WTW and Audatex launch inflation forecasting tool

WTW and Solera Audatex have developed the inflation forecasting tool to help motor insurers more accurately allow for the future cost of motor repairs in their pricing.

Using Audatex’s repair data, which covers 98% of all UK vehicles, the tool leverages machine learning to predict inflationary effects on vehicle repair costs for multiple vehicle categories, with a high degree of granularity, and validated using historical data.

Traditionally, insurers and underwriters have used a single inflationary figure across the board for predicting the future cost of vehicle repairs; but with the vehicle market becoming increasingly complex, blanket pricing policies for underwriting are becoming ineffective.

Stephen Cox, head of data partnerships, insurance consulting, and technology, at WTW, said: “This tool offers insurers a significant competitive advantage. In such a volatile market, access to accurate cost predictions gives underwriters the ability to avoid underpriced business, while also making their service more attractive to those consumers who will no longer face prices that are unduly high owing to being based on an average of all vehicles.”

Tom Hart, head of account management at Solera Audatex, added: “By making it possible to differentiate inflationary allowances between vehicle makes and models, this new price inflation tool allows insurers to boost their bottom line and offer more competitive pricing to customers.”

The UK currently has the highest inflation rate in the G7, with Brexit, Covid-19 and the Russia-Ukraine war contributing to the mix of challenges.

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