AI in smash repair – independent reviewer recommends codification

Artificial intelligence (AI) use in claims and the smash repair industry came under the microscope in the recently published independent review for the Motor Vehicle Insurance and Repair Industry (MVIRI) Code Administration Committee (CAC), with a recommendation having been levelled that AI use should be codified.

The report, authored by independent reviewer Dr Michael Schaper, said there is “scope” for the MVIRI code of conduct to clarify AI issues and for further education around the use of the technology, and noted that it may play a future role in dispute resolution.

“Some forms of artificial intelligence (AI) are already having an impact on the smash repair industry, on the nature of work performed, and in how insurance claims are assessed and processed,” the report said. “In future, AI may also be applied to some basic forms of dispute resolution.”

AI in the insurance and smash repair industries – four issues

The independent review pointed to four smash repair AI issues that could be addressed:

• Whether insurers should be required under the code to tell repairers that an assessment or estimation has been carried out by AI
• The rights smash repairers have to dispute assessments and estimations made using AI, and whether these are the same as their rights under the current code
• What operating rules (or algorithms) and assumptions are used in AI assessments
• Whether insurers should tell repairers if an internal dispute resolution (IDR) is dealt with by AI, and whether repairers should have the right to request that a person handles the matter instead

What did insurance and smash repair industry participants have to say about AI use in smash repair?

Numerous respondents identified AI as an important emerging issue for repairers and insurers, and something that is already being used across the industry, though the reviewer noted that “few specific suggestions” were made.

“AI is already in place – take a picture and it starts writing a quote. This allows you to use less qualified assessors, so there’s no need for a skilled estimator,” said one respondent. “We need to think about this in the Code.”

Another said: “AI is already here, and utilised in many places … you need for the CAC to prepare and educate parties about role of AI in the Code, and to clarify issues around AI.

“This includes disputes based on AI and AI-generated quotes which are based on images.”

The joint role of humans and AI was also raised by respondents.

“AI works in predicting claims costs; but isn’t going to necessarily do the physical work of the machine,” one commenter said. “It can’t perform the work, so only a small amount can be done by robots.”

The MVIRI code of conduct – independent review makes 15 recommendations

AI codification was just one of 15 recommendations made by Schaper, who was tasked by the MVIRI Code Administration Committee, made up of equal representatives from the Insurance Council of Australia and the Motor Trades Association of Australia, to examine key areas of the code. According to the report, the 15 recommendations made were:

• Clarify and strengthen provisions relating to dispute resolution process
• Update the code’s language, presentation and format
• Undertake greater public promotion of the code
• Work more closely with regulators
• Update the code’s website URL and its contents
• Introduce sanctions for breaches
• Appoint an independent CAC chair and deputy chair
• Clarify CAC governance, membership, voting and training
• Incorporate the CAC as a formal legal entity
• Better resource the CAC
• Codify practices relating to AI use
• Review educational requirements
• Greater consumer focus
• Clarify the role of third party representatives
• Change the frequency and focus of future code reviews

With the code now mandatory in both NSW and South Australia, and a “real possibility” that this could extend to Tasmania, the review said that it is “increasingly important” that the code undergoes a considered and thorough rewrite.