A career in insurance is AI going to take my job?

As published in The Insurance Apprentice brought to you by FA News

You have done all the hard grafting only for some piece of machinery to steal your designated spot in the insurance industry, right? Nope, wrong.

Let’s take a step back. The perceived big, bad Artificial Intelligence (AI) is no more going to replace brokers in insurance than calculators have replaced mathematicians.

It is evolution, not extinction

Some human beings will always prefer to interact with another human being while others imply prefer not to. Furthermore, some lines of insurance, say, commercial policies, require the human touch: bespoke wording and face-to-face negotiation, which will always have a place for the professional broker.

For personal lines insurance, yes, it is another story. These products have become commoditized and with the Retail Distribution Review (RDR) squeezing margins, brokers will in future primarily only be able to focus on high-net-worth clients, regardless of technology.

However, the conversation today should be less about AI and more about computer automation drastically reducing the cost of doing business, but also prompting decision-makers to evolve their product suites to suit automation and reducing costs while increasing efficiency. This means that brokers, will in future, migrate to more specific markets and niche products where complexity is involved. But it reiterate, it is evolution, not extinction.

Have no fear

Fear is the usual first reaction in every industry where computer automation has brought down operational costs. Like with any adversity in life, the key is your approach to it.

When focused purely on the technical pursuit of automation of AI we often forget the human element. Human beings are social animals by nature and have a natural need to talk to another human being somewhere in the process, either to purchase a solution, resolve a problem, or claim for insurance. And it doesn’t matter whether the client is a baby boomer, Millennial or from generation Z.

While the role of the broker may look different today than it did 30 years ago, so too it will differ in future, but if you embrace technology and use computer automation and AI as one of your tools, success is almost guaranteed, assuming you are a good broker, of course. Rather see AI and computer automation as a tool that can bring down costs and improve customer services.

Computer automation will bring down the cost of acquisition by automating segmentation, needs analysis, comparative quotes and ensuring compliance to regulation. AI can be used to learn from and improve on the underlying actuarial models for rating in real time to give client-specific rates. It can enrich data from multiple sources to reduce data capture. Use this technology as a tool to give your client something the next broker cannot; personalized solutions based on pure data.

A broker entering the industry

If I had to be a broker entering the industry today, I would embrace technology but also be sure to know every insurer’s product like the back of my hand.

I would focus on the niche industry and become an expert in this field. As long as you can add value in the form of a service or advice in proposing the correct cover for your client, you will do more than simply survive.

Ben du Preez
Group CIO and Software Solutions MD