CCC Intelligent Solutions Holdings delivered first-quarter results Tuesday (May 2) showing that the digitization of the property and insurance economy continues to grow markedly.
Artificial intelligence is a key driver of that shift toward a streamlined and more cost-effective claims experience for all parties involved.
In the first quarter of 2023, per the company’s release, about 3,800 repair facilities ran a scan through one of CCC’s diagnostic services partners, according to company metrics, twice the number of shops doing so in the first quarter of last year.
Over 500,000 scanned vehicles were verified via the CCC network in the quarter, more than double the volumes seen last year.
Total revenue was $204.9 million for the first quarter of 2023, compared to $186.8 million for the first quarter of 2022.
During the conference call with analysts, Githesh Ramamurthy, CEO, said that “our clients in the P&C insurance economy are increasingly focused on the need to manage the business through two powerful megatrends: Accelerating operational complexity and rising consumer expectations. Last year, auto insurers in the United States paid out over $200 billion in claims indemnity and spent about $25 billion on administrative expenses to handle those claims.” That metric is known as loss adjustment expense.
The vehicles themselves are becoming ever-more complex, with the advent of new technology spanning sensors governing everything from automating braking to lane departure warnings.
With that complexity comes more labor hours and services tied to repairs, where costs have risen 44% in just a few years — especially with the emergence of EVs.
AI Remains a Key Pillar in P&C’s Digital Transformation
And amid all of that, the CEO continued, “consumers today expect their commercial interactions to be highly digital, simplified, personalized, fast, empathetic, and available at all hours.”
AI remains a major pillar for innovation in years past and through what lies ahead. Ramamurthy noted that over 14 million auto claims have been processed using a CCC deep learning AI solution. With trillions of dollars of historical data and hundreds of millions of dollars in real-time data flowing through, said the CEO, the “feedback loop” feeding CCC’s AI models is a powerful one.
The company noted that the total number of claims processed through CCC Estimate-STP, the AI system that pre-populates repair estimates on qualified claims continues to increase. In March of 2023, the company said the annualized run rate value of auto claims processed through Estimate-STP was over $1 billion, more than 10 times CCC’s run rate value in March of 2022. That run rate still is less than 1% of CCC’s current annual automobile physical damage claim volume, management said.
Ramamurthy said that AI is being used to streamline the subrogation process, “addressing a key pain point for our insurance customers.” Subrogation is the process of insurance companies attempting to recover dollars from other parties who are at fault for a claim — and can cost insurers more than $2 billion annually in administrative expenses due to manual tasks.
“Digitizing subrogation is a natural extension of plans to address the industry’s vision of straight through processing,” said Ramamurthy.
CFO Brian Herb said on the call that 6% of the company’s roughly 10% revenue growth was driven by cross-selling to its installed client base, including the upsell of repair shop packages and the continued adoption of mobile and other digital solutions.
During the question and answer session with analysts, management emphasized that CCC’s revenue model is primarily subscription base, but there’s a continued need for solutions to manage the disparate components of claims and insurance in general.
Looking ahead, said Herb, about 20% of growth should come from “new logos and 80% will be coming from our existing clients.”
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