Artificial Intelligence and Insurance Broking

Andy Jenkins, Operations Director at Insurance Broker, Russell Scanlan, comments on the role of the broker in an AI world:

“AI is already embedded within insurance, primarily by insurers using big data and algorithms, which enable them to automate underwriting, claims decisions and processes to bring elements of consistency and efficiency. Brokers should be seeing the effect of some of these changes. An increasing number of underwriting and claims decisions are being automated, however, one of the roles of a broker is to negotiate on behalf of a client, when the ‘computer says no’.

Brokers can complement an insurer’s use of big data by adding a granular level of data not readily available to them; for example, a business’ culture and its approach to risk management.

There is a risk, however, that automation and big data could marginalise a certain sector of brokers who work with specific product types, as we have seen in the household and personal motor markets.

The introduction of autonomous vehicles could start to change the landscape again on motor insurance. Safer driving patterns could result in lower premiums and less claims, reducing the overall premium income generated by this sector.

The advance of the Internet of Things (IoT) will have an impact on household and personal health insurance, as data derived from wearable technology, linked personal devices and household technology is harnessed.

It’s conceivable that these technological advances will find their way into the commercial insurance sector, which is the traditional heartland of insurance brokers in the UK. It could be argued that people are one of the biggest factors in insurance claims, so the introduction of smart manufacturing processes and monitored warehouses could reduce the human element in factories and warehouses and potentially bring down premiums.

Insurance, specifically commercial insurance, is still traded by people and relationships, however brokers should not be complacent to the advances in technology & AI. In addition to keeping up with new knowledge and risk management techniques that will inevitably follow, brokers could be placed under additional pressure to demonstrate their value in the distribution chain.”