AI and the Future of the Independent Agent

What would you say is the most prominent theme throughout human history? Most people argue that conflict or culture defines humanity. Still, when we examine the entirety of human existence, we see one central point that outshines the rest: Advancement.

Each age of humanity has been defined by an innovation that changed the course of history forever. Whether it be the wheel, the invention of steel, or the internet, humans seem determined never to settle for their current reality and are always rushing towards that next defining moment.

We believe that the next defining moment is already here, and it has come in the form of artificial intelligence (AI). The floodgates are open, and in as little as five years from now, AI will likely have significantly altered how we live and work. So, what does this mean for insurance agents? Well, if history has taught us anything, it is that those who properly implement innovative technologies are rewarded, and those who don’t either fade into obscurity or serve as a cautionary tale for why you shouldn’t blindly charge forward into uncharted territory.

In this article, we explore how the emergence of AI could impact independent insurance agents and make the case for why agents should work to carefully implement this technology into their agencies’ operations.

First Things First

The burning question that professionals of all stripes are asking themselves is, “Can AI do my job better than I can, and will it make my role obsolete?”. Insurance agents are not immune to this line of thinking, but thankfully it is unreasonable to assume that machines will eliminate the need for human agents. Most consumers are not experts on the different types of coverage available and defer to the expertise of an insurance agent when navigating the buying process. While AI tools such as ChatGPT do a great job scouring the internet and organizing information to answer a question, purchasing insurance requires trust, and consumers trust that their agent is qualified and capable of advising them on their potential risks and securing the right coverage for their needs. That level of trust is not easily transferable to an artificial machine (do you prefer
navigating an automated customer service menu or speaking with a live person?), especially considering the nuance required to properly advise and service a client. As such, it is highly unlikely that consumers would ever prefer their risk profile to be assessed and managed by a programmable machine instead of a real person.

No one knows what the future holds, but we firmly believe that no matter how sophisticated AI becomes, it can never replicate the interpersonal value and expertise provided by agents.

On the Bright Side

With that being said, AI can potentially eliminate the need for agents to perform repetitive and mundane tasks and empower them to focus on where they provide the most value: Advising and servicing their clients. How will it do this? Let’s take a look:

Customer Service

The use of AI chatbots to answer basic customer questions is an increasingly popular feature that more and more companies are utilizing. These chatbots help companies stay connected to consumers and are especially useful outside normal business hours. For example, imagine a customer needing information about your agency’s renewal process after you’ve locked up shop for the day and your customer service team has gone home. Featuring an AI chatbot on your website that is capable of answering this customer’s questions will add value to your customer and, in turn, strengthen their loyalty to your agency. Even today, using AI to enhance your level of customer service can reduce service costs by up to 30%, according to Entrepreneur. Imagine what that number will be ten years from now as AI continues to advance. Additionally, companies such as synthesia allow users to create AI videos that could potentially be used for employee training or continuing education purposes.

It is important to note that AI chatbots are best used in tandem with your customer support team and should primarily be utilized when your team is unavailable (holidays, weekends, non-business hours, etc.) or as a fast reference for your team members when issues arise outside of their circle of competence. In our opinion, having a live person responding to customer inquiries is the preferred method (especially since being an insurance agent is a service-driven role), but when a live person is not available, an AI chatbot can provide an acceptable level of support in the interim and is certainly better than no support. Remember, AI should not replace your customer service staff but instead work in tandem with them to increase the amount of value your agency can provide to your customers.

Underwriting

AI and machine learning (ML) technologies are already transforming the underwriting process by improving data collection and risk assessment methods. For example, instead of relying on potentially inaccurate data provided by customers on an application, insurance companies are beginning to utilize technology that can automatically gather data through many different sources and more accurately discern the level of risk present in each policy. According to management consultancy McKinsey and Company, by 2030, underwriting processes will be almost entirely handled by machines, and most policies will be quoted instantaneously. This removes the need for underwriters to handle repetitive tasks such as data entry and allows them to focus their energy on handling complex submissions. These innovations will be groundbreaking for carriers and brokers. However, independent agents stand to benefit as their customers receive increasingly accurate and error-free assessments of their risk profiles and instant quotes on most policies, allowing agents to focus on other value-added items such as product education and customer retention.

Claims

Claims processing can be a tedious task that requires hours of investigative work and the examination of countless documents. McKinsey and Company estimates that by 2030, AI and ML will play a significant role in the claims process, with nearly half of all claims being fully processed without human oversight or intervention (Lemonade already handles half of their claims via AI and recently set a world record for processing a claim in just two seconds). What does this mean for agents? Well, less time focusing on data collection and information sharing with carriers and more time providing support and counsel to their customers. AI will never be able to match the interpersonal touch of a live agent, and using AI and ML to eliminate tasks such as data collection and information sharing allows agents to focus their efforts on ensuring their customers have the guidance needed to properly file their claims.

A Pivotal Moment

AI has already proven itself capable of enhancing customer support, underwriting, and claims processes. The technology is here to stay and will only become more prevalent over time. The way we see it, insurance agents have three options for how to respond:

1. Reject its implementation and become the equivalent of an agency still using a typewriter in 2010.
2. Rush to implement the technology without cause or consideration and watch it blow up in your face.
3. Identify the areas where AI can increase efficiencies and cut costs and meticulously implement the technology over time.

The key to mastering the age of AI is to choose option three. If you don’t, you may be overtaken by competitors who are more efficient and provide more value to their customers.