Over the past two decades, personal insurance lines in South Africa have undergone a transformative shift with the emergence of direct sales models and digital distribution. However, the commercial insurance sector still relies heavily on brokers and manual processes, despite the digitalization trend.
While precise statistics for South Africa are not readily available, brokers still account for around 70-80% of all commercial policies sold in countries like the US and the UK. According to Insuramore , global figures indicate that commercial brokers generate approximately $69 billion annually in commercial non-life premiums.
Given the complexity of commercial insurance and the need for specialized advice, business owners often turn to brokers for guidance.
AI set to disrupt commercial insurance market
Nevertheless, the commercial insurance market is not immune to digital disruption. The rapid adoption of artificial intelligence (AI) and intelligent automation is expected to drive significant change, presenting both threats and opportunities for commercial brokers in the coming years.
AI has the potential to revolutionize efficiency, productivity, and profitability in the insurance industry. McKinsey predicts that AI implementations could increase productivity and reduce operational expenses in insurance processes by up to 40% by 2030. From underwriting to claims assessment, AI can automate various stages of the insurance value chain, leading to improved pricing accuracy, faster customer experiences, and efficient claims settlement.
Automation and AI pose challenges and opportunities for commercial brokers
However, this advancement poses challenges and opportunities for commercial brokers. As insurance processes become more automated, self-service apps and websites enable business owners to directly purchase policies online without involving brokers. Brokers must demonstrate their value in the distribution chain by embracing technology and leveraging cloud-based platforms to automate processes and explore AI-powered solutions.
By incorporating AI-powered chatbots like Chisel AI or Exdion Policy Check offering online advice and quotes, and for policy checks, brokers can enhance customer experiences and improve efficiency. AI also empowers brokers to scale up their business, identify high-quality leads, predict customer behavior, and focus on providing bespoke advice and customer advocacy.
AI empowers commercial brokers to scale up, serve clients, and improve efficiency
In a world that is moving towards digital channels, AI-powered solutions can give brokers an edge in winning and retaining business.
The ultimate value of AI, however, will lie in helping brokers to cut back on the manual processes and administrative tasks that consume so much of their time. AI will enable them to focus their energy on bespoke advice, customer advocacy, and complex cases, in turn helping them to enhance relationships with and value their clients.
AI may thus be a threat to brokers who are merely processing transactions. Those that are taking a proactive role in helping clients reduce and mitigate risks will be able to turn AI to their strong advantage.
By leveraging AI and adopting omnichannel business models, brokers can better serve business owners and strengthen client relationships.
By Deon Louw, Head of Product and Marketing at Bi-me (Business Insurance Made Easy), online platform for business insurance