Do you think AI will replace insurance brokers? 🏴☠️ A producer recently asked me that question. My take: no Derek Sivers famously said, “if more information was the answer, then we’d all be billionaires with perfect abs”. We can already Google our way to most employee benefit answers. AI can now help us synthesize information faster, with more accuracy and less training data. Output is becoming indiscernible from a human. So why not replace the broker? There are slices of every professional services industry that will be replaced, or supplemented, and in truth this applies to the benefits broker too. Repeatable tasks like spreadsheeting proposals, merging claim files, financial reporting, billing audits, and commission statement reconciliation ought to be run through an AI workflow first. Tolerance for errors is low — trained benefit professionals should keep their hand on the wheel, but these execution-oriented tasks are not what employers are paying a brokerage $200-$300 per hour for. They’re paying for 𝚊̲𝚍̲𝚟̲𝚒̲𝚌̲𝚎̲. A small employer spends a small fortune on their health plan (hundreds of thousands), and a mid-to-large sized employer spends even more (millions). These decisions have a real impact on employees, drive the overall budget, and can have a long tail — taking calendar years to shift strategies. Maybe this bias will evolve over time, but our perception of advice from a human versus a computer is not the same. We trust algorithms to make reversible decisions like selecting the next TV show or song, but when making important, long-lasting business decisions we want guidance from other humans — rooted in their judgment, creativity, and hard-won knowledge. A benefits advisor embodies this. As a business owner with a benefits background myself, I can’t help but feel that while I have access to all the information in the world I still want guidance when making big ticket benefit decisions. Am I asking the right questions? Am I applying the answers to my specific situation in the optimal way? How does this decision fit into a multi-year strategy? Presumably others ask themselves the same. Whether that credibility is real or perceived, we feel better about the decision – it’s hard to replicate that feeling with a computer. AI is poised to make the industry smarter and more efficient, but I don’t believe it will replace the bespoke advisory services that brokers provide. Those who blend cutting-edge tech with human insight (and a personal touch) will continue to deliver the best outcomes for their clients. Hat tip to Jake Saper and Jessica Cohen of Emergence Capital for helping me see some of these ideas through the lens of their ‘Death of the Big 4’ post. Link in the comments.
It will replace brokers......that do nothing more than provide a policy and a cert. With a focus on certain types of businesses or coverage linesand significant programming, AI could run many parts of an agency. I'm working with our team currently on how to build a better tech platforms for managing the large book of small fleet auto haulers.
Richard Perrott Love the perspective here, and I share the sentiment. The sky isn't falling with AI supporting improved decision making in the benefits ecosystem-- if anything, it allows more space for better decision-making based on better data and insights.
Personally I feel like this specific use case is similar to many others in knowledge work, where AI will not replace the role as a whole, but the bottom X% of people. AI will allow brokers to be much more effective and productive, essentially resulting in firms needing ness of them for the same output. So who is at risk? The lowest performing ones, or the ones resistant to tech / change / innovation.
Only a producer would ask that question! 😂 An AE or AM is in the trenches and knows that the day to day issues with the carriers aren’t going anywhere, nor are the employee questions on how to actually use coverage. There’s no way AI is going to be able to replace those functions anytime soon! In fact, I think things will get more desperate for the industry as the older generations retire!
It will ALWAYS be a relationship business when it comes to more complex commercial risks. AI can help but the human factor in risk and insurance management is critical.
Richard - this is spot on. AI will make brokers much more effective/efficient, and can help dramatically improve the UX for employers and insureds. It will make brokers (and their consultative capabilities) better (not unnecessary).
People are social creatures. We always want to talk to a person who can understand nuances that AI can’t understand. Insurance has always been a relationship business and I think it always will be.
I think it’ll help the space, BUT at the end of the day people buy from people.
CoFounder // COO at ThreeFlow
5moDeath of the Big 4: https://www.emcap.com/thoughts/the-death-of-deloitte-ai-enabled-services-are-opening-a-whole-new-market/