivery and it can take a week for the logistics provider’s copy to be administered and the discrepancy identified. This creates big problems with the dealers who are in effect being caught out. If the e-copy is agreed at the time of the delivery, there can be less room for argument later.

“If the ePOD data is merged into the vehicle record with all of the other handover inspections, the claims agent’s role is simplified,” adds Holmes. “It becomes simpler to identify where a damage occurred and who caused it.”

Speeding up the claims process

Fenkell Automotive Services also uses an ePOD-type system to receive inspection data. Mary Taranto, director of global claims and systems, says Fenkell’s claims system is completely paperless, taking the form of electronic data interchange (EDI) and email notifications. Fenkell is also in the process of implementing a connection capable of receiving data in real time from logistics providers using an ePOD system. 

Large US-based auto haulier Jack Cooper Transport has also just started going paperless, using a system called Xata that Craig Irwin, president of the company, is confident should help speed up the overall claims process. The system will make use of portable equipment that can take geo-tagged photos of damage that will be able to quickly and more accurately allocate the source of damages. 

“Using the handheld device, we will be able to take a picture of the specific damage. This will go a long way in settling disputed claims,” he says.

Ellen Fontaine, vice-president, strategic planning and marketing at US-based Vascor Logistics, agrees that handheld scanners improve the flexibility and timeliness of data transmissions. She points out that, if information on damage was not transferred on a real-time system, response times would be much slower. 

However, some executives point out that ePOD-type systems won’t eradicate all delays in the inspection and claims process. Taranto doesn’t think it will have a big impact on insurance claims themselves, for example.

“I think the technology is great in order to receive the inspection data real-time,” she says. “This will assist in damage prevention techniques by way of real-time data [but] I don’t believe it will create any issues or help the claims process, since the claims are not filed immediately anyhow.” 

"Using the handheld device, we will be able to take a picture of the specific damage. This will go a long way in settling disputed claims" – Craig Irwin, Jack Cooper Transport

For de Lange at TES, any speed gained during the process “should pay off in the total process”,  but he points out that, sometimes, data processing is not the problem compared to processing the claims themselves. Insurance companies and carmakers still need to act upon the information that logistics providers or other third parties supply. 

“It’s a little comparable to how the theoretical acceleration of some motorbikes can be so impressive, but the actual acceleration is dependent on the skills of the driver,” he says.

“Claims handling, at least the versions we are involved in, is to a great extent [based on] the interaction between different parties in the supply chain,” de Lange adds. “The administrative and interactive part – where the technology comes in – is only a small part of the process. So it’s potentially very useful in helping to speed up the process, but without further changes in the process, including [changes in] the interaction between the different parties, the relative effect will hardly be noticeable.” 

In the future, de Lange speculates that technology might become sophisticated enough to replace physical inspection with a “full body scan”. But he trusts that, until such a time, changes in the methods of registration and exchange of information will not be significant enough to make a great impact. The human touch will still very much play an important role.

Prevention of future damage

As well as speeding up the claims process, Sevatas’s Holmes is confident that carmakers, logistics providers and insurance companies can use emerging technologies and methods of data exchange to help in the prevention of future damage. Increasing the accuracy, storage and speed of data allows all supply chain actors to analyse the root causes of damage.

“As a claims agent, this is our primary role. We exist to help OEMs and LSPs reduce the damage rates and have a track record of doing so,” says Holmes. “We have, for example, halved the damage rate for one client in the two years since appointment by focusing on damage data and generating improvements in the logistics chain.” 

In doing so, Sevatas shares data with carmakers and their insurance companies to identify “repetitive damages”, as well as opportunities to reduce damage levels and cost. The collection and analysis of data on damages can help to trigger remedial activity, such as quality auditing of logistics providers, improved vehicle protection and changes in logistics arrangements. Holmes says the company also exchanges data with logistics service providers to help them to understand what damage they’re causing and why.

"The carmakers and logistics providers will have the capability to implement process changes when seeing real-time data within our dashboards, which will greatly improve damage prevention" – Mary Taranto, Fenkell Automotive Services

Sevatas occasionally runs “client forums”, where experts from carmakers and logistics providers’ quality and logistics divisions come together to share data, best practice and ideas. Importantly, the company shares information with insurance providers, which Holmes says is aimed at improving knowledge of “catastrophic loss underwriting and claims management”.

Another important feature of ePOD-type technology is the provision of a variety of ‘dashboard’ options that can help users in a number of ways. For example, Ellen Fontaine says that the system used by Vascor Logistics allows the company to carry out a thorough root cause analysis and diagnostic check on vehicles following damage incidents.

Taranto also highlights the fact that Fenkell’s system provides dashboard reporting of all data feeds collected from the various logistic providers.  “The carmakers and logistics providers will have the capability to implement process changes when seeing real-time data within our dashboards, which will greatly improve damage prevention,” she says.


Representing data the right way

As well as using individual records for claims handling and settling purposes, TES Automotive puts together any data that it captures in analytical reports that are shared with stakeholders for the purpose of damage prevention, among other things. 

According to de Lange, there is “no standard script” for this process, but he points out that the company applies common techniques for distribution and communication. He stresses that it is critical for useful and meaningful data to be explained, so that carmakers and logistics providers understand “the story behind the graphs, bars, pie charts and listings and put them into perspective”. 

However, he warns it is essential that companies do not misuse, manipulate or misrepresent data. “When aggregated and put into statistics, data becomes a representation of the truth – and this representation requires, at least to our philosophy, some perspective so it is adequate for its intended use,” he says.

“For good order’s sake, I am not referring to analytical manipulation, something that we stay far, far away from. I am referring to ‘validation’,” says de Lange. “For instance, effective zero-damage can mean perfect logistics or no inspection. But in both cases the bar in the graph will be equally high.” 

Effect of extreme weather conditions

Sometimes, of course, the most advanced technology in the world can do little to anticipate or to deal with major incidents of damage, such as hurricanes and flooding. In October 2012, super storm Sandy had a dramatic impact on carmakers, logistics companies and dealers operating across the eastern seaboard of North America. 


In the aftermath of the event, insurance companies have faced a huge challenge in processing the deluge of claims for vehicle damage. The port of New York/New Jersey, for example, saw more than 10,000 cars damaged. There was also a large amount of finished vehicle inventory damaged at many dealerships. 

While the storm was of a particularly high magnitude, it follows a number of extreme weather events that have caused considerable damage. The Japanese tsunami and Thailand flooding of 2011 had tremendous impacts across the automotive supply chain, including damage to finished vehicles, as did hurricanes in North America. The frequency of these and smaller incidents raises questions over whether there is enough capacity in the insurance and claims system to deal with extreme events of this magnitude – and what might be the broader impact in terms of future premiums.

In Holmes’s view, the ongoing effects of extreme weather events are apparent in the sector and he believes that OEM premiums are already on the rise. “The marine cargo market has had a tough couple of years with large losses in Europe and the United States,” he says. “These events followed the Thailand floods and Japanese tsunami. Our clients suffered with Sandy and with hail last year and the insurance market has hardened in response [with] premiums increasing as insurers reduce capacity and exposure to the sector or increase premiums to recoup losses from previous years.” 


As well as being a claims agent, Sevatas also supports the administration of insurance programmes for insured OEM clients. Holmes points out that, already this year, three of the company’s large clients have renewed policies and have experienced increased premium rates as a result of claims, even if they have not suffered a large loss themselves. 

In seeking to offset premium increases, he says carmakers might opt to reduce coverage, such as by increasing their ‘self-insured’ element and reducing the value that is subject to insurance. Holmes expects that the net effects of such a hardening market will be a combination of this reduced insurance exposure and higher premiums.

Holmes also points out that premiums have risen in some cases because of the combination of weather events, such as flooding or hail storms, in conjunction with higher vehicle inventory levels in regions where sales are poor. “Premiums are increasing in response to higher accumulations of vehicles. For example, if vehicle sales fall but production doesn’t fall fast enough to keep up, as at present [in Europe], OEMs see increased stock levels, with vehicles waiting in compounds to be sold,” he says. “As storage volumes increase, insurers know the risk of a higher value claim, for example if hail hits, will increase. Storing more vehicles at risk equates with higher premiums.”

The capacity to repair

In terms of the capacity of the existing system to deal with more extreme events, De Lange stresses that the claims-processing system itself is not the problem, largely because once the parameters are agreed, the process tends to entail a lot of “copying and pasting”. He suggests that the main issue relates to the organisation of the repair event.  

“We have been involved in some major events and the most difficult part is to avoid uncoordinated action, which means that you have to slow down parties at times they actually want to ‘over’ speed-up,” he says.

For de Lange, two major factors can easily result in solutions that at best are operationally questionable. The first is a fear of lack of repair capacity, such as for hail repair, where companies are afraid competitors may hire the capacity before they do. The second is what he calls “undo-craziness” – this is what he says leads companies to believe that the damage event is interfering with all planning and prompting them to become overly anxious about remedying the situation right away. “In view of the claims procedures, insurance policy conditions are impossible and for this reason become very inefficient and long-lasting, irrespective of the available capacity,” he says.

"As storage volumes increase, insurers know the risk of a higher value claim, for example if hail hits, will increase. Storing more vehicles at risk equates with higher premiums" – Matt Holmes, Sevatas

Holmes highlights that the broader insurance market suffers from a lack of experience and expertise in managing large claims. He points out that there are fewer experienced loss adjusters now than previously and this results in longer claim settlement times. In his view, the requirements for an OEM in the event of a large loss are unique, so it is up to the insurance company to respond to these requirements effectively.  

For Holmes, a number of elements make the nature of loss for automotive companies unique, not least of which is vehicle condition, particularly since replacements need to be of an ‘as new’ standard or the vehicle cannot be sold.

The automotive loss claims differ in view of the need to confirm the availability of spare parts and the need to ensure that enough capacity exists to survey the vehicles and assess whether they can be sold as new.

“We had one example last summer where the OEM’s local distributor ignored our instructions on how to manage the hail event and the entire claim of €250,000 ($330,000) was rejected by insurers as there was no cost control evident at all,” Holmes says.

Meanwhile, Vascor’s Fontaine is keen to stress that a supply of new cars is ‘critical’ in the aftermath of extreme weather events and that people need transport to get their lives back on track. One thing that became apparent to her and her staff during the aftermath of Sandy was the lack of sharing of best practice between providers. This was not intentional, she points out, but happened because of how quickly things were changing and how unexpected some outcomes were.

“For the future, there should be an effort to access and document how extreme situations like this should be handled so we won’t have to reinvent the wheel,” she says.