WHAT CRAZY CAR PRICES SPELL TROUBLE FOR AUTO INSURANCE AND REALITY TV HAVE IN COMMON

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 J.D.  shows that  used car values ​​increase by more than 50%  on average. 
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  Global Insurance Analysis. strength. 
 After nearly two years of global accounting for supply chain, inflation, and new and used car prices, auto insurers face a major challenge. All historical 
 analytical models  must  be updated to determine repair and replacement costs. Each current vehicle application can be significantly more expensive than the proposed model. And given the forward-looking nature of these inverted depreciation curves, a portfolio of vehicle policies may have to address capital issues. 
 How insurance companies handle this issue can create a detrimental combination of inadequate premiums and pressure to increase rates. But for those who understand the new pricing formula, 
, this evolution allows more accurate pricing than ever  before offering customers hyper-personalized plans. The key is to access more detailed vehicle-specific data sets. 
 Understanding the 
 Price Problem To create this problem, it's important to understand exactly how the market has changed over the past two years before moving on to the 
 solution. The 
's supply chain disruption had far-reaching consequences, leading to a shortage of new vehicles and genuine  
 parts. For example, let's say the 
 hit a fender flare while  shopping for vacation and needs to replace the right rear panel of the car. It is very likely that the manufacturer will not keep these panels for weeks or months. When you find 
 replacement parts at your local auto repair shop, don't be surprised to pay  30% to 50% 
 markup depending on supply and demand. Suddenly, the $800 part you want becomes the $1200 part. Insurance companies that do not take this into account remain in debt. With a total loss of 
 people, the situation is exacerbated. Traditionally, cars depreciate first  after being evicted from a parking lot, and the 
 gradually depreciates on the road over 10 years before eventually dropping below a threshold where the cost of repairs exceeds the cost of  repairs. 
 In addition to car prices, when used car prices skyrocketed, J.D. Power shows that used car prices have risen  more than 50%  on average from 
, which changes the equation. When an appraiser is looking for  similar value for a damaged $10,000  sedan, it's much harder to justify the overall loss if the sedan's value is  unusually high. The process across the 
 insurance value chain has been historically driven by 
 trend data, which has undergone nearly 
 significant changes over the years. But the unique economic development after 2020 means we need to completely reconsider our views. Depending on the assumptions, replacing an older model will require the introduction of a new data source that will give you a detailed understanding of what exactly is in the frame of each car. 
 A New Era of Personalization 
 The wave will be far-reaching as these new terms will force insurers to charge more accurate and personalized prices. Our J.D. Power, we currently predict that the 
 used car price surge  will be moderate compared to its recent peak, which is 70% higher than usual over the past decade, but  the new price plateau for the 
 could continue to be  50% higher. However, the insurer cannot increase the 
 50% reserve for all current and future vehicle damage. Instead of 
, it is necessary to develop a risk assessment and pricing mechanism that can generate 
 personalized  premiums based on a deeper understanding of vehicle performance and value, and use observational data such as mileage, route and driver for ongoing insurance business. there is. A risk assessment must be performed. movement . This new custom valuation method can generate a market value for each vehicle based on an individual vehicle identification number, surpassing the universal depreciation curve because the curve is inverted. 
. This can be challenging for insurers using legacy systems, but new data, artificial intelligence and cloud processes offload legacy operations and use API-enabled processes to continuously monitor current quotes for both new and used cars. 
You can. . For buyers, this is a double-edged sword. Their cars are worth more than their credit and previous ratings. That said, some cars are upside down, but replacement and repair costs are increasing. This means that premiums based on the value of  
 losses are likely to find a new, higher balance. However, by tailoring individual policies  based on VIN data and  more detailed characteristics of specific drivers, insurers can offer their customers more personalized plans than ever before. 
This in turn can create 
 personalized customer experiences that provide long-term loyalty and support. 
 Getting ahead 
 This is a watershed moment for the industry. Unpredictable circumstances have presented us with new challenges and opportunities. Near real-time assessments  improve pricing, billing, underwriting, risk management and corporate billing, while making risk-based pricing more transparent and attractive to consumers. 
 Even the most optimistic forecast doesn't assume a change in used car prices until next fall. This means the insurer will have to make an immediate adjustment next year. Those looking for a way to account for this volatility will not only reap short-term gains, but will also create the infrastructure to weather the next crisis.

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