In view of the speculations surrounding most of the industries, including ours, I decided to write this article to shed light on the future of the insurance brokerage business.
Historically, the insurance brokerage industry has shown resilience compared to other industries. According to MarshBerry, a leading firm specialized in valuing insurance brokers and agents and providing advice to them, several factors have contributed – and still contribute – to the industry’s resilience:
- Insurance is essential by nature and is a fundamental necessity.
- Its recurring revenue stream creates stable cash flow, compared to the nature of revenue which can be seasonal or fluctuate depending on economic cycles in other industries.
- MarshBerry data show that insurance brokerages maintained stable performance even during recessions (2008 economic crisis, 2020 epidemics).
- Even when other sectors see slowdowns in mergers and acquisitions activity, MarshBerry reports (according to its database built on a large scale) that the insurance brokerage deal flow remains steady and attracts private equity on a large scale.
Now, how the insurance brokerage industry will look in the coming decade with the introduction of Artificial Intelligence (AI), which will undeniably play a vital role in every aspect of the economy.
I believe that insurance brokerage under AI will mutate towards a major transformation but will not sustain a total replacement.
First, AI can provide an unequaled personalized experience and offer the possibility to tailor products to individual needs. Through AI, the broker can recommend insurances that are tailored to the client based on lifestyle, income, age, preferences, etc.
Second, the broker will be able – with the help of AI – to provide faster quotes, prepare comparisons in real time, pre-fill the “Know Your Customer” forms, and assist clients in processing their claims in an efficient way; to name but a few…
Third, and for brokers focusing on corporate business – like our group – we will be able to use AI in order to prepare insurance slips, analyze large data sets of information, and, most importantly, identify the risks and calculate their impact. AI will also help in setting the limits of the coverage needed and in drafting bespoke wording.
Last but not least, we will introduce virtual assistants that give clients a comfortable experience by answering their needs. The above are mere examples of how the insurance brokerage industry will be adopting AI to enhance its services.
Finally, I decided to scrutinize the opinions of the concerned and sought the views of three reputable AI engines: ChatGPT, CoPilot, and Gemini. I addressed to them the following question:
In what ways will AI influence the insurance brokerage industry in the future? Please limit your answer to 2 or 3 lines.
ChatGPT: “AI will streamline operations by automating administrative tasks, enabling brokers to focus more on advisory roles. It will also enhance client service through personalized policy recommendations and faster, data-driven risk assessments.”
Gemini: “AI will automate routine tasks and enhance data analysis, enabling brokers to provide more personalized advice and improve customer experience. It will also drive efficiency in risk assessment, underwriting, and claims processing.”
CoPilot: “AI will revolutionize insurance brokerage by automating underwriting and claims processing, enhancing fraud detection, and personalizing customer experiences. Brokers will leverage AI-driven insights to optimize workflows, reduce inefficiencies, and focus on advising clients.”