The road to resolution: Reimagining auto insurance claims

December 19, 2025

The auto claims experience has to change. For customers, it's too often a fragmented process that leaves them feeling unsupported and dissatisfied. For carriers and other stakeholders, the current process costs unnecessary time and expense. To increase efficiency, reduce expenses and improve satisfaction, the system needs wholesale reinvention.

The underlying challenge: Improving claims economics

High loss ratios, persistent loss adjustment expenses and long cycle times carry a significant cost for auto carriers.

Loss ratio: The most direct, though so far unrealized, path to improved economics is through lower claims losses. Carriers can achieve this by lowering the frequency of claims filed or reducing the severity of claims filed—ideally both. This includes latent (“invisible”) claims, losses that go unreported initially but emerge later as litigation or supplemental payments.
Loss adjustment expense: Despite years of investment in claims technology, most carriers still rely heavily on inefficient manual processes that inflate costs. Loss adjustment expense (LAE) represents a meaningful share of overall claims costs, erodes margins and pressures insurers to identify claims management efficiencies.
Cycle time: Every additional day a claim remains unresolved introduces incremental expenses, from rental reimbursement to litigation exposure.

Auto claims roadblocks

Long-time traffic jams

Recent bumps in the road

Fragmented processes: Adjusters are often burdened with highly manual adjudication tasks and lack intelligent decision-support tools, leading to uneven workloads, inconsistent outcomes and long processing times.

For policyholders, uncoordinated handoffs among carriers, repair facilities and service partners often leave them waiting for resolution.

Frustration with DIY claims management: People involved in accidents frequently have to personally manage logistics and coordinate support among the carriers and service providers that are supposed to help them in their time of need. They and intermediaries are increasingly demanding real-time updates, clearer communication and equitable treatment.

Regulatory scrutiny: Regulators continue to focus closely on adverse consumer outcomes, data usage, fair claims settlement practices, and how carriers use modeling in their claims decisions.

Rising repair costs: Price increases, supply chain challenges, tariffs and increasingly complex vehicle technology (including electrification) have combined to raise the cost of parts beyond the overall rate of inflation. A shortage of skilled technicians is further exacerbating this situation.

Litigation expenses: Litigation costs have always been a concern for auto insurers, but aggressive legal activity is resulting in large jury awards that strain loss adjusting expense (LAE) and underwriting profits.

Challenges from new market entrants: Digital-first insurers and data rich equipment manufacturers are introducing innovative claims solutions—for example, prompt, incident-based restitution—that heighten competition and redefine customer expectations.

Increasingly frequent and severe CAT events: The growing impact of weather events on auto claims is driving higher loss costs and straining operational resilience.

The way forward: Reimagining claims

While many market participants are investing in incremental improvements to their respective parts of the claims process, few are reimagining the entire experience, which is by its nature interdependent.

If they’re bold enough to seize the opportunity, insurers can transform claims into a competitive advantage that makes every claim an opportunity to create value for and earn loyalty from all stakeholders. We see six connected, strategic imperatives for redesigning the function.

Shift to prevention	Get economic benefit from data	Construct ecosystems
Build digital-first experiences	Reinvent the talent model	Build resilience

Incrementalism, the industry’s traditional approach to change, isn’t adequate for reimagining claims. Market movers are taking a bold, multifaceted approach.

Shift to prevention

The claims process is reactive by design. Carriers mobilize resources after a loss, assess damages and work with relevant partners to settle the claim. Though this process is well established, it comes with risks of cost escalation and customer dissatisfaction.

Prevention offers a fundamentally different path, one in which insurers aren’t just payers but proactive safety partners. The value proposition is a game changer: Helping customers avoid accidents in the first place can significantly cut expenses.

Prevention begins with applying customer and peer data from advanced driver assistance systems (ADAS) and connected platforms to make personalized recommendations. Rather than broad, impersonal messaging, drivers can receive tailored alerts based on driving data highlighting, for example, how their braking patterns compare to the safest drivers and how regular vehicle maintenance can help prevent costly accidents and repairs. Prevention also can take the form of structured safety programming in which carriers embed relevant safety courses and incentive programs with motivators like premium discounts.

The payoff here is twofold. Policyholders receive relevant advice that demonstrates their insurer cares about their well-being, encouraging their buy-in. And over time, these proactive interactions can transform carriers from distant payers of claims to daily partners in safety, strengthening retention and improving outcomes for all concerned.

Even modest adoption rates of prevention technologies, ADAS and usage-based programs can translate into measurable loss reduction.

Build digital-first experiences

While carriers have been saying digital-first for years, fragmented workflows inhibit efficiency and often force customers to provide the same information to multiple parties and rely on manual handoffs to reach a resolution. Fortunately, advances in AI, automation and connected vehicle data are making it possible to improve workflows, enhance fraud detection and personalize service, notably via:

Self-service portals, including mobile apps.
Automated damage assessments that can significantly increase the speed of the damage assessment and appraisal process thanks to their combination of AI-powered image recognition and telematics data.
Digital payments, which result in rapid disbursement instead of unsatisfactory wait times for funds.

Transparency and access are critical because policyholders expect real-time visibility into claims status. Digital platforms that provide continuous status updates, easy access to documentation and accessible two-way communication can transform what’s historically been a stressful, opaque process. These platforms help reduce call volumes and manual inquiries, freeing up adjusters to focus on complex cases where they can add the most value.

Ultimately, building digital-first experiences requires carriers to play a central role in choreographing claims ecosystems. Integrating repair facilities, rental providers and payment processors into a unified digital workflow can help customers experience a seamless journey rather than a patchwork of disconnected steps.

Auto insurers have touted digital-first for years but have often failed to deliver.

Get economic benefit from data

Claims generate vast amounts of data, much of it underutilized. Every touchpoint, from first notice of loss to repair completion, creates a trail of behavioral, financial and operational insights that carriers can apply to new revenue streams.

As we noted earlier, particularly promising pathway is “prevention as a service.” By aggregating claims data across geographies, vehicle types and customer segments, carriers can more accurately identify leading indicators of risks and offer these insights to policyholders or third parties.

Carriers also can explore ways to repackage aggregated claims insights to support the broader consumer ecosystem. Auto manufacturers, repair networks and even navigation service providers all stand to benefit from anonymized data that reveals patterns in accident frequency, repair cycle times and recurring parts failures. For example, claims data that highlights common damage types across vehicle models can inform design improvements and repair protocols. Repair shops can base parts ordering on local and vehicle trends.

Naturally, consumer privacy and data protection cannot be afterthoughts. Instead, they must be the foundation of customer relationships and regulatory credibility. Carriers must clearly communicate which data they collect, how they use it, and the benefits policyholders can expect in return. Consent-based models, combined with anonymization and strong governance controls, are essential to avoiding reputational risk and regulatory setbacks.

Effective data application throughout the claims process is the pathway to prevention as a service.

Reinvent the talent model

Historically, adjusters personally processed large volumes of cases, resulting in a heavy administrative burden. But the profession is changing, as independent process automation increasingly undertakes routine, repetitive, manual tasks like data entry, document validation and claim file routing. AI-enabled triage and predictive damage assessments can further cut average handling times cost per claim by ensuring simple claims can progress smoothly without manual intervention. That frees up adjusters to focus on complex cases where their skills can add value and increase customer loyalty.

As more of the claims process is automated, adjusters will increasingly apply their expertise as “humans in the loop” to high-value and high-risk cases, where human judgment, empathy and person-to-person communication are critical. This requires skills in data analytics/interpretation and ecosystem management, as well as an innovative mindset.

This change goes far beyond individual reskilling. It requires reimagining the entire staffing model. With agentic AI and intelligent automation, carriers can align talent to simple, moderate or complex segmentation models. As automation assumes ownership of predictable or low-risk claims, adjusters can focus on complex ones. The result will be smaller, specialized teams of skilled, empathetic adjusters who work alongside digital agents to drive faster and more consistent resolutions.

Automating the claims process isn’t about eliminating workers. It's about utilizing them as “humans in the loop” on complex, high-value claims.

Construct ecosystems

No single carrier can reinvent claims by itself. The process involves many stakeholders who need to seamlessly work together, sharing data and incentives, in fully integrated ecosystems. These partners include:

Vehicle manufacturers: The ubiquity of telematics and sensors, an increasingly wide range of electronic features, and electrification have increased vehicle repair costs and complexity. To improve feature design, usefulness and reparability, carriers, vehicle manufacturers, parts suppliers and battery producers need to work together on joint initiatives to streamline repair protocols, design more effective warranties and create recycling programs to offset end-of-life battery and parts/component costs.
Repair networks: Many carriers already have direct repair programs (DRPs) or preferred vendor relationships. They don’t necessarily need to expand these networks but do need to digitally empower them to enhance the customer and partner experience. By incentivizing repair partner integration into digitally connected ecosystems, insurers can enhance data exchange among stakeholders, streamline service scheduling and provide real-time insights into expected costs.
Technology providers: Advanced technologies are critical enablers of claims transformation. Partnerships with AI vendors, telematics providers and insurtechs can accelerate carrier innovation, enabling them to adapt quickly—especially during periods of high claim volume—without having to make prohibitive upfront investments.
Legal, medical, and other services: People involved in accidents often need to file injury claims. Carrier integration with medical networks can facilitate access to care and billing transparency, while early legal engagement can lower the risk of adversarial and costly litigation.

As a central point of contact for customers and service providers, carrier-orchestrated ecosystems can negotiate pricing, streamline repairs, involve other relevant services, and improve connectivity among participants. In fact, by leveraging real-time data from their partners, insurers can intervene earlier in the claims lifecycle, often before a claim is formally filed. This proactive approach can accelerate mutually agreeable resolutions and reduce claims leakage, frictional costs and settlement size.

Because carriers are at the center of the claims process, they’re in an ideal position to orchestrate ecosystems that benefit all relevant stakeholders.

Build resilience

Increasingly frequent and severe natural catastrophes are a growing cause of loss for auto insurers, but emerging tech offers hope. Drones, sensors and connected vehicle technology provide proactive monitoring that can help carriers give policyholders real-time hazard results and safety guidance before and during CAT events, thereby reducing loss or preventing it altogether.

In addition, digital workforce models play a critical role in ensuring business continuity during CAT events. Virtual claims support, mobile apps and automated intake channels can enable adjusters to remain accessible even when disaster zones are unreachable. Claims insights from CAT events then can be fed to underwriting and pricing, helping refine geographic risk tiers and understanding of emerging hazards.

Post-event recovery also can benefit if carriers coordinate directly with manufacturers, suppliers and repair shops for scheduling, parts sourcing and cost management. Moreover, co-developing solutions with other key stakeholders can help mitigate losses over time, transforming CAT response from a reactive function to a core source of competitive advantage and resilience.

Preventing CAT loss benefits everyone, not just auto carriers and their policyholders.

A roadmap to reinvention

Carriers individually spend millions of dollars each year to modernize their claims organizations because they know how critical it is to get the claims experience right. However, most of them are working within old frameworks, essentially applying band-aids.

Ultimately, claims transformation isn’t just cutting costs or driving efficiency, it's creating better outcomes. Proactively preventing risk and achieving timely resolutions are the key. Carriers that do this well will build deeper relations with their customers while simultaneously reshaping the economics and purpose of auto coverage.