NORTH HILLS, N.Y. and WESTCHESTER, Ill. –
Perhaps accelerated by the coronavirus pandemic, electronic signatures and other fintech developments now are being utilized more frequently in connection with vehicles that end up being scrapped or dissembled for parts.
Dealertrack and IAA recapped on Thursday that the General Assembly of North Carolina has amended its laws governing the title transfer of salvage vehicles by removing notary requirements, permitting electronic signatures and allowing access to division of motor vehicle systems.
Prompted by the global health crisis, the companies highlighted this amendment — due to be signed into law this month — marks a new milestone in that half of the states in the U.S. would officially be eligible to transfer total loss titles digitally.
“With the passage of HB 337 (regular session 2019), North Carolina became the 25th state to enable electronic salvage title processing,” said Sarah Hunsicker, director of government affairs for Dealertrack Registration and Title Solutions.
“Additionally, North Carolina has taken further steps to streamline the transfer of a total loss vehicle, including permitting electronic signatures and eliminating notarization requirements,” Hunsicker continued in a news release.
Even before the coronavirus pandemic forced many dealerships, DMVs and auctions to operate with fewer staff and social distancing, Dealertrack and IAA pointed out that total loss title processing could take eight 10 weeks. The delay to transfer ownership of a total loss vehicle can stall cash flow for insurance companies, dealers and other downstream players who derive value from fixing, parting out or recycling salvaged vehicles.
The companies highlighted the new law paves the way for digital processing of total loss titles in North Carolina, which can now be done via an enhanced strategic agreement between IAA and Dealertrack Registration and Title Solutions.
The companies’ combined technologies can allow for the transfer of information between the parties necessary to the total loss title transfer, which can cut the timeframe down to as little as one week and free up crucial cash flow. IAA’s Loan Payoff can allow insurance companies and automotive lenders to digitally connect to address negative equity liens. It then issues a letter of guarantee, resulting in accelerating the total loss settlement and lien payoff process.
“When a total loss occurs, generally the consumer is made whole at the beginning of the claims process on the value of the vehicle,” said Tim O’Day, president of U.S. operations for IAA. “The creation of value and healthy revenue from that asset then falls on insurance companies, dealerships and a whole eco-system of affiliated businesses.
“Enabling the process to work digitally speeds up the flow of value from one party to the next, which in turn benefits the entire auto eco-system,” O’Day continued.
The companies went on to mention that in a vehicle claim, moving the title faster decreases the cycle time to sell a total loss vehicle, which means better value to the involved parties, and can translate to more stable insurance premiums to consumers.
Based on internal analysis and interactions with multiple insurance providers, IAA estimated that there are more than 5 million vehicles declared a total loss each year and approximately 60% to 70% of those vehicles have retail installment contracts that require payoff prior to the clear transfer of title.
Based on the average price for vehicles declared total losses, delays in the contract payoff and title transfer processes can tie up billions of dollars and slow consumers from returning to the auto retail market to purchase their next vehicle, according to Dealertrack and IAA.
“If there is a silver lining to be found for our industry during the upheaval caused by the national health crisis, it has been the spur to digital adoption,” said Kaitlin Gavin, vice president of operations at Dealertrack Registration and Title Solutions. “We’ve progressed years in terms of applying available technology to total loss titling in just weeks’ time.”