Putting it all together: New ways of working in insurance
October 22, 2018
October 22, 2018
The Intelligent Broker: Part 3
In our last article we explored how data, analytics and Artificial Intelligence (AI) can be used to deepen insights and improve decision making for brokers. In this article, we highlight opportunities for brokers to combine these capabilities, along with automation, to move select parts of their business toward a fully technology-enabled future and launch new business models in the process.
In other parts of financial services, technology-driven disruptions are already occurring. Robo-advisors provide decision support for standardized, low complexity investment and retirement planning strategies, enabling clients to get advice and have their investments managed with minimal, if any, manual intervention. That model is based on algorithms that help clients choose the appropriate investments based on their risk tolerance, time horizon and investment goals. Recommendations are made based on models that incorporate the decisions that investors like them—for example, with a similar profile and risk tolerance—have made in the past.1
That same principle can be applied to broking, where the primary objective is for brokers to understand their clients’ risks and develop a program tailored to their needs and objectives. That “tailoring” is based on several considerations, many of which can be codified into algorithms that provide recommendations based on public data and client-provided inputs, an understanding of decisions that clients like them have made, and market insights in terms of coverage and pricing details gathered from carrier quotes.
While the application of new automation, data, analytics and AI capabilities has benefits across broking business segments, the resulting broking models will vary. The lower-complexity Small Commercial segment can, in many cases, be fully technology enabled. For those clients, a comprehensive set of automation solutions and data, analytics and AI-enabled decision tools can be implemented. Key interactions include:
Within that model, the only time manual intervention is required is to handle a scenario that is not (yet) covered by existing solutions. Those exceptions will decrease over time as solutions and models are continuously improved to address additional scenarios.
The dynamics have changed and broking is approaching a ‘tipping point’ similar to what the financial advisory industry faced three to five years ago.
For medium and large businesses with more complex and non-standard risks, the broking process is often more bespoke and therefore typically less suitable for a fully technology-enabled solution. However, brokers can still use the new solutions to create capacity for their higher-skilled resources and provide insights that improve decision making. For example, automation and AI solutions can be applied to gather and consolidate data, review policy documents, and even make preliminary coverage and pricing recommendations that the broker can then validate. And AI-powered online risk monitoring solutions can be used to continuously monitor risks and flag scenarios that require broker review. By taking that approach and expanding the solution set over time, the broker is enabled by technology and able to deliver better outcomes to their client.
Many brokers have been constrained in developing these end-to-end solutions due to a lack of data and technology capabilities. Advanced analytics and AI were in their infancy and third-party data sources not readily available. The dynamics have changed and broking is approaching a ‘tipping point’ similar to what the financial advisory industry faced three to five years ago. What’s required for the model to ‘tip’ more fully:
Carriers and brokers are aggressively leveraging AI. Eighty-seven percent of Property & Casualty (P&C) executives agree that AI will work as a co-worker, collaborator and trusted advisor within the next two years.2 In addition, 79 percent say AI is advancing faster than their organization’s pace of adoption. And 84 percent of those executives feel AI will mature to make an impact equal to what a human is capable of. Brokers must keep pace with carriers or risk being disrupted.
What are the broader implications for the future of broking and the intelligent broker? We see three main opportunities for brokers:
1 Accenture Strategy Tech-led change: AI research, 2018
2 Accenture Technology Vision "Intelligent Enterprise Unleashed", 2018