Insure TV Masterclass: Navigating the future of motor claims and vehicle repair

Mark Colegate: Hello, and welcome to this Aviva Masterclass in association with InsureTV.  We are looking at repairability. A lot to get through in the course of the next 40 minutes or so. So let me introduce you to our quartet of experts. They are Felicity Harer, she is Senior Transformation Manager at Solus; Andrew Hooker, Head of Technical, also at Solus; Darren Bright, Principal Engineer, Automotive Repair at Thatcham Research; and Gavin Gleed, Head of Motor Supply Chain at Aviva. Those are our panellists. Let's get things underway. Now, you've all got different roles within this ecosystem, so I want to get a sense from you around what the day jobs consist of and why now is such an important time to be discussing repairability. Felicity. 

Felicity Harer: So, my job is predominantly around taking the uncertainty around emerging vehicle technology and turning it into credible insight that we can use to drive action. So, I've been working at. first Direct Line and then Aviva. for the last eight or so years building up what we're thinking around emerging technology and what we're doing within the repair side in particular, and I think repairability is really, really important. The main reason is we need it to-- we need to make sure that vehicles are repairable from, firstly, a sustainability perspective. We can't just be total lossing them every time they get damaged, and from a societal perspective because if you want people to insure vehicles, you need to make sure that insurance is affordable, and repairability is a key driver of that. Obviously, there's the safety element of that. We want to make sure vehicles are safe for customers, but I think it's fair to say we can consider that to be an assumption because of course, safety is important.

Mark Colegate: Thank you. Andrew, how about from your perspective? 

Andrew Hooker: Very similar to everything that Felicity said. I think, you know, we're in that period at the moment whereby technology's probably changing faster than it's ever done, and it's often been mentioned about it's changing more in 10 years than 100 years. We're halfway through that period, and certainly probably the same as my colleagues, we've probably never seen technology move at the pace it's doing. We need to keep pace with that, and as Felicity said, at the end of the day, this is all paid for by consumers, and we need to keep a good control on that just to make sure the consumer doesn't lose out on it. So, I think repairability is absolutely critical just to keep cars on the road the right way. 

Mark Colegate: Thank you. Darren. 

Darren Bright: So, my role at Thatcham Research is overseeing the quantification of technical risk associated with the sustainable repair of emerging vehicle technologies. Repairability is really, really key for the very reasons that Felicity and Andrew kind of mention. You know, sustainability is growing in importance. 

Mark Colegate: Thank you. And Gavin, can I get a thought from you around supply chains?

Gavin Gleed: Sure. So yeah, as Head of Supply Chain at Aviva for motor, my responsibility is to look after all of the suppliers that hits our motor claims process. That could cover salvage, it can cover mobility, it can cover glass, but really importantly, it also covers repair. As my colleagues said, repair is crucial. We're at a crucial crossroads, I suppose. There's an awful lot going on. There's an awful lot of change. And my role is to just help the repairers that we work with ensure they continue to drive value for our customers and work the way we like to work with them. 

Mark Colegate: Well, on this point about repairs and repair capability, how is Aviva set up to manage EV repairs in particular? 

Gavin Gleed: Yeah. So, Aviva's in a really, really strong position having combined forces with DL. You've effectively got three major components we can look at. You've got Solus sites, which now total over 40. We've got the Motability book, which is basically a rather large fleet and comes with a number of EV vehicles. And then we've got our external network that we work with as well, who provide a load of insight into what they're looking at and what they do as well. So as an organisation, we have a huge breadth that we can pull on to support the repairability of EV vehicles. And if you look at traditionally, there's these larger commercial fleets that tend to have more EVs. Motability is effectively exactly that. So, combining that with Aviva's existing and present commercial book gives us a really, really strong capability. 

Mark Colegate: Andrew, how's that impacting the repair industry? 

Andrew Hooker: I think it's not just a shift towards EV. If you consider that, say, some brands such as BMW now are on their sixth generation of EV technology. So, I think we consider it as a single move, but it's not. It's an ongoing move, and alongside that, you've got other regulatory changes such as the NCAP crash safety requirements, they move forward. That affects how the vehicle's built. So, it's not just a shift to EVs, it's a shift in EVs and every other technology alongside it. I mean, certainly with EVs we see a lot of driver assistance systems, but then they're the same assistance systems we're still seeing on conventional vehicles. So, I think it's more than just a shift to EVs. It's just one of many shifts at the moment that we're seeing. It would be lovely if it was just one challenge that we had, but unfortunately, we have a few. 

Mark Colegate: Felicity, what's your thoughts on that? 

Felicity Harer: I think it's that complexity, that pace of change, and the fact that it is so many different things changing at the same time. And I think historically what we've seen has been that you generally get a new change, you adjust to that new change, and then that spike that you've probably seen in complexity and insurance pricing will kind of drift away before the next change comes through. When you have lots and lots of changes at the same time, you're adjusting to all of them at the same time, and that means that you tend to see bigger spikes because you're seeing lots of different things that you're having to spend more money on, and obviously, again, more complexity, and it's quite hard then to draw out which are the things that are causing the outputs. So, for instance, you might say we're seeing a spike in claims cost because of electric vehicles. Actually, is it that we're seeing a spike in claims cost because of electric vehicles, or is it because we're seeing a lot of newer vehicles and newer vehicles tend to be more expensive? Is it because they tend to have more technology on them? Actually, do we see the same spike in other vehicles that have ADAS on? And it's that kind of, what is causing it? There's a correlation, but is it causation? 

Mark Colegate: Sorry, you mentioned ADAS. 

Felicity Harer: Yes. 

Mark Colegate: What does that stand for? 

Felicity Harer: Oh, driver assistance systems. 

Mark Colegate: Right. 

Felicity Harer: So, for instance, when you've got cameras, radars, all that kind of stuff on your car. 

Mark Colegate: So, when you reverse and your car beeps when you're near a tree, all that. 

Felicity Harer: Yes, one of my favourite features. Yeah. 

Mark Colegate: Okay. Thank you. And we're talking about all of this complexity and the fact it's speeding up. In supply chain terms, Gavin, what are some of the challenges that throws up? 

Gavin Gleed: I mean, gosh, in the supply chain, there's a whole raft of challenges. You know, we're... You can look at supply chain from two perspectives. One, you've got the supply chain in terms of we use a lot of external repairs alongside Solus to support the work that we need to do. So, we need to really work hard with our own sort of repairers to support them and understand what they need to develop and build and what insights can we give them, say from the teams in Solus to support them. But you've then also got to look at supply chains from a supply chains into us or into repairers in terms of parts, et cetera, et cetera. So, there's a whole raft of challenges that we've got to manage. I think over the last number of years we've had pandemics, geopolitical issues, conflicts, maritime issues that have all thrown challenges at the supply chain and then Solus as well. And I think there's a level of resilience that's been built up over time, but there's a constant need to look at sort of operational resilience and supply chain resilience, which is sort of what we look at. 

Mark Colegate: From the engineering/repair perspective, I mean, again, could you put a bit more detail around what some of those challenges are as we move... I was gonna say to electric vehicles, but as Andrew said, it's a bit more complicated than that. There's regulation, different iterations of EVs. There's a lot going on. 

Darren Bright: So, I think it's just another layer. I think to Felicity's point, there's a lot of change always going on all at once, you know, and I think as an industry, naturally, we're quite reactive. And I think the last five, six years has been extremely challenging for a lot of the points that Gavin mentioned. So, you chuck all of that in the mix, and it just makes things unnecessarily difficult. I think EVs specifically, whether it's battery electric vehicle or hybrid, the obvious thing is we're seeing new components in new places, right? The layout, the packaging and stuff is changing quite considerably, but not on all of them, you know? So, it's very, very different, and I think from a vehicle design point of view, we're kind of in a position where there's no standardization. We're all trying to find the sweet spot, and what that does is just makes things very different from vehicle to vehicle, brand to brand. Even vehicles within the same brand, the way you approach them, it can be really different. And I think without the right repair information, the right training, and like I said, it's always quite reactive.

Mark Colegate: Well, bringing this back to the Solus Accident Repair Centres, Andrew, I'll come to you on this first. I think you said at the start of your introductory remarks the importance around pricing and making sure this is all available at a fair price for consumer. How do you meet that challenge if we're living in an ever more complex and expensive world? 

Andrew Hooker: Yeah, no, I think it's exactly to Darren's point. I think what we've got to do is kind of converge all those different technologies and make it simplified. And, you know, we're taking advantage of that. I mean, at the moment, there's a proposed UK type approval from the UK government, which will mandate all sorts of driver assistance systems. That, to us, is potentially an opportunity that all cars will start having the same more or less equipment or levels on them. So perhaps we can then start to define some of the solutions for repairing them. We are having some very positive discussions with some of the car manufacturers about helping us to do that because, you know, they're constantly rolling out new tools, new processes. So, what we're looking at is how can we actually just simplify all that. So, we try to, for example, with EVs, we repair them exactly the same as we do a conventional vehicle and just do the EV bits as we need to. And that way, it just simplifies the entire repair process and actually helps contain the cost. It makes it the most efficient repair we can do. 

Mark Colegate: Well, just on that point of standardisation, Felicity, I mean, how much more standardisation could take place? If you're talking to a big car brand, are they receptive to it? Do they say, "It's a great idea, but the brand over there should do it. They should conform to our standards. It's not our job to change theirs"? 

Felicity Harer: I think the interesting thing from a car manufacturing perspective is you've got a few big drivers of change. So, you've obviously got the regulatory change, you've got consumer impact, and you've got pressure from shareholders. So, you will potentially see a push towards standardisation, but you need one of those levers to be pulled for that to go through. I think we're in quite an interesting position as a large insurer because we can put a level of pressure on them to say, "Actually, the right thing for the consumer is this," and we can share that insight with the consumer so they can then put pressure on the manufacturer themselves to say, "This is what we want." 

Mark Colegate: Thank you. Sorry, Gavin, I can see you want to come in on that. 

Gavin Gleed: Yeah, no, so I just wanted to make a point. I think relevant to what everyone has said so far. I mean, we're in quite a unique position at Aviva with the Motability book. I mean, Felicity's talked about life cycles being much quicker to develop cars, access to repair methods, all these things. Motability, as you know, is an enormous fleet of vehicles, and they are constantly being approached by manufacturers to get on their books, and obviously they're trying to make these purchases as economically as possible to make them affordable for the customers. But one of the things that we've picked up on quite early on in that relationship, we started a couple of years ago, was a lot of these vehicles were great value, but they were hard to repair, or there was no supply chain in place for it. So, there's now a forum in place around repairability that any sort of new manufacturer entrant wanting to work with Motability has to come in and talk to them about their repair methods. Are they developing them? Is there a supply chain? Otherwise, it makes it much harder to put on the book for Motability. So, we've got a real advantage at Aviva having that Motability book to sort of support those new entrants but also help them understand what they need to do, and then how we can take them on board as well. So that's I think that's pretty crucial. 

Mark Colegate: Well, Andrew, I think I caught you shaking your head a little earlier, just out of the corner of my eye. What do you want to add to that? 

Andrew Hooker: No, you're right, and I think we are a unique market. I think we're very heavily regulated, which is a good thing, and safety matters more. But obviously our labour costs are quite high as well. So, you find we are very, very different for repairing vehicles than we are to most of the world. 

Mark Colegate: Yeah. 

Andrew Hooker: That does cause an issue with the vehicle manufacturers. Typically, most of them for supply chain quote about 95% parts availability. Now, my viewpoint is, if the average repairs got 11 parts on it, every other car got a backorder. So, it's how they deal with the backorders and the other 5% is the conversation that I normally have, and that's the bit that varies between all manufacturers, all brands from all parts of the world, is how they manage the 5% that is essentially letting down their customer. 

Mark Colegate: Thank you. Felicity, you were talking a little bit about the technology earlier and some of the changes, but talk us through it. How does that then play out when it comes to the claims experience? How long does it take to get claims through now? 

Felicity Harer: What you would generally expect to see is that the claims might take a little longer with vehicle technology on the vehicles, but again, it's that correlation causation thing. We were able to get vehicles through quicker five, six years ago before a lot of this technology was coming on, but we also weren't seeing all that global instability Gavin mentioned earlier. So how much of it is causing which one, we don't necessarily - you can't necessarily pull them apart. The thing I would say as well, though, is what you generally find is when a newer vehicle comes in, it reaches the critical mass where we'd start being able to do that repair in-house, and prior to that, you're probably sending out, subletting it to the dealership. So, you're then reliant on that dealership to give that positive customer experience. That manufacturer has that control, and that might take 24 hours, it might take three weeks. You don't necessarily know, and that is down to the manufacturer. So that bit before we start probably bringing it into our own body shops where we've got a level of control, it's a little bit more out of our hands. And that's the bit where you see that variability much more than you would do once it's within that kind of Solus ecosystem where we’ve had practice, we can generally do things quite smoothly. 

Mark Colegate: Hmm. That does bring us on to sort of the nitty-gritty of repair. What I suppose my question is, recycled parts. I mean, again, if you are repairing things, does it have to be a new part? Can you recycle something? Andrew, let's start with you. 

Andrew Hooker: Yes, it can. I mean, it's an area that I think has been held up for many, many years. Very interestingly, we were sitting down with a vehicle manufacturer recently talking about their own recycled parts scheme, and that same manufacturer was criticizing us 18 months ago for using recycled parts. I think the EU and other bodies are really pushing this now. I think everybody's aware of sustainability, and I think everybody's moving into that space. So, we're seeing movements in sustainability and recycled that just weren't there a few years ago. It just wasn't on the agenda. It certainly is now. I think the supply chain has certainly been so disrupted over the last decade. I think they're very much into that space, and that helps us because they can do things in testing, and they can help us with the science that we don't have potentially that capability to do. We can use some simplified parts, we can make some good engineering decisions, but there are absolutely things that the vehicle manufacturers can help us with and work with us on. 

Mark Colegate: And just separate from that, what's the advantage to the end consumer? Is it about price? Is it about speed of repair and claim being dealt with? 

Andrew Hooker: All of the above. I think, yeah, I think it is. I think it's more than one win. I think, as I say, clearly they're gonna be cheaper to manufacture because you haven't got the materials cost and things like that, so the parts are cheaper. Yes, it's sustainable. Yes, it can be quicker. So, I think all in all, I think it absolutely works out as a win for the consumer. 

Gavin Gleed: Yeah, I totally agree, and I think from a supply chain point of view, we've worked really hard over the last sort of four or five years to sort of try and drive innovation in this space. We've worked closely with some really key partners of ours who have developed their own enormous warehouses and systems to be able to strip, stock, store, and grade. And one of the key things here is getting the right grade of replacement. We can't get any old replacement part. It's got to be of a certain quality, a certain grade. Certainly, can't be a safety part. And then it helps with cycle time. It helps with the key-to-key. Customers do like it. You typically would never put an older part on than the age of the vehicle, so it's always gonna be the same age or newer. We've had some real wins from a customer perspective, just getting vehicles back on the road for customers, which is what you want. 

Darren Bright: I think it's really interesting kind of what's gonna happen in the next five to 10 years. I think there's gonna be a greater level of integration between repairers, insurers, and recycling yards. You know, no longer are they just salvage yards or scrap yards, as we used to refer to them. But the capabilities that are required to safely dismantle the vehicle and test the parts, and then when they go into the supply chain, what's the requirement for data? So actually, so at Thatcham, we produce repair methods to repair things, replace things, remove and refit things. Actually, we might need a repair method to reuse something. So, example there is a headlamp. So actually, you'd need to know when you're buying that headlamp, replacing the module, you may need to diagnostic code it. Can it actually be coded to another vehicle? Some yes, some no, some more challenging than others, you know? So, knowing that when you're buying the part, knowing what parts you can actually reuse is gonna be absolutely key, you know? 

Andrew Hooker: It's a very complex thing because I mean, I think, particularly when you're talking about the electronics on vehicles, we've obviously got security requirements, and we have to think about how we code parts to the car. And obviously, we're very, very mindful of an insurance company about parts theft and vehicle theft, and I think we need to have those clear conversations with the vehicle manufacturers about, yes, how do we manage this safely? But, yes, we do need to be recycling, reusing, remanufacturing these parts. And those conversations are happening. We're seeing increasing. I think we're getting more and more of them seem to be on the same side of the fence of us in terms of, let's help the customer. 

Felicity Harer: The only thing I would say is we also are aware that there's limited data so far. So, there is an opportunity, and I think there's an opportunity that actually we can do a really good job of, to understand which areas this is gonna have the maximum impact in. So, I know there's various projects going on within Aviva around sustainability, and I know there's a couple that we've been involved in, which are looking at things like life cycle analysis and making sure that actually you understand which are the parts where a recycled part is the right thing to do, and which are the ones where actually it's not the right thing to do. So, for instance, I mean, I started my career in the automotive industry looking at recycled aluminium. Fantastic opportunity because the energy use is significantly lower, but actually there's some applications where it's not the right thing because you end up with far more waste, and it's that kind of balance of it's not a, definite recycled part's always the right thing to do. It's in a lot of situations we believe that they are the right thing to do, but there will be situations where it probably isn't, and we need the data to be able to make that informed decision. 

Mark Colegate: Thank you. And just bringing this back to the supply chains side of things. Gavin, how close does... We've talked about this inventory here. How close does that inventory need to be to the repair shop? I mean, does it need to be in the UK? Do you feel pretty relaxed if someone says it's in a depot in Hungary, we'll get that to you in two days' time? 

Gavin Gleed: It's two things. It's one, it's how good is the grade of the part, and is it specially graded and appropriately done in a way that we'd be comfortable with it arriving? The second bit is how quickly can they get it there? And that's what it's about. So, if it's in, could be anywhere, but if it gets there the next day, that's a good thing. So, we're quite fortunate in the UK, you got a number of quite strong providers of recycled parts, and they often guarantee next day delivery, which is what you'd expect to get from a manufacturer. So, you know, they've got to make sure the packaging is right, it's not damaged in transit, et cetera, et cetera. But there is a good stock of recycled parts that's available and not scouring. So, we've been trying to... We've been working on this for, like I said, last three or four, five years, and some of the stocks and inventories are pretty impressive. 

Mark Colegate: And just more broadly, as a broader point, I mean, there's a lot more geopolitical uncertainty around than there was. I mean, we can see that in the Middle East, Red Sea. I think earlier this year, the Panama Canal was a lot lower than it usually was in terms of water. That's a sort of a nature issue rather than a geopolitical one perhaps. But how do you think through all of that when you then sort of apply it to this flow of goods, services, repairability in electric vehicles, and people in the UK? 

Gavin Gleed: Yeah, a lot of it's to do with sort of stock availability and making sure they've got the... It comes from lots of different places, right? It doesn't always come from Asia. It comes from parts in Germany, Eastern Europe, et cetera, et cetera, right? So, it's just about making sure that what you've got on your books to get those either new parts or recycled parts are available, and you have the relevant options to acquire it. Some might take a bit longer, yes, but there's quite often other options available. Having this conversation before we started about, you know, talking directly to manufacturers, et cetera, to make sure you get those back orders in early, get on the lists, and constantly be talking to them. You can't just sit back and wait for them to deliver the part. So, there's a... It needs to be a constant to and for on that. There's always gonna be some level of disruption. It's about how we manage it, how we create operational resilience to make sure we can continue to repair the vehicles. 

Mark Colegate: Well, we've got a couple of minutes left, so I wanted to move on to a couple of challenges, and obviously one of them is data. So, Felicity, on this, I mean, somebody listening to this might say, "Well, it all sounds great, but you're talking about a headlamp that might be compatible with some different type of cars or might not, and is it up to scratch?" That sounds like an awful lot of human interaction with that headlamp before we attach it. So, is there a point it might just be cheaper to phone up the factory and get them to send us a new one? You know, is there a danger actually there's a lot more cost and time built into this than there would be if you just went back to old-fashioned industrial basics? 

Felicity Harer: Yeah, and I think that's why it's so important to have the information around where the right opportunity is. So, I know we talk an awful lot about the challenges, but actually I would really want to reinforce there's a lot of opportunities here. There are a lot of difficult challenges, like things like that where we might say we can do the wrong thing, and there's a lot of opportunities where we can do the right thing, and we can do it right, and we can do it at a scale that not a lot of our competitors are able to match to get that right outcome for the customer. So yeah, and I think that's the thing where actually our scale allows us to build that data to be able to right then make that right decision. And I would also reinforce we are being really proactive about this. I know we've spoken about reacting quite a lot earlier, but we are being very conscious that we need to be aware of what is coming. We're making sure we do the right things before it arrives, and we're making sure that we have that data and the insight to drive that right action by the time it becomes a problem. So yeah, again, it's an opportunity. It's an opportunity as well as a challenge.

Mark Colegate: Thank you. And a lot of what we've been talking about is about process and moving things over huge distances, but it seems to me ultimately it comes down to people and skills and doing the repairs, doing all the checking. So, from the world you've described, is there a big skills gap at the moment? 

Felicity Harer: We've done an awful lot of work on being aware that changing technology is coming over a prolonged period of time, and we've had a technical graduate scheme for the last eight years. Yeah, we've had apprentices coming in every year. We've got a technology centre that we built that launched in 2022, built it in 2020, which allows us to offer the right training, and we can target that to the needs of our business, so we can deliver RMI accredited training. But I think the key thing for that is where you prepare for these kinds of things, again, there's an opportunity. I think we're quite relaxed about it now because we have done the preparation, and we've done it over a prolonged period of time. The interesting thing I think for us is going to be making sure that our networks see the benefit of that as well. So how do we make sure that the lessons that we've learnt and the things that we've done to prepare for that future and make sure we've got that sustainable pipeline of people coming through, how do we make sure they can benefit from that? And actually, that's something that Solus is really hot on. It's literally in our values. We want to have a positive impact on the industry. We want to be leading the way when it comes to this kind of thing, and we wanna make it a great place to work.

Gavin Gleed: I think there have been some challenges in the industry with skills. Would I call it a gap? I don't know. But I think from a supply chain point of view, we've worked really hard with all our repairers we work with externally to make sure that they have the right apprentice programs in place. They all work really hard at it. It's great when we go and visit them, and you can see the number of apprentices on the floor, so I think that's really positive. I think the exciting bit about it; it'll probably attract a lot of new talent because of the level of technology. There'll be people who wanna look at technology who would never have thought about working with cars, but they're suddenly interested. My son is 10. He keeps talking about wanting to be an engineer now and all the technical stuff, and there's... Which I find really exciting because it's, it'll open whole new doors and avenues for people to explore, and I think what was probably a few challenging years a few years back is turning into a real positive. The other thing as well, and it's probably a whole separate conversation, is but with the advent of all the technology on cars, there's probably fewer accidents happening. So, you know, you don't necessarily need a, potentially, a growing labour force. You just need a really well-qualified one, and just make sure it keeps up with the demand, right? So, I think you've got to consider that as well. But yeah, I think it's exciting times from a skills point of view. There's much more to go at.

Mark Colegate: We've talked all about the skills needed, particularly in the repairability networks, but in essence, what does this all mean for the end customer? Gavin. 

Gavin Gleed: Yeah, from a supply chain point of view, what it means is we need to work really closely with our repair partners and across the wider motor claims supply chain to ensure that those vehicles are repaired to the standard required and what customers would expect. 

Mark Colegate: Thank you. Darren. 

Darren Bright: So, from a workflow perspective, we need to be making the right decisions at the right times, keep the customers and the vehicles, getting them back to normal. 

Mark Colegate: Thank you. Andrew. 

Andrew Hooker: I think it's very much that we're not reactive and that we carry and continue to look ahead, so we manage this, and ideally, the customer should not notice the complexity if we're doing our job right. 

Mark Colegate: Thank you. Felicity, final thought. 

Felicity Harer: Yeah, at the end of the day, that's what insurance is about, isn't it, is making sure that you put the customer back in the same place as they were before, and that's what we will always strive to do, to make sure that the person at the end of that claim is able to go about their life and, yeah, in the way they were able to before. 

Mark Colegate: We have to leave it there. Felicity Harer, Andrew Hooker, Darren Bright, Gavin Gleed, thank you all very much.