The fourth industrial revolution has already bought about phenomenal change and innovation at an unprecedented pace. It has transformed the way in which we conduct in business in all aspects of the insurance value chain, including sales and underwriting, claims processing, risk analysis and the processing of payments.
Technological advances promise efficiency, greater accuracy and speeds and a simpler and cost-effective way of life for those working in the financial services industry. But it also comes with a few negatives, and one of the biggest is the possibility of replacing humans entirely, which is why technological advances are often viewed or taken on with apprehension.
In the case of the insurance sector, the biggest threat lies with the broker. In their Automating the Insurance Industry report, McKinsey & Co suggest that automation could leave up to 25 percent of the insurance industry’s current full-time positions consolidated or replaced over the next decade.
The consulting giant predicts that the biggest and greatest change would be in operations. Based on an evaluation of insurers in west Europe and the use of its full-time-equivalent benchmarking database, McKinsey predicted that just 33 percent of the insurance-industry workforce would be centred in operations within a decade, reduced from 46 percent in 2015. Automation could leave ten percent of the workforce focused on administrative reports, a reduction from 18 percent in 2015.
According to the McKinsey, insurance brokers and agents are among the most vulnerable to having at least 30 percent of their tasks automated. As many as 60 percent of the tasks sales agents perform could be automated. For underwriters, it’s 35 percent.
Other areas that would experience smaller cuts include product development, marketing, and sales support going from 21 percent of the workforce in 2015 to 20 percent within a decade. Similarly, IT could decline from 15 percent to 12 percent over the same period.
McKinsey say that declines could be steeper in more saturated markets where declining business volumes and redundant IT positions are more common. But it is not all doom and gloom. While AI is more likely the solution to dealing with customers’ needs it’s not the panacea to replacing the ‘human touch’. The customer service department won’t be overrun by robots just yet
The biggest advantage of having a broker is the customer service and personalised approach, which automation simply cannot compete with. In a technologically connected world, consumers desperately desire informal communications with another human being that is an expert in the field – particularly when it comes to all things finance.
Automation will result in brokers having more time but if they don’t use this smartly – to enhance their services, for example, they could end up losing some customers that haven’t quite mastered the use of chat bots just yet. Brokers need to work with AI, not against it. They need to use it to enhance their services to deliver more for customers and grow their business.
The role of the broker will always be relevant and required. Rather than seeing automation as a the enemy that will steal jobs and functions, brokers need to work smartly in building the technology that will suit their customer’s needs. And if it doesn’t, they need to make sure they are still able to have that face to face meeting or be available on the other end of the phone to provide the assurances that customers may need.