Is my job as an insurance broker safe from takeover by artificial intelligence? I am sure we have asked ourselves this question at some point in time with the advancements made in AI making the news almost daily. This is in addition to the pressure already being experienced by brokers from today’s clients who are savvier than ever before and have access to a wealth of information at their fingertips and are not afraid to use it to make informed decisions about their insurance needs. With sophisticated and predictive technologies now available, brokers are nowadays under more pressure to demonstrate their value in the insurance value chain.
Artificial Intelligence (commonly known as AI) deals with the creation of computer systems that can reason, learn, and act autonomously (simulate human intelligence). It encompasses everything from machine learning, automation, chatbots, predictive recommendations, and algorithms. Thanks to these technological advancements, AI systems are now able to perform tasks that previously required human intelligence - things like visual and speech processing, decision-making, and language translation.
It’s only natural to link technology and artificial intelligence to industries like telecommunications, marketing, and manufacturing. In the insurance sector, perhaps not so much. Yet technology is transforming the way insurance carriers provide coverage and how policyholders receive service.
AI and the Insurance Industry
AI is employed in various applications in the insurance industry, including fraud detection and prevention, risk assessment and underwriting, customer service & engagement, claims processing and management, and predictive analytics and risk management. With the simplification of these processes, insurers are enabled to improve customer experience, cut costs, and streamline operations (reduce errors).
Fraud Detection and Prevention
Insurance fraud is a major concern that costs insurers billions of dollars every year. Manual reviews are one of the more time-consuming and frequently inefficient traditional fraud detection techniques. To evaluate huge amounts of data in real-time, increasingly advanced fraud detection and prevention systems are being developed using AI. With these tools, insurers can see trends and anomalies in the claims data and stop fraudulent claims before they are paid out.
Risk Assessment and Underwriting
In the past, insurers have calculated premiums and assessed risk using manual procedures. But to effectively evaluate risk and determine rates, AI systems can now examine important amounts of data, including demographic data, claims history, and behavioral data. Additionally, insurers use AI to automate the underwriting process, which saves time and money when processing applications. As a result, customers receive their quotes more quickly, and insurance costs may go down.
Customer Service and Engagement
Customer service and engagement in the insurance industry are improved with the use of AI. Artificial intelligence-powered chatbots and virtual assistants offer customers immediate assistance and responses to their queries. These chatbots can answer basic questions, freeing up humans to handle more complex problems. Additionally, by customizing goods and services to suit each client’s requirements and preferences, AI can be utilized to enhance consumer experiences. This can raise customer retention rates and promote customer satisfaction and loyalty.
Claims Processing and Management
Insurance companies use AI and machine learning algorithms to automate claims processing, saving time and money. As a result, customers will receive their payments faster, and insurance costs may decrease. Furthermore, data on claims can be analyzed using AI to discover patterns and trends. This can help to reduce the likelihood of claims being denied, and insurers can use this data to identify areas where their claims procedures can be improved.
Predictive Analytics and Risk Management
Predictive analytics algorithms can analyze vast amounts of data to identify potential risks and predict future events. This can help insurers to develop more effective risk management strategies and reduce the likelihood of losses. For instance, insurers can use predictive analytics to identify customers who are at a higher risk of making a claim and develop targeted interventions to reduce the likelihood of a claim being made. This can lead to lower costs for insurers and better outcomes for customers.
AI and Broking
Insurance brokers are ideal candidates for AI due to their extensive consumption and production of large volumes of unstructured data obtained through various client interactions in the form of policies, claims, regulatory documents customer data, meeting minutes & notes, emails, industry reports, research papers, text messages, social media posts, etc.
Harnessing this unstructured data with AI can help brokers enhance their efficiency, effectiveness, and overall customer experience by automating routine tasks, improving decision-making, personalizing customer interactions, and streamlining various aspects of their operations. Ultimately, AI will allow brokers to have more clients with lower costs, leading to increased market share, profitability, and valuations for firms that are successful at implementing AI technologies.
The extensive knowledge of customers’ financial needs and appropriate insurance products will help brokers play a critical role in evolving and refining AI. This integration between human experts and AI, augments each other, creating augmented intelligence.
Augmented intelligence can interpret data more clearly and quickly, enabling more accurate predictions to be made about the market, premiums, and products, leading to decisions based on data, not intuition or experience.
It seems unlikely that AI will replace brokers in the insurance industry, especially in roles that require specialized expert judgment, and experience in claims. Even those dealing with customer inquiries & management, underwriting, and renewals will find that several activities are nuanced and multi-layered, requiring their judgment and expertise in various situations.
To remain relevant in a world where AI and savvy clients are transforming the industry landscape, insurance brokers must innovate. The broker of the future will have to invest in AI technology to reap the below plus more:
- Automate tasks, improve efficiency and provide better customer service.
- Gain insight into customer intent to identify opportunities and recommend the right products, coverage, limits, and deductibles at the right time.
- Diagnose and resolve trouble areas, develop new products, and enter new markets based on data-backed insights into customer trends.
- Monitor patterns to spot threats early and take prompt action.
As customer demands change and technology progresses, broking will shift from transactional, low-touch customer interactions to high-value and high-touch customer interactions. Individual needs will no longer be defined by product features and standardized pricing. In turn, brokers are being pushed to cater to customized needs and preferences with solution-based offerings.
Despite advancements in AI and other technologies, the core value of insurance broking remains the same; to help clients find the right insurance coverage for their needs. By embracing change and innovation, insurance brokers can continue to provide value to their clients and remain a vital part of the insurance industry.
So, are our jobs as insurance brokers secure? Can the computer systems match the expertise, experience, and human touch of a seasoned broker? Only time will tell. We can breathe a sigh of relief, as our jobs are safe…. for the time being.
Duncan Ekasi Otiti | Chief Broking Officer | Minet Lesotho
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