To put it simply, we’re preventing fraud by AI with AI.

But how realistic are AI generated images really?

To put AI image generation to the test, we asked ChatGPT to “generate a realistic photo of a BMW X5.” Here’s the result:

Next, we wanted to add some damage, so we prompted: “add some scratches to the front bumper.” The result was surprisingly convincing:

To further manipulate the image, we asked ChatGPT to change the license plate to read “123 ABC” instead of “BMW X5.” Here’s the updated photo:

At this point, the image already looked quite realistic, but we wanted to refine it further. To make it appear more authentic, we reduced the image quality and formatted it to match typical phone camera dimensions. Here’s the final result:

Upon closer inspection, the image appears a bit too polished to be a real photograph. However, when viewed casually, such as when scrolling through a collection of photos, a claims handler might not immediately notice the inconsistencies.

Now, this wasn’t a tutorial on how to commit insurance fraud, but rather a demonstration of how little effort it takes to generate a fake image. If we added some Photoshop on top of that, making the car body a bit dirtier and adding some dirt on the ground for example, it would be quite difficult to tell whether the image was real or not.

How much fraud is there in motor insurance?

The Coalition Against Insurance Fraud (an organization dedicated to educating and protecting American citizens from the cost and damage of insurance fraud) published a study in 2022 to develop a new estimate of the economic impact of insurance fraud in the US.

The study referenced a statement from the Insurance Information Institute, which states on its website:

“In the late 1980s, the Insurance Information Institute interviewed claims adjusters and concluded that fraud accounted for about 10 percent of the property/casualty insurance industry’s incurred losses and loss adjustment expenses each year.”

Based on this, the study assessed the cost of P&C fraud from 2016 to 2020 by taking the loss adjustment expense (LAE) for each year and then multiplying that figure by 10%. Here’s the result:

Source: https://insurancefraud.org/wp-content/uploads/The-Impact-of-Insurance-Fraud-on-the-U.S.-Economy-Report-2022-8.26.2022.pdf

According to Statista, in 2023 private passenger auto insurance premiums accounted for approximately 36% of all P&C insurance premiums written in the US. Since auto insurance is the largest segment of the P&C insurance market, it also contributes the most to overall P&C fraud. 

It’s important to note that these figures are based on data from a few years ago and do not account for the recent advancements in AI, which could have significantly impacted fraud detection and prevention. Without more recent studies, the true extent of fraud today remains uncertain. We’ll have to wait and see.

The solution

As fraudsters now have thousands of AI tools at their disposal, insurance companies must also equip themselves in response. While insurers could develop their own AI solutions, we can assure you, it’s no picnic. In our experience, it’s far more efficient for insurers to focus on what they do best and outsource the necessary solutions.

For outsourcing to be as seamless as possible, AI add-ons should be lightweight, easy to use, and integrate smoothly into existing processes. With DriveX, that’s exactly what we aim for. We couldn’t wrap up this blog post without a little promo now, could we? But seriously, from an insurer’s perspective, eliminating one source of fraud – faked vehicle photos – is easy with DriveX.

The post AI vs AI: The Fight Against Fraud appeared first on DriveX.

Windscreen repair companies have benefited from increasingly strict MOT (Ministry of Transport) tests, which encourage vehicle owners to replace or repair damaged windscreens rather than neglect them. The MOT ensures that a vehicle meets the minimum legal standards for environmental impact and road safety at the time of testing.

1. Autoglass (Belron) – the global standard

Autoglass® is part of Belron Group, the world’s leading vehicle glass repair and replacement company. They emphasise handling insurance claims on behalf of their clients and employ 1000 technicians across the UK.

They have published an Environmental Policy Statement, outlining their commitment to minimizing environmental impact, sourcing sustainable products and services, achieving net-zero carbon emissions and using carbon footprint data to guide their action plans. Autoglass stood out with a dedicated research and development center, Belron® Technical, which continuously enhances the knowledge, tools, and training available to its technicians. What we really enjoyed was their easy-to-use online booking form, which makes scheduling an appointment very intuitive. Another sign of a great customer experience is their strong Trustpilot rating of 4.5 which is based on 126K reviews(which is double the number of reviews compared to the other two).

2. National Windscreens – the emission reducers

National Windscreens is the UK partner of Automotive Glass Experts®, a global network of leading automotive glass repair and replacement companies. With over 600 mobile technicians available across the UK, they offer widespread service coverage.

For the past two years, they have published a detailed Sustainability Report, each spanning approximately 40 pages, outlining their environmental initiatives. Impressively, 100% of replaced windscreens are recycled, and they have also published an emission reduction journey map. Their well-thought-out environmental strategy is quite impressive and definitely sets them apart in the industry.

3. Auto Windscreens – the charmers

Auto Windscreens grabs attention with its witty slogan: “Clearly going places.” This claim is backed by its ServiceMark accreditation from the Institute of Customer Service and an impressive Trustpilot rating of 4.6 (from 63,000 reviews). 

From a sustainability standpoint, they recycle 100% of their waste glass and based on their website seem to have a clear environmental plan in place. What truly sets them apart, however, is their annual charity challenge, through which they support various initiatives each year, demonstrating a strong commitment to corporate social responsibility.

The post Top 3 Windshield Repair Companies in the UK appeared first on DriveX.

Still, the industry faces challenges like rising material prices and the growing complexity of windshields with advanced driver-assistance systems (ADAS), which require more specialised repairs. With a push for sustainability and digital claims processing becoming more popular, the industry is moving towards being more efficient and innovative while keeping up with the latest vehicle technologies. But for us, who are the US glass repairers that have stood out? Here they are, in no particular order:

1. Gerber Collision & Glass – the customer favourite

Brought to you by Boyd Group, Gerber Collision & Glass operates in 34 states across the nation. They not only specialize in auto glass services, they also perform windshield repairs and auto body work.

Everywhere we searched online, Gerber’s customer reviews particularly stood out due to its customer’s praise. Their services come with lifetime warranties, giving assurance that the service provided is up to standard. Gerber also has partnered with most insurance companies which makes it convenient for customers when filing claims. Furthermore, they have mobile units that offer auto glass repairs and replacements at the customer’s desired location.

2. Glass Doctor – the nationwide expert

Glass Doctor is a part of Neighborly (world’s largest home services company) and is present in 45 states in the US. Their nationwide presence makes them a convenient choice for windshield repairs and replacements. 

Glass Doctor is known for its comprehensive glass services, covering not just auto glass but also residential and commercial glass repair. They also offer both in-shop and mobile services, giving customers the flexibility to choose the most convenient option. Furthermore, Glass Doctor is well known for having great service with fast and easy answers to any windshield repair and replacement needs.

3. Auto Glass Now – the digital innovator

Auto Glass Now has established itself as a recognised brand in the US for automotive glass services. Operating in 37 states, the company specialises in windshield repair, replacement and calibration.

Auto Glass Now also offers lifetime warranty which guarantees that the customer is serviced with effective results. In addition, the ASM certified technicians possess no less than five years of service, which assures that the customers get professional help. What impressed us the most is their online quote request, which is very intuitive and enables customers to describe the damage and receive an estimate in no time.

The post Top 3 Windshield Repair Companies in the US appeared first on DriveX.

1. Cary Group – the sustainable leader

Cary Group specializes in vehicle glass repair and replacement across Sweden, Denmark, and Norway. The company also provides auto body repair services, positioning itself as a full-service provider in the Nordic region. 

What distinguishes Cary Group is its dedication to environmental sustainability. The company incorporates eco-friendly practices by utilizing recycled materials, minimizing waste, and adopting energy-efficient methods. A recent strategic development includes the acquisition of 123 Pare-Brise in France, which operates 129 workshops nationwide. This move enhances Cary Group’s footprint in the European market while upholding its commitment to sustainability.

2. InCar – the Finnish powerhouse

InCar is the largest auto glass service network in Finland, with over 50 locations across the country. With over 30 years of experience, the company specializes in windshield repair, replacement and calibration.

InCar’s customer-centric approach sets it apart. The company collaborates directly with insurance providers and handles the submission of repair details to customers’ insurance companies, making the process more efficient for clients. Its widespread service network ensures that customers can access quick and professional vehicle glass repairs throughout Finland. This focus on efficiency and dependability has established InCar as a reputable name in the Finnish automotive service sector.

3. Belron Group – the global standard

Belron Group provides vehicle glass repair, replacement and recalibration services through the Hurtigruta Carglass® brand in Norway and Carglass® in Denmark, Finland and Sweden. 

The company is known for its top-tier standards and expertise in the industry. Its key advantage is its vast international network, which operates under multiple brands while ensuring consistent service quality across all regions. Belron encourages ongoing knowledge sharing within the organization to implement best practices globally. The company also emphasizes sustainability by actively minimizing waste and emissions and supporting a circular economy. Its dedication to ethical business practices further solidifies its position as a leader in the automotive glass repair sector.

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To delve deeper into the development of this technology, I sat down with our CTO, Kentti, on a crisp November morning to ask him some challenging questions.

Okay, but what do you do as the CTO of DriveX?

My job is to create and implement the technical vision for DriveX’s deep-tech product. This involves staying up-to-date with the latest technologies and tools in the fields of computer vision and AI. The goal is to understand how to combine these technologies with traditional programming to develop a service that fills a gap in the market, offering a solution that delivers significant value to customers through cost savings or increased revenue.

If I were to use a metaphor, my role is like conducting an orchestra. The musicians represent various applications, servers, and networks, and my job is to ensure they all work together in harmony.

What’s the favourite part of your job?

My favourite part of the job is when a newly developed technology is used for the first time in a pilot project. That’s when we measure the product’s success against business KPIs. Seeing how users benefit is incredibly motivating. As an ongoing process, it’s also quite rewarding to act as the “doctor” for the system by eliminating pieces of code which limit scaling any  systems to support DriveX’s  rapid growth in usage.

How would you describe the AI development process at DriveX?

The process is centred around enabling a small team to create the maximum amount of valuable data as quickly as possible, avoiding months of manual work. In 2024, we’re fortunate to have tools that allow us to generate training data with machines. This means we can run thousands of processes simultaneously, each completing in seconds, simulating the work of a thousand people. This efficiency drives our training processes forward.

Phases:

1. Planning, understanding the problem
2. Selection of AI model type and architecture
3. Collection of training data (+ labelling, if necessary)
4. Model training
5. Measuring model prediction performance against test data

How do you gather training data? 

Training data can be gathered in two ways. First is quite time-intensive, where data operations specialists gather, label, and categorise the data manually. The other option is to source the data automatically, either from our databases or by using tools to render 3D models (of cars, for example)  in simulated environments. For computer vision, the latter  approach is feasible due to recent innovations by the developers of  graphical rendering enginesc – synthetic data in 2024 looks very photo realistic. 

What happens after the last phase?

If we identify weaknesses during performance measurement, and describe how to solve each individually. Where  additional training data is needed, we incorporate new labels  into the training dataset (e.g., if the model could be better at  detecting windshield outlines on minibuses, we source additional minibus windshield labels). This additional training cycle (steps 3, 4, and 5 from above) continues for each model even after it is deployed live. AI development is like managing a living organism: as the system runs, we keep analysing its shortcomings and add targeted training data to produce specific enhancements.

How was the AI for windshield repair/replacement decisions developed?

First, we analysed how windshield repair companies operate today. We needed to understand the criteria for deciding between repair and replacement. This revealed that factors like the type, size, and location of damage are crucial. 

Windshield repair algorithm development required three models working together to reach a decision. Each intermediate decision, such as determining the distance between damages, identifying cracks versus chips, or assessing proximity to the windshield edge, required separate models.

While our machine learning engineers worked on these models, our full stack engineers were integrating  them to the DriveX SmartScan car inspection flow. The latter involves coding the triggers for executing AI inference in real-time and building the UX around acquiring full-windshield images and close-ups of the damage from users.

Our windshield repair algorithm is a blend of traditional software engineering  and computer vision engineering. 

What was the biggest challenge in AI for windshield repairs?

The biggest challenge was gathering enough high-quality training data. For example, to train a model differentiating between chips and cracks – types of damages – we sourced 50,000 detailed annotations outlining variants of both shapes of damages. This task required either a massive manual effort or a highly effective synthetic data generator. We pursued both.

One technique we used to speed up manual labelling is pseudo-labeling. By combining manually labelled bounding boxes with Meta’s SegmentAnything we set up a semi automatic segmentation labelling pipeline which doubled the rate of creating training data.

We also generated our own synthetic labels. We rendered 3D models of cars in various environments like forests, parking lots, or streets — where our customers inspect their cars. Then, we rendered graphical sprites, such as chips and cracks, onto the windshields. 

If you weren’t building DriveX, what other AI projects would interest you?

I’d love to develop a chatbot for mental health first aid. It would engage with young people, asking insightful questions to help them see the positive side of life when they’re struggling. With a shortage of psychologists, such a chatbot could reduce waiting times and gather information about issues from people waiting on call centre queues.

There are new AI solutions and companies launching every day. How to stay competitive?

There’s quite little guidance online about how to use all of the tools that make machine learning engineers exponentially more productive. This is where we focus our innovation: finding entirely new ways to train models efficiently on large datasets by a small team. Speed to market with their products is, I believe, a key competitive advantage that separates leading AI companies from the rest.

The post Behind the Glass: How DriveX Built their AI for Windshield Repair Decisions? | Interview with CTO appeared first on DriveX.

Not exactly loyal, but fine with it

A lot of drivers simply let their insurance policy renew automatically. A study from MoneySuperMarket states that 25% said they looked around for different providers but couldn’t be bothered to switch. This means that these customers aren’t exactly loyal, but they’re fine with the current situation. However, if a customer needs to file a claim and has a poor experience, it would most likely push them to switch providers.

We did some digging to find out how many people have a poor claims experience. The report by Accenture (2022) found that 31% of the claimants were not fully satisfied with their home and auto insurance claims-handling experiences over the past two years. 

Why is the claims experience poor?

Here are some reasons why customers might have a poor claim experience.

1. Long processing time

One of the most common complaints is that it takes too long for the claim to be processed. This can be quite stressful, especially if customers are in urgent need of the payout or need their car fixed ASAP.

2. Poor communication

Customers may have to provide the same information to different people repeatedly, which can be frustrating. Additionally, customers might have to wait in silence for weeks without receiving any updates regarding their claim’s status.

3. A lot of bureaucracy

When the claims process involves numerous forms, multiple approvals, and various departments, it can become overwhelming. This can make clients feel like they have to jump through unnecessary hoops.

4. Technical problems with online claims submission

Technical issues with online claims submissions, such as website crashes, errors in form submissions, lack of mobile compatibility, or the need to download additional apps, can cause frustration. These problems can make the insurance company seem unreliable and inefficient.

5. No clear instructions

When customers do not receive clear guidance on how to file a claim, what documentation is needed, and what the steps involved are, they can easily make mistakes. These mistakes can result in rejected claims or additional delays, causing dissatisfaction.

What can insurers do to improve the experience?

We believe that AI technologies could significantly improve the claims process. According to an Accenture report, 79% of the claims executives surveyed said they believe that automation, AI, and data analytics based on machine learning can bring value across the entire claims value chain — from flagging fraudulent claims to damage assessment and loss estimation, reserving, adjusting, processing optimization, and subrogation. And we agree.

Insurance is a business where the profit rate is extremely low, at 1-2%, and competition is intense in most markets. This means that insurers need to execute small initiatives that make them stand out from their competitors. Every day, more and more insurers are hopping on the AI train and investing more in these solutions. AI is no longer just hype, but an established capability that most companies are leveraging for themselves.

The post Why 31% Are Not Pleased With Their Claims Experience appeared first on DriveX.

1. Wrong repair methods 

Many repair shops replace car parts that could be repaired, whether it is at the clients’ request, insurers’ request, or their own call. This practice means increased spending and higher CO2 emissions, as it involves using more new parts that could have been avoided. For example, windshield repair prices start from 40€ while replacing prices start from 250€. Repairing a windshield emits a few kilograms of CO2, while replacing one emits 20+ kilograms. 

2. High cost of parts: 

High-quality replacement parts are often very expensive, especially for newer or high-end vehicles. The trend towards more integrated and unique parts makes this problem worse, as parts that could have been repaired before now need to be completely replaced, greatly increasing costs. For example, some manufacturers have regulations stating that certain parts, if damaged in any way, need to be replaced. These might include parts with sensors or cameras. Also, finding some type of parts quickly can be challenging. 

3. Labour costs 

Vehicle repair industry is facing labour shortages. This means that the repair shops are forced to offer competitive salaries and benefits to attract and keep talent. These higher labour costs contribute to higher repair prices and overspending.

4. Customer service expectations 

To stay competitive, repair shops invest heavily in customer service enhancements. This can mean anything from building luxurious waiting areas to offering digital services for clients. Although these benefits are crucial for customer retention and satisfaction, they also increase the operational costs of the repair shops.

5. Economic fluctuations 

The cost of materials, parts (and also labour) can vary due to economic conditions such as inflation or supply chain disruptions. These fluctuations can mean unpredictable increases in expenses, making it challenging for repair shops to manage their budgets effectively and contributing to overspending in the industry.

On a more positive note, there are a few things that can be done to decrease the overspending (for repair shops, but also for their clients and insurers as well). A lot of manual tasks can be automated – this includes vehicle visual inspection, documenting the vehicle condition and sourcing parts for repairs. 

Automating vehicle inspection and the documentation of the state of the vehicle enables employees to focus on more value-adding activities and also decreases the need for extra labour. A smart documentation allows employees to easily find and review any vehicle, any time. This also speeds up the whole repair process and potentially increases the customer satisfaction. High cost of parts can be soothed with smart repair parts sourcing that doesn’t need a human touch and again, leaves more valuable time to the employees.

The post 5 Reasons Why Vehicle Repairs Cost More Than They Should appeared first on DriveX.

Please introduce yourself and tell us what you do at Modera.

My responsibilities include finding new clients, managing communication with existing clients, and exploring expansion and new regions. I also handle the recruitment and management of salespeople and do a lot of sales work myself, prepare proposals, and conduct client analysis. I try to stay informed about product development. I’m more of a specialist than a born salesperson. I speak what I know and promise what I can deliver. I communicate with the product department regularly and keep track of all the updates to understand what we’re doing. 

In your opinion, what is the best sales strategy? What kind of sales do you not tolerate at all?

For sales to succeed, there must be a need on the other side for the product or service being offered. Often, something is pushed on people, making them believe they need it when they actually don’t. Such sales may occur, but the end result is usually that the customer isn’t satisfied. The offering and demand should align to some extent. I avoid over-promising. Instead, I try to understand what the pain points are and whether we can help or not.

If someone is considering whether to do a trade-in or sell their car independently, what should they consider?

I think it comes down to convenience. Of course, it also depends on the region. For example, in Estonia, we are used to selling our cars ourselves to get a better price. However, we are also moving towards valuing convenience. People don’t always want to bother with showing their car in a parking lot to potential buyers. It’s easier to go to a car dealer and let them handle the process for you. On the other hand, that convenience comes at a cost. You probably won’t get the amount of money you initially hoped to get for your car. However, the final sum might not be that important when everything is well managed, there are no risks, and no one is trying to deceive the buyer.

Can you provide an example of a country with a different car sales culture?

The Baltic and Eastern European countries are not yet at the level of Northern or Central Europe. For example, if you look at Finland, Sweden, or UK, these are well-developed markets where the culture of selling used cars is on a completely different level. It’s common for people to do trade-ins rather than sell their cars themselves. In some countries, deals are even made without seeing the car in person. In those cases cars are assessed based on photos. There’s a higher level of trust between the buyer and the seller.

What does trade-in usually look like? 

There are three steps in a trade-in process. 

1. The customer fills out a web form to sell their car. Based on this, the car seller knows the make, model, and year of the car, which allows them to provide an initial price range based on the market prices. For example, €15,000 – €20,000.
2. A quick initial inspection, which can also be done by a new car salesperson. They take some pictures and provide a more precise price estimate based on these. It’s because in the case of a trade-in, when a customer is looking at a new car, they want some estimate for their old car.
3. To determine the final price, the car needs to be technically inspected. A car mechanic checks its technical condition, and performs, for example, a 50- or 150-point inspection. This includes for example examining the tire tread, paint thickness in different areas, and many other things. This process can take several hours. With newer cars, the software is checked during this process as well. Any faults in the car and the cost of repairing them are identified. The final car price quote is then provided. Some may skip the final step and make a riskier purchase.

How is the data obtained for the first step?

In developed countries where the used car business is well-established and great quantities of cars are sold, such as Finland and Sweden, there are databases available. These databases contain information about how many cars of a particular make and model are on the market and how they are priced. 

There are actually several approaches to pricing. The simplest but not very accurate method is to look at classified ads, find all similar cars for sale, and make a small calculation based on factors like mileage. This method provides the prices that people want for their cars but doesn’t provide the actual selling price. For example there are portals that collect information from different car sales portals and draw their own conclusions. This method is considered the least accurate. Another option is to gather information from sales systems, such as the Modera platform, which has transaction prices. You collect the sales history and calculate market averages based on that data. This method is much more accurate, but the information is harder to obtain. The third option is using a market price calculator. Some of these calculators are quite large, like Indicata and Autovista in Europe. They work in major markets like France, Germany, the UK, etc. In addition to buying information from sales platforms, they rely heavily on auction environments where many used cars pass through. Therefore, information collection from websites is the lowest quality, while auction center data is at the top.

Once the initial price is established, is the second step even necessary?

The second step is necessary when the customer doesn’t come via the web and comes directly to the dealership. It’s often easier to communicate face to face and handle things in person, and I believe that’s where the importance of the second step lies.

I have a good story to illustrate this. One dealership, a client of ours, had a practical issue. They have two showrooms a few kilometres apart, one for new cars and one for used cars. When a customer came to see a new car and immediately showed their current car in the yard, asking how much they would get for it, the salesperson would tell them to take a trip to the other, used car showroom to get their car evaluated.

This might have resulted in the customer leaving and going somewhere else instead. The dealership didn’t like making their customers go back and forth. This is where the idea of the new car salesperson performing the initial inspection and sending the information to the used car department came from. This was also the beginning of Modera’s current product.

How did you reach the point of developing your own car sales and CRM software?

Modera initially started by creating websites for car dealerships. This is still one of our areas of focus. We continue doing this because of customer buying habits – they are moving more and more online. 

Another direction we took was in sales and CRM solutions. This originated from a customer’s need. Back in 2014 or 2015, Nissan decided to change its dealership concept. They wanted to make the showroom experience more pleasant for the customer. They aimed to create a lounge-style environment with amenities like coffee machines, tables, sofas, plants, and more. They wanted to create a new atmosphere where customers and salespeople could meet. They wanted to eliminate the cubicle setup where the salesperson sat on one side, and the customer sat on the other side of the glass. The goal was to make customer interactions more enjoyable. They wanted to put a sales platform on a tablet, so their sales people could use it comfortably. That’s how we started creating a sales system for tablets. 

At first, the solution was simple, allowing the salesperson to make offers and showcase additional equipment. However, customers still had to leave with a stack of paperwork. This is where it all began. Then we started looking into digitising the sales process further. We knew who our competitors were – solutions that were somewhat outdated, around 30 years old (solutions that were not web-based). So, we started developing. We added lead management, test drives, inventory features, contracts, and invoices. Today, we have developed a sales system where dealerships can handle all their sales matters. The next logical step was to develop a feature that supports trade-ins, as trade-ins have become such an important part of the process (for every two cars sold, one is taken as a trade-in). We initially focused on car dealerships but have now shifted to manufacturers. When we’re currently looking for customers, we primarily approach car factories.

What does the trade-in process look like when using Modera’s software?

The idea of the application is to allow the new car seller, who might not be skilled in assessing cars, to provide an initial price estimate. They are usually the first people to meet the customer. In the application, the car is registered, and there are predefined steps where the salesperson records information about the car’s equipment, which ultimately affects its price (significant factors like leather seats, navigation system, etc.). Not every element of equipment needs to be documented if it doesn’t affect the price. The salesperson takes some photos of the car, including any damages if present, documenting and compiling the basic information. Ideally, based on this material, the person responsible for valuing the car should be able to provide an initial estimate. The advantage is that the used car buyer doesn’t need to be physically present; they can work from somewhere else. Additionally, everything is documented. Otherwise, this information would be on paper or in emails, and no one would know who has been involved and what prices have been offered. With this application, a clear digital trail is left behind.

In your experience, how often does the difference between the initial and final price quote disappoint customers?

Every subsequent quote is always lower. Explaining why the price difference occurred is part of the salesperson’s job. It’s an art of salesmanship. If you can explain it well and highlight the necessary procedures that must be performed on the car, the customer usually better understands the offered price. 

I recently visited Finland, and there, automatic pricing is widely used and generally trusted. In Finland, the government has made it mandatory for all car importers to submit their car price lists. As soon as a new price list comes in, they have to input it into the national system (because calculating the car tax there is quite complex). They have collected information at the national level for decades, resulting in a very good database to calculate prices.

If someone wants to lease a car in the case of a trade-in, does the Modera application manage it in any way?

The residual value is definitely determined. The problem is that usually leasing information is between the customer and the bank, and the car dealer can’t access it. So the car dealer has to ask the customer how much the residual value is. However, in some countries, like Finland, the car dealer can obtain this information through an API from the bank instead of asking the customer. 

What are the biggest bottlenecks for car dealerships in the trade-in process?

The biggest challenge is letting go of old habits. There’s a lot of scepticism about new systems. The trust in paper and pen, and physically seeing things, is a significant obstacle. This is especially true for old-school salespeople or buyers. Sometimes, they fail to see the big picture of why things should be done digitally. They don’t think about how doing things digitally allows information to remain easily accessible for years to come. Smaller car dealers who sell, for example, 10-15 cars per month can manage with Excel. Larger dealerships need a more advanced system.

What has changed in the trade-in process in recent years?

It has improved because decision-makers are choosing to digitise processes. Guided photo-taking and damage detection software have emerged as new trends. In some regions, like ours, there’s still scepticism about relying on photos, but in other countries, it’s becoming more popular because people realise that time is valuable. They understand that letting the computer do the work is worthwhile. Quickly finding defects on the car body and documenting them is becoming popular. Another well-developed aspect is sales photos and their editing, such as background removal and replacement. 

Additionally, I’ve seen AI-generated sales videos. Artificial intelligence is given a bunch of images, and it generates a 30-second introduction video. In our region, this might be a bit unfamiliar, but in the USA and the UK, such videos are quite common. 

What are the new trends in trade-in for the next few years?

I’m in touch with several technology companies. An interesting thing being done is inspection gates where you just drive your car through, and during that time, the vehicle is scanned, pictures are taken, and you get an immediate price. This is very cool. It’s not entirely new though, it’s already in use in some countries.

Additionally, what’s happening now is that car dealers are experimenting with new sales models. They are changing the sales chain and experimenting with direct sales. The traditional process involves dealerships buying cars from importers, setting their prices, and then selling them on. The new model means that the brand itself sells directly to the end customer. This can be online sales or through an agent, where the agent takes care of the test drive and the delivery of the vehicle. The contract is between the end customer and the factory. The factory gets access to the customer’s data and can do marketing for them. In this case, the factory can keep car prices under their control. Currently, it’s a trial period where factories are piloting this process in certain countries. Factories traditionally are not used to doing retail, and now they are building up the organisation and processes for that purpose. Dealers often already have established customer bases. They have been serving a part of the city for decades, and they have their customers. It’s interesting to see how this direct sales model will take off.

The post The Future of Car Trade-Ins: An Interview with Janek Prümmel | Modera appeared first on DriveX.

We discussed how the company has changed during his time and what has kept him there. Ahti explained why Toyota and Lexus are great brands to work with and why Amserv has decided to do so. Lastly, we dove deeper into why the maintenance of electric cars often proves to be more cost-effective compared to traditional combustion engine vehicles.

What do you do at Amserv, and what does your typical workday look like?

In the group, there are 6 dealerships in Estonia and 3 in Latvia. Anything related to after-sales service, whether it’s spare parts sales, maintenance, body painting, technical inspections, or anything that happens with the car after it’s sold, I’m involved in. I also deal with insurance matters as the product manager for insurance sales. In Amserv we offer a complete service so our clients do not have to search for additional things elsewhere.

I have various roles, and every day is different. For example, yesterday, I attended a career fair for students in Tartu. Various car brands were represented there. It required me to assemble a team and figure out what would appeal to students. We organized a Kahoot! game for them. We believe that interactive activities are much more effective for introducing the brand and the company. Just giving a presentation usually doesn’t leave a lasting impression on anyone. It’s important to reach young people through their phones – they learn more and remember more that way.

I also visit Latvia once or twice a month. Sometimes I stay for several days because one of our dealerships is near the Lithuanian border, and that’s a longer trip.

We often brainstorm internally about how to improve and offer better services to our customers. Amserv is a company owned by Estonians, and that’s a great value because the owners understand the local market, and they really care about their people. Our corporate culture is respectful and caring, we support and help each other, and this is immediately reflected in our customers.

You’ve been working at Amserv for over 20 years; what has made this work interesting for you?

I fulfill various roles in my job, so it never gets boring. We have multiple dealerships and a broader vision. Finding commonalities and implementing best practices from one dealership to another is my responsibility. It’s about standardization. When a process works well, it should be standardized to maintain consistent quality.

Certainly, there are requirements from importers that must be met. In Estonia, we represent the Toyota and Lexus brands. In Latvia, we also have Peugeot and Opel. The focus is mainly on Toyota and Lexus. They are strong importers, and that’s a value in itself because they provide many frameworks that ensure quality. My role is to ensure that we offer the same quality in all of our dealerships. And to come up with ideas to attract customers to Amserv. In both Estonia and Latvia, the market isn’t divided among too many companies. But competition is good because it drives progress. It forces us to make an effort and find ways to capture the customer’s attention.

What are some significant changes that have occurred in Amserv over the years?

At some point, we thought it was a good idea to have a full scale car dealership and work with many different brands. It took us a while to realize that it’s not that simple. The support and information provided by importers varies significantly. If the importer is weak, it restrains the business. That’s why today we focus more on Toyota and Lexus because they are strong partners. Good information exchange is ensured, and this shows to customers that things are in order. It provides clarity and trust, ensuring that you get a certain price and quality. We actually started with Toyota, and now we’ve come back to Toyota.

Do you personally drive a Toyota or Lexus?

We have hybrids from both brands in the family. You must have faith in your products. It’s difficult to sell things that you have doubts about; brand loyalty must be there.

There’s a sentence on your website: “Nothing is so good that it cannot be made better. That’s why we constantly strive to improve everything.” What do you think could be improved in the current Amserv after-sales service?

That’s an extended idea from Toyota, and it’s described by the term “kaizen,” which comes from Japanese philosophy. It means going to the detail level and looking for ways to do things even better. How to get even closer to the customer. Digitally, it’s possible to be in a customer’s pocket, for example, through apps. We have such solutions for Toyota and Lexus. The whole society is moving towards making things more digital and convenient. The points where customers can reach out to us must be easily accessible. All kinds of bookings should be easy to find. 

On more specific topics, the possibility of online check-in, like the one used in hotels, could be implemented in the automotive industry. As a customer, you can pre-book and confirm your services, saving time on-site. This aspect should be made more digital.

When making additional sales and offers, sales people often forget certain things. But if this process is made digital, and personalized products are offered based on the customer’s profile, it would solve this problem as computers don’t forget. But the digital aspect and human contact must go hand in hand. The option to consult with a specialist must remain, even if it’s through a chat in the background. We have our own chat, with real specialists behind it. They handle around 250-300 cases per month. At Amserv, we understand that problems need to be solved outside of working hours, so bookings should be available 24/7.

Amserv focuses on Toyota and Lexus. Why are these good car brands?

Certainly, experience plays a role. But it’s also about having a strong importer. Having a partner for the brand who doesn’t keep information to themselves and willingly shares it is crucial. No brand is foolproof, and something can go wrong with any car, so having a reliable source for information is essential.

Let me give you an example. I’m on the board of the Union of Car Vocational Studies, an organization that conducts vocational exams in the automotive field. We collaborate with schools. Schools that have partnerships with a specific brand’s dealership produce stronger students. Those without such partnerships have to fend for themselves and seek that information from all over the internet. Information doesn’t naturally flow in. You have to put in a lot of effort yourself, and it’s challenging to distinguish important information from the unimportant. In reality, it’s good if that information is packaged in a training format.

So, having a good relationship with importers is highly valuable.

You also sell used cars from various other brands. Do you offer after-sale services for them as well?

Typically, when someone buys a new car, they often have another car they need to get rid of. We do buy cars back from customers. We conduct inspections and assess their condition. We offer services for other brands as well. Maintenance is not the primary service we provide because for maintenance, you need brand-specific diagnostic tools and equipment that only authorized dealerships usually have. You also need trained technicians who know how to properly service that particular brand. But we do offer technical inspections and body painting services for other brands. The same goes for windshield replacement, car wash, and tire work – all of these can be done. We also have a “fast service” where you can change light bulbs, wiper blades, and do minor repairs. Brand doesn’t matter for these services.

Let’s say a person has an old Audi at home and wants to trade it in for a new Toyota. What does this process look like at Amserv?

Sometimes an initial assessment is done based on the car’s data and pictures. But that’s a rough estimate. To agree on a price and take it into our inventory, we conduct a 50-point inspection on-site. Based on our checks, we offer the customer a price at which we’re willing to buy the car back. If any issues came up during the inspection, we make the necessary repairs before putting it back up for sale. That’s how the business works.

Cars are changed quite frequently. The average time a car is usually driven is about 3.5 years. Of course, there are differences, and some people drive cars for 10 years or more. Often, people take out 5-year leases, but they replace their cars much sooner; they don’t wait for the lease term to end. People tend to get tired of their cars faster. If the market value is higher than the lease value, the difference becomes a down payment for a new car.

We also purchase cars from outside of Estonia, such as from auctions. We also conduct personalized searches. When bringing a car from abroad, it’s essential to do a background check on the seller. We prefer working with authorized dealerships whenever possible. Buying from private individuals can raise various questions, from taxes to the condition of the vehicle.

In your experience, which car brand has the most expensive maintenance?

In terms of maintenance costs, Toyota is relatively affordable within its segment. Likewise, Lexus, in the premium segment, isn’t excessively expensive. Competition plays a significant role in setting prices; the number of providers in the market matters. Availability of spare parts is also a factor. Most regular car maintenance is either annual or mileage-based. Toyota typically has service intervals around 15,000 kilometers. Some brands may have intervals at 20,000 or 30,000 kilometers. Toyota, in collaboration with the PSA Group, has created the Proace van series, where some models have regular maintenance intervals of 50,000 kilometers.

What are the procedures that should be done with your car every year?

I believe it’s similar to taking care of a home. If you regularly maintain it and fix any small issues as they arise, the overall costs will be lower. If you let things pile up, it ultimately becomes more expensive. Car owners can do a lot for their wallets by properly maintaining their vehicles.

Currently, it’s essential to ensure that your tires have good traction on the road. The mindset of “summer is almost over, I’ll use my tires until they wear out” is not advisable because the slipperiest part of the year is still ahead. Falling leaves and rain make the roads slippery. It’s better to switch to all-season tires with good tread depth a bit earlier; it prevents more significant problems. The same goes for lights – if they don’t work, you won’t see well, and you won’t be visible to others.

What are the after-sales service differences for electric cars compared to combustion engine cars?

Wheels, tires, suspension, cooling and heating systems still require maintenance for electric cars. Just because you bought an electric car doesn’t mean there’s nothing to be done. However, it does raise a significant challenge: who can repair these cars today? There’s a great demand for diagnostic experts who understand electrical schematics and connections and can also work with computers. Training these people needs to become a priority. Electric car maintenance is generally less expensive; there are fewer consumables, like engine oil, to worry about. The electric motor also contributes to braking and energy regeneration, which means the brakes last longer, reducing their maintenance cost. Maintaining an electric car is definitely cheaper than a combustion car.

Toyota believes that pure electric vehicles are an interim step, and at some point, we will reach hydrogen vehicles (which Toyota also has). With hydrogen, there’s currently a legislative transportation issue that needs to be addressed in Estonia. Alexela is a partner in Estonia ready to build those refueling stations, and Utilitas is expected to provide the hydrogen. Currently, we have to refuel our Amserv hydrogen car (Toyota Mirai) in Riga, which is obviously inconvenient. However, to showcase future technology, we need to display this car. Usually, we transport it to and from Riga on a trailer because the car can travel 800 km on a single tank, and it’s not worth driving it from Tallinn to Riga and back to Tallinn.

The post Leading Car Sales and Service in the Baltics | Amserv appeared first on DriveX.

Tell us a bit about yourself. Who are you, and what do you do at Racetunes? What does a typical workday look like for you?

My name is Mallort, and I am one of the founders of Racetune. We started in December of last year. A typical day looks like this: we arrive at 9 AM, turn on the lights, open the computers, and then the customers come in. Every day is actually different, which makes it exciting. I am more involved in dealing with customers – invoices, quotations. 

We have 5 main team members, including me. We have a workshop space of 300 square meters and two lifts. We mainly work on projects and don’t offer regular car repairs. We do diagnostics, chip tuning, and car tuning. Sports cars, race cars. We keep the team small, with our own skilled specialists. We avoid unnecessary mistakes that we don’t need. But that doesn’t mean we don’t train or share our knowledge. Interns always have the opportunity to prove themselves and become part of the team in the future.

How did you get to the point of starting your own tuning shop?

The company may be fresh, but the people behind it not so much. Personally, I have been in this field for almost 10 years. My business partner has been in it for nearly 30 years. Basically, everyone has been involved in this business, one way or another, for their whole life. We have also worked in different companies before. Now we have taken the best of the best and started our own thing, a niche business. It grew out of doing a bit of everything, car repairs, and maintenance, and then it evolved. In short, we are experienced guys.

Starting a company seemed like the right move. I personally got a bit tired of cars as they are. I was thinking of doing something else. But then I realized it’s not worth wasting these skills and experiences.

What car do you drive yourself? What is your dream car?

Currently, I’m actually on foot. Two weeks ago, I sold my Golf 7R. It’s the most powerful version of Golfs. It was a very good car. But I’ve been driving it for a couple of years, and I thought it’s time to try something else.

My dream car is the Porsche 992 Turbo S.

Originally, sports cars were intended for a narrow group of enthusiasts. But now, they are quite accessible to a wider audience. Why do you think this has happened?

One thing is that if there is demand, there is also supply. People are looking to add fun to their lives. Something fun and different to spice things up. If you want to stand out in traffic, a sports car is a great option. It gives you much more room for customization. You have special colors to make you stand out. With regular cars, when you buy one, it’s likely to be black, gray, or white. But with a sports car or a performance-oriented car, you get offered special colors and maybe some sporty exhausts right from the factory. People are also looking for better quality and driving pleasure. Even though the price range may be higher, the emotion you get from it might be worth it. I meet many clients who admit that it was just an emotional purchase. They might already have multiple cars. “I had the feeling that I wanted to buy it, and that’s why I did it.”

Can you give us some examples of significant projects you’ve done at Racetune, where a regular street car was turned into a high-performance car?

We started building this car a few years ago. It’s an old BMW station wagon. The customer brought it to us and said he wanted a fast street car, 1000 hp. So, we started building it from scratch for him, and then one day, he said he also wanted to go racing with it, do drag racing. Okay, so now it’s both a streetcar and a Sunday race car. Building a race car from an older BMW that was originally designed as a family car takes quite a lot of effort and work. The whole project became much longer and more expensive than intended. At that time, fortunately, it was not a problem. This car turned out to be street-legal (able to pass inspection, no big turbos, straight pipe exhausts, and such) and also capable of racing (roll cage installed). Today, the car is considered a special-purpose vehicle and no longer used on the street. The owner started to enjoy racing (he had not done it before), so the initial street purpose was set aside, and the car became primarily a race car. He then built another similar car to use only on the street. Building a car like this, which is fast on the track but also suitable for the street, is very challenging.

How do you test your cars?

We have two options: a dyno stand (used for tuning, where we can simulate various situations, apply load, try different speeds, accelerations) or, if it’s a drag racing car, we go to the drag strip and do the tuning and testing there.

Have you ever had a customer come in with a crazy idea that you had to say, “Sorry, we can’t do that”?

I receive calls and messages every day with different ideas, and often, I have to tell people that it’s not possible. The most common example is when someone has a diesel car and wants to have V8 engine sounds, with the exhaust popping and crackling. Unfortunately, you can’t achieve that with a diesel engine. So, we have to explain to the customer that if they want something like that, they need a different base vehicle. Such situations occur daily. But no one has asked us to turn a car into a submarine so far.

As the power and capabilities of street cars increase, do you see any risks or safety concerns? How do you address these issues?

The risk is not in the power but in the people driving them. It doesn’t matter how much power you have; accidents can happen with any car, and they can be very unfortunate. Generally, people who own very powerful cars, and who can afford to buy or build them, know how to handle them. They usually know where to drive them properly. They don’t go to a straight road on public streets and test the car’s abilities there. They mostly go to the racetrack and racing events. Even though their cars may have 1000-2000 horsepower and they could easily show off everywhere, they are generally reasonable and don’t do that.

It can be different if, for example, young people have access to their parents’ cars, which they shouldn’t be driving or don’t know how to handle.

What is the most powerful car you have driven?

I think it’s around 1000 hp. We have had more powerful cars in our workshop, but those are specialized race cars that we set up for customers to drive on the track. I don’t usually go for joyrides in customer cars.

The power of the car also affects insurance costs, right?

Insurance takes into account the power of the car stated in kW on your registration document. In Estonia, the Road Administration does not recognize any dyno stands that would allow you to update the power figures on your registration document at all. In Germany, for example, this is done differently. Let’s say you have a car with 100 kW, and you go to a certain company to increase the power to 150 kW, in Germany, you can have it updated on your registration document. They make a separate note, and the power is adjusted, which also results in a higher insurance premium. But in Estonia, the factory kilowatts stated in your registration document determine the insurance price. I hope this will change in the future so that people who wish to make these modifications can do it properly.

What do you think are the trends (new technologies, mindsets) that will most influence the car tuning and customization industry in the coming years?

We mainly deal with engines, ECUs (engine control units), and electrical systems. I’ll leave the aesthetics aside as we don’t focus much on that.

Regarding trends, recently, pops and bangs have been very popular. It’s when the exhaust makes popping noises and the car makes sounds during gear shifts. It’s definitely the number one request this summer; people have seen us doing it for someone in our YouTube videos. It has generated a lot of interest, and many have come to get it done. Of course, there are limitations, not everyone can have it done. 

As for the future, it’s difficult to predict. Electric cars are gaining popularity. How everything will change, we’ll see over the years. There are always new interesting things coming out each year. ECUs have advanced significantly in recent times. New things keep coming out to make it easier and safer to drive and race with all kinds of race cars.

In our work, we always use the latest technologies. Billet parts and components are very popular in the racing world. They are cut from a single piece to make them stronger. Carbon fiber is also quite popular due to its appearance and lightweight properties (it has been around for years but is becoming more accessible). Many people are starting to work with carbon fiber more. In Estonia, there are already people who create custom solutions according to customers’ requests, special products, and so on. It seems that this part of the industry is developing quite rapidly.

For those who want to stay up to date with car tuning and customization, I would recommend following our own YouTube channel Racetunepro Car Tuners to gain knowledge. Also, check out Wampiiroja drift team; they also cover technical aspects of building and repairing cars.

As for electric cars, do you work on them?

Currently, there isn’t much to do with electric cars. We can’t directly tune them, at least not all of them. It’s more of a future prospect. If electric cars become more popular and more opportunities arise, we will definitely want to work on them. For now, there isn’t much to do, they don’t require much maintenance either. They have brake discs and pads that wear out, and not much else to do. You can’t really tinker with electronics, so that’s how it is for now.

I will describe a specific person to you, and based on that description, you can tell me what car he or she is driving.

Person 1: Karl is 18 years old and has just received his driver’s license. He is a high school student, and his great passion is WRC and F1. Karl has worked on cars with his father, but he wants to learn to do things himself. He wants a car on which he can tinker, which looks cool, and costs less than 5000 euros. The car should have some potential because Karl also wants to go drag racing with it.

Several cars crossed my mind at once. WRC and tuning somewhat diverged in options. I think he should consider the BMW E46, where he can do some adjustments and modifications. If he had been only a WRC fan, maybe a 1.6-liter petrol Citroen or Peugeot could work. But since he is young and interested in tuning, it’s probably a BMW. To stay under 5000 euros, the choices are in the range of 2000-2005 cars. There are quite a few options available at various prices.

Person 2: Katrin is 35 years old and has been driving for 15 years. She is married with two children and currently not working but taking care of the kids at home. For Katrin, safety and space for the whole family are the most important factors when choosing a car. At the same time, she wants to drive a beautiful car. She mainly uses the car for grocery shopping and trips to the countryside.

A Volvo XC90 would be a good fit. Volvo is known for safety, and it has enough space for the kids. At this stage in her life, I think safety and roominess in a car would be appreciated.

Person 3: Alfred is 57 years old and has been driving for decades. He is a successful divorced businessman who is looking for a new partner. For Alfred, the most important thing about a car is that it is fast, looks flashy, and impresses. He likes vintage-looking machines.

Ah, Alfred is my kind of guy. It must be a Porsche for him. I’m a bit unsure about the specific model because of the vintage aspect that came into play. Initially, I would have suggested the Turbo S right away. If he wants to be very flashy, then it could be the Porsche GT3 RS. But since the vintage look is a factor, I’d say Porsche 911 Classic. They incorporate vintage elements from old Porsches into new technology. I think that would be a perfect match for him.

The post Tell Me What Car You’re Driving, I’ll Tell You Who You Are | Racetune appeared first on DriveX.

People will often believe that when they replace a part instead of repairing it, it will last longer. This might come from the lack of trust towards repair technicians. People might have the mindset that new is always better. Or people just don’t have the time to deal with repairing and it is easier to throw money at the problem to make it go away as quickly as possible.

Understanding the Environmental Impact

The decision to repair rather than replace damaged car parts in motor insurance claims can have a significant impact on CO2 emissions. Research conducted by the Allianz Center for Technology shows that repairing minor damages such as cracked windshields or broken headlights instead of replacing them with new parts can reduce greenhouse gas emissions by approximately 99%. Increasing repair rates by just two percentage points across Europe could lead to annual CO2 emission reductions of around 30,000 tons. This represents a substantial opportunity for the insurance industry to drive positive change and contribute to climate action. 

When to Replace Car Parts

Collision estimators consider various factors. The age and value of the vehicle play a significant role in this decision, as the cost of repairs may outweigh the remaining worth of an older car. Collision estimators aim to restore damaged parts to a state close to their original condition, prioritising safety, fuel economy, and overall performance. Misaligned or subpar repairs can have negative consequences for the vehicle and the client’s satisfaction. Additionally, the time required for repairs versus replacements is another crucial consideration. Longer repair times can result in higher labour costs, potentially making a replacement more cost-effective for the client. Collision estimators can accurately assess the condition of damaged parts and recommend the best course of action for their clients’ vehicles.

Who makes the decision whether to repair or replace a car part?

The decision of whether to repair or replace a car part is typically made by the owner of the vehicle in consultation with an expert, such as a collision estimator or a mechanic. The owner, based on their preferences, budget, and the advice given by the expert, ultimately has the authority to make the final decision. The expert provides insights into the condition of the damaged part, the potential for repair, the cost-effectiveness of repair versus replacement, and any safety or performance considerations. However, it is ultimately the owner who weighs these factors and determines the most suitable course of action.

It depends on the insurance company and their contracts with their clients as to what types of repairs or replacements are covered. When a collision estimator or mechanic suggests repairing, but the client wants a replacement, the client is usually offered an opportunity to pay an additional fee or deductible to have it done. Therefore, the decision-making power usually lies in the hands of the client.

What can we do to increase the repair rate?

Increasing awareness among car owners about the benefits of repair over replacement can have a significant impact. By educating customers about the environmental and financial advantages, as well as the quality and safety aspects of repairs, they can be encouraged to choose repair options. This blog post is trying to do just that.

From an insurance company perspective, incentivizing and promoting repair options can play a crucial role. Implementing policies that encourage repairs, such as offering lower deductibles or coverage for repair costs, can effectively influence customers to opt for repairs rather than replacements.  In addition, insurance companies can build strong partnerships with repair service providers, which can help ensure the availability of quality repair services. Providing training and support to these service providers can enhance their capabilities and encourage them to prioritise repairs whenever possible.

In conclusion

In conclusion, consciously choosing car part repair over replacement can benefit the environment and our wallets. Repairing minor damages can significantly reduce CO2 emissions, as shown by research. By raising awareness and incentivizing repairs, we can encourage more people to choose the sustainable option. Insurance companies can play a role by implementing policies, building partnerships, and providing support. Together, we can make a difference in reducing waste and emissions in the automotive industry.

The post Repair or Replace a Car Part: What’s the Right Call? appeared first on DriveX.

According to PwC research, 76% of consumers say they will stop buying from companies that treat the environment in which they operate in poorly and according to Cone Communications research, 88% of consumers will be more loyal to a company that supports social or environmental issues. This means that companies should care about their environmental impact in order to preserve and grow their customer base. But caring about the impact alone doesn’t do much. Companies need to measure their environmental impact in order to improve it. But how?

This is where the ESG score comes in. ESG stands for environmental, social and governance. An ESG score is like a grade given to a company based on how well they take care of the environment, treat people fairly, and run their business responsibly. It helps to measure and compare how different companies are doing in these areas. 

Insurance companies like many others are under increasing pressure to assess their ESG scores. Also many new regulations are being introduced requiring companies to disclose their ESG performance. For example, The new EU Corporate Sustainability Reporting Directive (CSRD). Insurance companies need to comply with these regulations and ensure that their investments and underwriting decisions align with their ESG policies. But how?

How can your insurance company assess their ESG score?

Well, first of all there is a framework of 4 principles, that insurance companies should follow.

1. We will embed in our decision-making environmental, social and governance issues relevant to our insurance business. 
2. We will work together with our clients and business partners to raise awareness of environmental, social and governance issues, manage risk and develop solutions. 
3. We will work together with governments, regulators and other key stakeholders to promote widespread action across society on environmental, social and governance issues. 
4. We will demonstrate accountability and transparency in regularly disclosing publicly our progress in implementing the Principles.

Based on these principles, there are several designated organizations who assess insurance companies’ ESG scores. Or insurance companies can do it themselves. However, self-assessment should be supplemented with third-party validation to ensure accuracy, transparency, and credibility of the assessment.

For example, in 2022 highest ESG scores (indicating low risk) were awarded to Allianz, AXA, Zurich, and Swiss Re. All of them got 92.9 out of 100. These ESG scores were provided by MSCI and then nominalized to a score out of 100 (with higher being better). Lowest scores were rewarded to Berkshire Hathaway, China Life Insurance and Aon with the score of 35.7 out of 100.

Different organizations use different methodologies for assessing ESG. Although, in the end of the day all ESG assessments should be comparable to each other.

What are the exact steps to take for complying with the regulations?

1. Define ESG factors and set goals

Your insurance company should identify and define the ESG factors that are most relevant your company’s business and stakeholders. Based on the defined ESG factors, the insurance company should set specific and measurable ESG goals.

2. Collect data

Collect data on your company’s activities, policies, and practices related to the defined ESG factors. This may involve internal audits, stakeholder engagement, and benchmarking against industry peers.

3. Analyse ESG performance

Analysing ESG performance involves looking at the data that has been collected about the your company’s activities, policies, and practices related to the defined ESG factors. It helps your company understand where they could improve.

4. Develop ESG reporting framework

Your insurance company should develop a reporting framework for their ESG performance, which includes the defined ESG factors, ESG goals, and data analysis. The reporting framework should align with relevant reporting standards and guidelines, such as the Global Reporting Initiative (GRI) or the Sustainability Accounting Standards Board (SASB).

5. Measure and report ESG performance

Your insurance company should report their ESG performance to stakeholders, including customers, investors, and regulators. This can include publishing ESG reports, disclosing ESG metrics in financial reports, and engaging with stakeholders on ESG issues.

The pressure to assess ESG scores is increasing, and complying with new regulations is critical. By following these 5 steps, your insurance company can improve their environmental, social, and governance practices, align their investments and underwriting decisions with ESG policies, and build trust with their stakeholders. Ultimately, a strong ESG score can help your company preserve and grow their customer base, attract investors, and create long-term value for all stakeholders.

The post What is ESG Score and Why Your Insurance Company Should Care? appeared first on DriveX.