Githesh Ramamurthy: The short answer is that, over the long-term, it does open a lot of other avenues and capabilities, especially if you look at the — what happened with P&C insurance, right? In 2022, for example, the P&C insurance had a combined ratio of 102, and auto — personal auto had a combined ratio of 110, which has been pretty challenging. And so over the long-term, we do think there will be other use cases, but we are not focused very deliberately on those use cases right now. For example, the ability to — when you insure a car, to be able to take pictures around the car, look at the damage on the vehicle to get fraud checks and other things, when you underwrite that vehicle, the AI is absolutely applicable but over the long-term. But that’s not what we’re focused on today.
Dylan Becker: Okay, that makes sense. And then going back to kind of that 2 billion cumulative days metric, which I mean, I think it’s just fairly mind-blowing. We’ve talked about complexity in the past, maybe touching on frequency and severity. The perception that maybe, I don’t know, even EV brings it down over time. I think some of the early stats point to the contrary there. I guess how you’re thinking about the trend line of not only frequency and severity as it pertains to EVs, but then the positioning of repair facilities to actually address this growing mix of work because, again, it doesn’t seem like 1 billion going to 2 billion, there’s room for that number to continue trending higher? Thanks.
Githesh Ramamurthy: Yes. Sure. So, first of all, from a frequency standpoint, frequency has been coming up a little bit, but still below 2019 levels, probably 7% to 10% below 2019 levels. But what has happened is that the complexity of repair has increased significantly. Let me give you a couple of stats to illustrate this point. So, if you look at repair costs, 75% of the increase in repair costs between 2018 and 2022 came from really two categories; the number of parts in the vehicle and the amount of labor hours in the vehicle. That accounted for 75% of the increase. So, in 2021, we saw a repair cost increase of 11.5%. In 2022, we saw a repair cost increase of 13.5%, and that has abated somewhat. But underlying this was really the fact that in 2018, we had 10.1 parts per collision repair and in 2022, that had increased to 13.1 parts.
So, in other words, every repair, every collision repair just over that four-year timeframe, you’ve got 30% more parts going in with inflation coming in, and you also have more specialized labor coming in. So, labor hours have gone from about 24 hours to a little over 27 hours. So, when you take these two things, all of these factors in, this is what we’ve talked about, is the growing complexity of repairs, the growing complexity with EVs. EVs are still almost 35%, 40%-plus more expensive to repair. And since we see a very — a decent volume of EV going through our platform, it’s still only 1% of claims, even though EV sales are now around 6% of sales. We see this growing — fundamental growing complexity is really what we’re trying to address and hence, the number that we see going from 1 billion days to 2 billion days and part of it is also due to supply chain issues, which are starting to normalize.
But underneath all of this is really complexity that we need to help every single one of our customers help manage.
Dylan Becker: Got it. Thank you.
Githesh Ramamurthy: Thank you.
Operator: Thank you. Our next question comes from the line of Gabriela Borges from Goldman Sachs. Your line is now open.
