The Motor Vehicle Insurance and Repair Industry (MVIRI) Code of Conduct is undergoing a review. The Code Administration Committee (CAC) is considering 15 recommendations from a final report by Dr Michael Schaper, the former deputy chair of the Australian Competition & Consumer Commission (ACCC).
Insurance Business is seeking views on the recommendations from insurance industry stakeholders.
Allan O’Brien (pictured above) is COO for DKG Insurance Brokers. Sydney-based O’Brien runs Recoversure, the motor fleet claims business owned by DKG. He said the proposed Code changes will likely have more impact for retail insurers. However, in answers to IB, he was very positive about Schaper’s recommendations.
“The review makes detailed recommendations intended to improve compliance, governance and to protect consumers,” said O’Brien. “Improving awareness, the customer focus and providing additional safeguards can only benefit all, including insurers and brokers.”
According to the Insurance Council of Australia (ICA), the recommendations aim to deal with the review’s terms of reference which focused on five areas:
Schaper’s recommendations include introducing sanctions for breaches, strengthening dispute resolution processes, working more closely with regulators and incorporating the CAC as a formal legal entity.
A number of respondents to the review identified artificial intelligence (AI) as a significant emerging challenge for insurers and repairers. One respondent raised concerns about AI already facilitating the use of “less qualified assessors, so there’s no need for a skilled estimator,” and called on any Code changes to address this.
“Rather than provide an opinion, Dr Schaper raises some possible issues relating to AI for consideration,” said O’Brien. “It’s a certainty that over time, more and more assessments and estimates will be fully automated.”
O’Brien said “vigorous testing and calibration” will be needed to maintain and ensure quality, accurate vehicle assessments. He also pointed to other AI issues raised by Dr Schaper in his review:
“I’m strongly of the opinion that consumers expect all IDR matters to be fully considered and dealt with by an appropriately skilled, senior staff member,” said O’Brien. “We would not consider using AI for disputes or complaints and if an insurer did use AI for this purpose, we believe that all relevant parties should be notified.”
Other AI issues raised by the review include: Whether insurers should be required under the Code to tell repairers that an assessment or estimation has been carried out by AI and 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.
O’Brien’s parent firm, DKG Group (DKG), has made considerable investments in AI. The group recently launched a behaviour-based insurance offering for the motor fleet market called Fuse Fleet. The offering uses AI technology and telematics to base premiums on assessing a driver in action and judging how safe they are.
“The technology works by analysing real-time driving data to identify and compare patterns against billions of trips that have been trained with actual insurance claims,” said Simon Donovan, executive general manager of commercial for the new DKG firm rolling out the offering: Fuse Fleet Underwriting. He said the AI converts GPS data into “crash probability scores” for each driver.
The CAC, the body that is currently considering the report’s recommendations, is also the administrator of the Code. The CAC consists three appointees from the Motor Trades Association of Australia (MTAA) and three from the Insurance Council of Australia (ICA).
The current Code is mandatory in New South Wales and South Australia. According to Dr Schaper, a review of the Code by the Tasmanian Government is underway.
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