DUBAI, UAE, November 26, 2014 /PRNewswire/ --
Would you believe that 165,000 cars are produced every single day across the globe - that's staggering isn't it? What's also staggering is that, sadly, thousands of these cars end up in car-crashes every day. Official figures show that with 313 vehicles per 1,000 people, insured vehicles in the UAE have a total loss rate of 1.5%. This leaves Insurance companies and their claims managers with a lot of work to do in as cost-effective a method possible. Auto insurers are therefore re-thinking their salvage management processes much more than they used to.
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Outsourcing salvage sales
A vehicle is considered "written-off " or a "total-loss" when its estimated repair costs make it uneconomical to proceed with that repair. When considering a claim, a claims manager thinks about the total insurance payout to the policyholder, against the likely return from the sale of the damaged "salvaged" vehicle. Most auto insurers today continue to sell off their salvage to private dealers, either directly or through local physical auctions. The UAE has a sizeable market for second-hand auto parts and the reconditioning of vehicles for sale to other parts of the world. This leads buyers from the region to seize opportunities from salvage purchases from the UAE, with good location, price and logistics being crucial factors too.
This raises a few que stions. Are auto insurers maximising returns from their salvage portfolios? How can claims managers ensure they get the best deal and value from their salvage assets? Claims are a costly natural product of being a motor insurer. After an accident, insurers have to transport the vehicle, have it assessed, store it, provide a replacement hire car, process paperwork and pay the customer their insured total. The leading insurers with the best loss ratios effectively manage all these aspects better than others, with the resulting sale price of the salvage asset being one of the most important influencers to the end result.
Many insurers have now realised that outsourcing the vehicle sale aspect of a claim experience can add value. Specialty salvage sellers, like Copart, have taken over the process to good effect, providing transport/logistics, facilities for storage and safe-keeping of the asset and, ultimately, global reach to ensure the asset is exposed to as wide an audience as possible, thus increasing its chances of higher sales prices. So, rather than selling them to their list of known buyers, who basically control the price setting themselves, they now allow the middleman service provider to advertise and auction the asset to fetch the right market price.
Advantages of outsourcing
The key elements to the value chain that companies like Copart offer are:
Storage
Removing the salvage vehicles from the insurance facilities and negating the need for land to be leased by insurers, thus cutting operational costs. Copart also has a vested interest in maximising the value of the ultimate sale and therefore it is in their interests to protect the asset as best possible.
Use of technology
It is important to get the right value for each salvage vehicle, but the real challenge for insurers is to maintain a buyer base that is reliable and consistent. Copart's technology enables vehicles to be exposed to a global audience and they can track and maximise the data collected online from all buyers. The buyers can view the vehicles by visiting Copart's facility, however, the online auction platform called, Virtual Bidding 3, allows buyers to browse vehicles 24 hours a day across the world. Copart's buyers trust Copart and the information and images they provide on each vehicle. Copart sells in excess of 9,000 vehicles every day of the week, and most of these are bought without having been seen by the buyer.
Buyers' ease and convenience
Buyers get instant exposure to vehicles from all over the world through the power of the internet. and they are not limited by time zones and office opening times. Overseas interest helps create competition and the technology improves the purchase and sales process and helps provide transparency and clarity to all sales that occur.
Getting the experts in
By outsourcing the protection, storage and sale of their valuable salvage assets, it streamlines and simplifies the salvage disposal process, improves the chance of better sales prices and better loss ratios and importantly, it cleans up a messy process fraught with fraud possibilities and no transparency.
For further information, contact:
Carlos Sabugueiro CEO, Middle East & Africa , for Copart.
Office number: +971(0)4-3792707
SOURCE Copart
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