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King Arthur went on a quest for the Holy Grail. Aeneas quested for a homeland after losing Troy. Bilbo Baggins made an epic quest through Middle-Earth to help his friends reclaim their dwarven kingdom.
Now it’s the insurance industry’s turn … to quest towards a digital transformation.
The quest plot requires the protagonist (in this case: insurer or broker) to leave a place of comfort (old-school business) in search of a place, item, person or understanding (digital innovation). Some insurers and brokers are chapters into their digital plot, while others remain frozen at the intro, or worse – the title.
As tales go, the digital quest is not a new phenomenon. Numerous other industries have walked this path before. The macro picture would suggest that the story tends to end the same way – embracing technology is advantageous and ignoring it brings risks of obsolescence.
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“Digital innovation can be scary if you haven’t been through it before. My advice would be for the insurance industry to look at comparable industries for a blueprint, or at least some guidelines, to see how the story ends and the different paths the plot might take,” said Fil Firmani, vice president of product management at Duck Creek Technologies – a provider of P&C insurance software and services.
“Look at the financial services sector and how the advisory services in both consumer banking and wealth management adopted automation. Financial advisors, similar to insurance brokers, have changed to more of a hybrid format to take advantage of digitization but still provide value to the end customer. Of course, insurance is different, but I would definitely recommend looking at some prior blueprints for ideas and guidance.”
For insurance brokers, automation is a bit of a glass half-empty, glass half-full scenario, according to Firmani. The emergence of artificial intelligence (AI) has enabled insurers to automate many data-driven processes that were originally dealt with by brokers. With time, the capabilities of AI are only going to expand, putting more pressure on the broker channel.
“The way brokers conduct business today is going to change,” he added. “They’re under pressure to justify value to the policyholder and the insurance carrier. Those who embrace the possibilities of technology and figure out how to take advantage of them, are likely to not only succeed in the future, but also thrive. Unfortunately, those who don’t change run a very real risk of obsolescence.”
Insurance, unlike a lot of products, often needs extra touch time and human explanation. Even with the use of AI to automatically produce coverages and premium quotes, there will always be a percentage of people who want to ask questions and gain better understanding.
Commercial lines, in particular, will always have a need for the broker, according to Firmani.
He added: “The real opportunity there is for brokers to embrace digital tools to improve service for commercial lines policyholders. There’s real value there on the broker side.”
Has your agency or brokerage started a digital quest? Let us know how it’s going by commenting below.
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