AI devours data but likely won’t eat insurance brokers

Like many other industries, insurance is trying to integrate AI into the way it does business. That can involve using AI to process claims, identify risk, set prices and enhance operational efficiency, among other tasks. AI is adept at quickly processing a lot of disparate information to produce results almost instantaneously.

For an industry that sits on top of mounds of data that it needs to analyze, insurance is well positioned to take advantage of AI.

“Where AI can have the biggest leverage of impact is it can automate or support time-consuming processes in just massive amounts of data and speed up tasks,” said Ketan Nayak (pictured above, left), senior director of product at Coalition Inc. “It makes lives easier for teams, for partners, for customers, for brokers in the ecosystem.”

But AI won’t end the professional lives of brokers and others working in the industry, Nayak said. In fact, the time that AI saves on more time-consuming and tedious tasks can be used in a more meaningful way by people.

“Humans can still focus on answering the key questions, providing a high level of service or spending more time where AI cannot do things, such as helping a client through like a cyber incident,” Nayak said.

People powered through AI

People also will have a critical role in managing AI so that it doesn’t cause harm. The National Association of Insurance Commissioners released a model bulletin in December on the use of AI by insurers. Regulators are concerned about the accuracy of the results produced by AI and whether it introduces unfair discrimination.

“AI, even for the foreseeable future, needs to be heavily monitored to produce desired results,” Nayak said.

That means job security for brokers.

“AI can aid brokers, but not really replace them,” Nayak said. “I think the power lies in humans powered through AI. [AI is] yet another tool in our toolkit to serve clients better.”

Brokers will remain ‘the voice for your customer’

A similar message about AI augmenting rather than replacing brokers came from a lawmaker at a recent industry conference.

Even as the insurance industry increases its use of AI to help set premiums, determine coverage and run daily operations, brokers won’t become obsolete, Sen. Mike Rounds, R-S.D., said at the Independent Insurance Agents and Brokers of America legislative conference in Washington in April.

A former Big I member himself, Rounds (pictured above right) told the audience of 600 brokers they will be needed to negotiate with underwriters, evaluate data and prevent unfair bias.

“It’s not going to take your place,” Rounds said of AI. “You’re still going to be the voice for your customer long term.”

Another thing AI can’t do as well as a broker is meet with long-time customers to tell them their premiums are going up because of a hard market.

“When you walk in to do a renewal, it’s not fun,” Rounds said. “You earn the commission.”

Rounds worked in the industry for about 30 years, running an insurance and real estate business with offices throughout South Dakota. He’s also among a group of four bipartisan senators who are helping the Senate shape AI legislation.

Coalition offers AI endorsement

In addition to becoming a part of the daily operations of an insurance business, AI could become a line of insurance itself.

For instance, AI could be used to exploit vulnerabilities in security systems and, through a deepfake, execute a funds-transfer fraud, Nayak said. Companies will have to protect themselves against that risk.

Coalition has added an endorsement to its cybersecurity policy to address attacks caused by AI.

“We are expanding the definition of what we call a security failure or a data breach,” Nayak said. “We’re expanding the trigger. [It is an attempt to] take a proactive step in helping companies feel peace of mind against these known risks or emerging risks.”