United Services Automotive Association (USAA) grew to become the fourth- largest insurer of homes and the fifth-largest insurer of automobiles during its first fifteen years. One reason for its success was the use of IT to lower costs and improve customer service. USAA spent almost \($150\) million on computer and imaging technologies over a 25-year period.

USAA uses its extensive database to keep track of minute details, such as which auto parts are fixed most frequently. It also uses its database to find ways to reduce claims costs. For example, USAA discovered that repair shops would rather charge up to \($300\) to replace a windshield with puncmres than to charge \($40\) to repair it. USAA began offering to waive the deductible if the owners would repair the windshield rather than replace it.

USAA spent extensively to develop an image-processing system that digitizes all paper documents sent in by claimants (over 25 million a year). It only takes a few keystrokes for a policy service representative to retrieve pictures of all the documents in a customer’s file. The system can sort and prioritize documents so that employees are always working on the most important and urgent tasks.

Required

a. Why should USAA collect data on which auto parts are getting fixed most frequently? What could it do with this data?

b. Even though USAA offered to waive the deductible, the repair shops still man¬ aged to convince 95% of the owners to replace rather than repair their damaged windshields. How could USAA use its AIS to persuade more shop owners to repair rather than replace their windows?

c. How does the image-processing system at USAA add value to the organization?