AI in warranty management is redefining the ways OEMs approach claims processing and prepare accruals for future claims. From depleting their profit margins for costly claims processing to actually realizing and mitigating concerns that lead to budget overruns, AI is helping automotive OEMs overcome even the most resistant warranty management problems.

The best part is that OEMs who are switching to AI first are leveraging the benefits to gain a competitive edge. They are delivering faster claims processing and higher-quality repairs, all while reducing warranty costs. While second movers will also get these benefits, they may not be able to stand out to the same extent.

Also, several automotive OEMs are already aware of the capabilities of AI, but they’re hesitant to make the switch because of over-dependency on traditional software. Similarly, OEMs need assistance in implementing AI-tech. There can be multiple approaches to implementation, but it should be fast, quick, and cost-effective.

In this blog, we have shared insights into the key areas of AI in warranty management and the best approaches for implementing AI-tech.

Key Areas Where AI Helps Automotive OEMs In Warranty Management

Although the impact of AI is transversal to numerous areas in warranty management, we have mentioned the key areas where automotive OEMs want AI assistance.

1. Warranty Cost Reduction

In the automotive sector, warranty costs are skyrocketing. OEMs have to spend billions from their profit margins to provide these warranties. The accruals are increasing from year to year, with a massive jump of 17% alone in 2023. These figures are only expected to increase for 2025-2026. With the help of AI-automation, OEMs can eliminate human errors, prevent coverage issues, detect warranty frauds, and even keep costs overruns away. They can ensure that dealers are offering a warranty on coverage items only and following a systematic process that helps them detect warranty parts and do policy administration. 

2. Warranty Fraud Detection

Speaking of warranty frauds, AI is the next-gen approach to detecting fraud in time and eliminating it. Even fraudsters are now relying on AI technology to conduct fraud, making it essential for automotive OEMs to integrate the same in their operations. AI helps in warranty fraud detection in multiple ways. It can cross-check data based on numerous variables, including but not limited to:

• Warranty claims cost
• Warranty claims region
• Claim filer name
• Proximity to warranty end date
• Repetition of warranty claims
• Warranty claims estimate
• Labor cost estimate
• Inventory part correlation
• Claims-to-Claims Ratio
• Part failure data
• Seasonal claim spikes
• Geotagging
• Evidence metadata

With so many cross-checks, AI can detect anomalies in warranty data, recognize suspicious behavior, and help in levying complex warranty terms. The best part, being an adaptive learning model, AI only gets better at fraud detection, making you future-proof as well.

3. Faster Claims Processing

Warranty claims processing delay leads to increased vehicle downtime, customer frustrations, and constant back and forth with an exhausting chain of approvals. This increases the administrative efforts of the OEM and reduces overall productivity. With AI-enabled automation, warranty claims checking is streamlined and fast.

AI can administer warranty policy terms, ensure the claim is eligible under warranty, analyze evidence documents, including the metadata, and conduct complete audit trailing. Doing so manually can take weeks or even longer, but with the help of AI, tracking and maintaining records is quite efficient. 

4. Audit Trailing

We spoke about audit trailing in our previous point. Audit trailing is essential to maintain accountability in the claims process. It is creating a detailed record of activities and user actions, like which user filed the claim or accepted the evidence, or who gave approval for a claim. The entire process of audit trailing helps OEM in tracing record history, ensuring compliance, identifying reporting errors, and maintaining accountability in case of fraud detection.

5. Warranty Forecasting and Budgeting

Lastly, AI in warranty management can help with forecasting warranty claims and budget preparation as well. With the help of warranty analytics, automotive OEMs can figure out which parts are breaking down the most, which parts have the highest warranty costs, and which regions are filing the maximum warranty claims. Based on this information, OEMs can predict future claims, set accruals, and be proactive in serving their clientele network.

Impact on OEMs and Dealerships

With AI-based warranty claims management, both OEMs and dealerships witness a positive impact on the warranty process.

1. For OEMs

• OEMs primarily benefit from lower warranty costs and leakage. They can ensure that dealers are only provided coverage on eligible parts. AI tools even flag suspicious, incorrect, or duplicate claims before approval.
• With AI, OEMs can catch repeat part failures quickly and find the root cause behind part failure. They can also start an RMA process to call back the failed part for R&D processes.
• By predicting failure parts earlier on, OEMs can initiate part improvement in manufacturing and prevent large-scale field issues.
• With accurate identification of faults in spare parts and automated evidence verification, OEMs can recover damaged part costs from suppliers faster. Even suppliers get complete visibility on the system and can easily verify claims.
• Along with suppliers, OEMs can keep warranty teams and dealers, all on one unified system.

2. For Dealers

• Dealers primarily benefit from faster claim approvals. They don’t need to conduct constant back and forth with the OEM. They can simply check out for AI-claim validation and start working on the repair.
• As AI extracts, pre-fills, verifies claims data, and runs multiple checks, dealers also don’t have to manage manual paperwork. This also streamlines the process to a vast extent.
• With AI making policy administration easy to follow, dealers have to face fewer reworks and fewer claim rejections. This gives a massive boost to productivity as dealers don’t have to repeat processes.
• With timely claims approval and vehicle repairs, dealers get to deal with satisfied customers, which boosts team morale as well. 
• Increased visibility on the warranty claims management platform leads to less friction between dealer and OEM. It helps develop strong relations between the two parties.  

How to Deploy AI Tech for Warranty Management

Despite being aware of the benefits of AI in warranty management, OEMs are often hesitant to integrate AI tech. This is because of multiple misconceptions, like OEMs believing AI deployment is costly, or that it can interrupt operations and create a slump in the dealer network. However, the reality might be different.

Here are multiple ways automotive OEMs can deploy AI in their warranty claims process:

1. Using an Off-the-Shelf Software

Using an off-the-shelf solution that comes with AI warranty management features right out of the box is the most cost-effective and time-saving method. Such solutions can be easily deployed and help you streamline warranty operations without major disruptions in the workflow. As these warranty management solutions are already tried and tested in the market, they have very strong and efficient documentation, ensuring your dealers can get used to the software easily.

Pros of using an off-the-shelf software

• Come with all essentials right out of the box
• Time-saving, can be deployed easily
• Very cost-effective as OEMs don’t have to develop the solution from scratch.
• Already tried and tested for daily use cases
• Proper documentation is available

Cons of using off-the-shelf software

• OEMs don’t get the choice of tech stack

2. Custom Development Approach

The custom development approach also remains an option. However, it can be very time-consuming and costly. First, you will need to reach out to AI software developers, share requirements, and follow the proper software development life cycle approach. All this can take years. Meanwhile, your existing warranty management operations remain costly. The only benefit of this approach in the foresight is that you get complete flexibility in development. You can add as many features as you want.

Pros of Custom Development

• Choice of tech stack
• You get more flexibility in development

Cons of Custom Development

• Highly time-consuming and costly
• Not tried and tested in the market. The software efficiency will remain based on how well the business analyst plans the solution
• Documentation can lack clarity, as it is never revised for improvements.

3. Hiring an In-house Team of Developers

This approach is the most time-consuming. You will need to screen developers and build an in-house team. The team can work on your requirements via both the waterfall and agile development approaches. The overall effectiveness of the software and the quality of the source code will depend on the skills and expertise of the selected developers.

Pros of hiring an in-house team

• More cost-effective than custom development
• Maximum flexibility in development

Cons of Custom Development

• The most time-consuming approach
• The final build has not been tried and tested for the market
• No documentation available. You will need to build documentation separately
• Deployment can be challenging

Our Recommendation

Using an off-the-shelf warranty management software with built-in AI capabilities is the most practical way to introduce AI in warranty management operations.

• It is the most cost-effective and time-saving deployment approach
• Does not interrupt business operations. You can easily integrate the solution into your existing workflows
• You get a tried and tested solution that is built to handle everyday warranty management challenges
• No need to depend on costly and time-consuming custom development services
• AI is still evolving. Finding reliable developers can be challenging, which again makes using a readymade software a better approach than building your own in-house team
• The technical support team is more reliable and can easily resolve any issues in off-the-shelf software.

About Intelli Warranty

Intelli Warranty is a state-of-the-art AI-based warranty management software that helps OEMs reduce warranty management costs, prevent leakages, detect fraud, and even improve supplier recovery. It brings complete automation to the warranty management process, so that OEMs can eliminate human errors and improve overall work efficiency.

Key Features of Intelli Warranty

1. AI-Based Anomaly Detection and Fraud Prevention: Intelli Warranty validates claims data through 25+ parameters, such as the cost of repair, region of claim, part failure history, duplicate claims, proximity to warranty end duration, and even evidence metadata verification. With the help of so many parameters, Intelli Warranty helps OEMs prevent warranty fraud in a timely manner.‍
2. Automated Policy Administration: Warranty terms can be very complex, with varying coverage for different parts in different regions, and that too with varying coverage duration. With Intelli Warranty, dealers don’t need to monitor policies manually. AI can handle policy administration on its own. It can also check evidence data and share approval on behalf of the OEM if everything lines up.
3. ‍Audit Trailing: Audit trailing is essential to maintain accountability in the system. Intelli Warranty keeps a complete trace of which user is filing the claim, submitting documents, giving approval, or coordinating with the customer. With complete traceability of efforts, it becomes easier to identify manual errors, identify fraudsters, and refine processes.
4. ‍Multiple Claim Types: To provide complete coverage, Intelli Warranty supports multiple claim types. These include OEM PDI, Dealer PDI, Post-Sale, Campaign, Goodwill, and Spare Part claims.
5. ‍RMA Authentication: In case of repeated part failure, OEMs can call back a part on their own budget for research and development purposes. OEM enables the RMA, and dealers will get direct notifications of the RMA process and prepare the spare part for dispatch in time. This helps in improving part quality and preventing future warranty claims as well.
6. ‍Warranty Analytics: Intelli Warranty can also collect warranty data in real-time and provide detailed warranty analytics to OEMs. This data can include metrics like which parts had the maximum warranty claims, which region has the highest processing costs, or parts with the costliest claims, etc. Based on this info, warranty management heads can make necessary business decisions.

Conclusion

With AI handling key warranty management processes, OEMs can refine their operations by a huge margin. They can save on warranty management costs, speed up claims and repair processes, and improve supplier recovery. While there are multiple ways to deploy AI in your warranty management operations, opting for a readymade off-the-shelf solution remains the most reliable and cost-effective option. You can even see Intelli Warranty, one of the most advanced AI-powered warranty management solutions, in action by booking a free one-on-one demo with our experts.

Frequently Asked Questions (FAQs)

1. What are the key benefits of using AI in warranty management?

Answer: For the automotive industry, using AI for warranty claims management can help OEMs reduce warranty costs, prevent leakage, detect fraud in time, streamline operations, and ensure higher customer satisfaction levels.

2. What are the multiple ways to add AI in our warranty management operations?

Answer: For deploying AI in their warranty management operations, OEMs can use a readymade off-the-shelf solution, opt for custom development services, or even hire an in-house team of developers. Out of these three, using a readymade off-the-shelf solution remains the most cost-effective, time-saving, and tried and tested approach.

3. Which is the best AI-powered warranty management software in the market?

Answer: Based on the different requirements of businesses, it is difficult to handpick a software and call it the best. In case you need a suggestion, you can check out Intelli Warranty, which is a part of the Intellinet System’s aftermarket software ecosystem. It is a readymade solution that can conduct 25+ AI validations to detect warranty fraud, reduce costs, and simplify warranty management operations.