Filed Under:Agent Broker, Agency Management

How insurance brokers remain relevant in the 21st century

Chatbot limitations

Insurance brokers can thrive in this new digital landscape by further developing their understanding of emerging risks to complex businesses, and the steps that must be taken to mitigate these risks. (Photo: iStock)
Insurance brokers can thrive in this new digital landscape by further developing their understanding of emerging risks to complex businesses, and the steps that must be taken to mitigate these risks. (Photo: iStock)

The workforce of the 21st century is priming itself for an automated future, and the consequences that follow: a shift toward strategic collaboration with intelligent software that will deeply impact insurance brokers. To stay relevant, they must be able to survive — and thrive — in a digital world.

Related: Cyber: Getting to grips with a complex risk [Infographic]

Deep Learning and advancements in Artificial Intelligence (AI) have been the driving force behind the evolution of computer-customer interaction, otherwise known as software bots. Previously able to only perform basic routine tasks, bots are now able to make meaningful decisions. In fact, according to The Economist, there are many jobs that will be entirely replaced by computers in the next 20 years.

For instance, the insurance industry has its fair share of routine tasks, such as agents collecting and preparing data for underwriting or claims handling. As a result, we are already seeing chatbots handling some of these simpler tasks: GEICO has ‘Kate’, Lemonade has ‘Jim’, Metromile has ‘AVA’, and the list goes on. Moreover, the proliferation of the internet has significantly diminished the value of broker relationships, as anyone with internet access can easily conduct research, communicate with a service provider, and select and purchase a product solely online.

The jobs that are hardest to replace, however, are those that require unique insights or skills in a dynamic environment. Insurance brokers can thrive in this new landscape by further developing their understanding of emerging risks to complex businesses, and the steps that must be taken to mitigate these risks.

Related: 7 challenges insurers face in the cyber insurance market

Brokers as cyber experts


Brokers for complex businesses are, first and foremost, risk advisors. To help companies analyze their risk exposure and build an insurance program that adequately offloads risk, brokers must have deep understanding and knowledge of both the risk and appropriate products. More specifically, brokers must consider the unique risk appetite of the organization; how each risk affects the business model and processes; and the adequacy and applicability of the specific insurance products to the requirements of the business.

Cyber insurance is where customers need broker expertise the most, but it is exactly where brokers lack tools to support them. Why?

  • The customer is unsure of all of the variables when it comes to their cyber risk. Brokers themselves are new to the space and do not have the technical background they need to assess these risks.
  • Insurance brokers require ongoing education to stay on top of cyber risk, which changes quickly and is growing larger.
  • The insurance policies are new, rapidly evolving, and differ widely between carriers. In addition, there is limited claim history to provide comfort in how insurance claims pan out for every insurance agreement. Brokers have no access to benchmarks or analysis tools to guide the customer on exposure to loss, what peers are buying, etc.
  • When a claim arises, it is often a first for many customers and they do not know how to respond. On top of this, the response itself is often complex, requiring coordination on multiple fronts — technical response, business operations response and even marketing/communications response.

Related: Cyber insurance claims: What happens when a breach occurs

The increased cyber risk

The claim is a stressful time for customers, giving brokers the opportunity to play a key role in guiding them to ensure financial loss is minimized. How can brokers equip themselves to improve service to their clients, while becoming more effective in selling cyber policies?

  • Provide customers with insights on their security concerns or high-quality analysis of their financial exposure. Without such insights, customers are often reluctant to purchase insurance, or insist on low aggregate limits, not appreciating the real risk exposure.
  • Share knowledge with their customers, such as relevant case studies that help showcase risk, or benchmarks on coverage adoption. Most customers want ‘the right’ amount of coverage – no more, no less –  than their peers, and draw great comfort in understanding their relative position to industry standards.
  • Provide guidance and clarity on the content of insurance agreements across the wide variation between carriers, especially to IT managers who are not familiar with “insurance talk” and lack the tools to appreciate nuances.
  • Streamline communication with underwriters and shorten turn-around time to reduce customer frustration.

The complex tasks and expertise employed by the broker to guide the customer in choosing the right cyber policy, managing their risk and dealing with a breach event will be irreplaceable as we continue moving into the 21st century. Brokers who want to position themselves successfully are wise to equip themselves with the above recommendations that will help build their expertise.

Rotem Iram is the founder and CEO of At-Bay (formerly Cyberjack).

Related:

6 steps to take to evaluate cyber risk

Cyber risk: It's personal

Data obstacles hamper cyber insurance growth

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