The ongoing digital transformation of insurance broking

Artificial intelligence (AI) and big data are driving a shift from traditional broking methods towards dynamic, data-driven strategies aimed at enhancing customer experiences and anticipating their future needs. This transformation was the focus of a recent seminar hosted by the Insurance Institute of Gauteng (IIG), where a trio of non-life insurance experts gathered to present on the evolving landscape of insurance broking in the digital age.

Risk advice futures trading higher

Linroy Peters, Head of the Education Portfolio within the IIG, introduced the event, saying “the objective of the IIG Educational Seminars is to encourage dialogue and information sharing on technical and topical matters, such as this morning’s focus on the broker of the future.” The central theme of the discussion was how the digital revolution, coupled with the current levels of AI adoption and expertise, would enable brokers to provide an efficient customer service model and meet the evolving expectations of future clients. 

Christopher Appanah, from Bryte’s claims, liabilities and salvage division, got the conversation underway by commenting on the degree of digitalisation in the business and social landscapes. He singled out three core concepts that would influence future broker-client interactions. The first, called digital maturity, “refers to the extent to which digital technologies are adopted and integrated into organisational processes.” Organisations that are further along their digital journeys enjoy a distinct competitive advantage and are able to respond more swiftly to market changes. 

The second component is customer experience. “Digital transformation has reshaped how businesses engage with their customers; by utilising technologies such as AI and machine learning, companies can gain deeper insights into customer behaviours and preferences,” Appanah said. He suggested that brokers and insurers apply these and other emerging technologies to deliver truly personalised experiences through targeted marketing, customised product recommendations and proactive customer support. One-size-fits-all is history; it is replaced by uniquely-yours-for-you, delivered via the customer’s preferred channel. 

Analytics: redefining the insurance game

Lastly, analytics. “Data analytics is indispensable for digital transformation,” mused Appanah. “It is a game changer that offers valuable insights on customer behaviours, market trends and operational efficiencies.” He quipped that insurers and reinsurers were sitting on a ‘gold mine’ of data and that firms that used data optimally were ‘leaps and bounds’ ahead of the competition in making informed decisions and driving innovation. Alas, many firms are at a total loss as to how to convert their data prowess into exceptional customer service. 

Would you believe, dear reader, that ‘big data’ has been a ‘big thing’ since the early 2000s, and widely punted as a differentiator in the insurance and reinsurance sectors since 2012? Yet, challenges remain. “To fully capitalise on analytics, businesses must address challenges such as data quality, data integration, and ensuring that they have the necessary data sources and storage systems in place,” Appanah said. He then focused on how digital technologies would redefine the age-old discipline of short-term insurance broking. 

Brokers are already benefitting from the overlap of digital applications, smartphones and tablets that have forever changed how they give financial and risk advice. These are powerful tools that have contributed to improvements in areas like access to financial services, broker-client communication, complex underwriting tasks, productivity and scale, to name a few. According to Appanah, “social media has become an essential platform for engaging with clients and building a brand presence, and it offers new avenues for marketing and customer interaction too.” 

It seems the future is already here

In many senses, today’s brokers are the brokers of the future. Every aspect of today’s financial and risk advice discipline has been enhanced by digital strategies. Just think of the ‘edge’ afforded to businesses by web services in the cloud: these offer scalable solutions for data storage and processing. “And then we have the end-to-end visual platforms [that further] streamline operations by integrating various processes, from client onboarding to policy flexibility,” the presenter said. The flow of data and sharing of data-driven insights between broker and insurer contribute to informed decision-making and improved strategic planning. 

The first presenter hardly mentioned the Chat-GPT 4o and Chat-GPT 4o-mini large language models that are creeping into everyday use by brokers and their customers. To illustrate the power of the technology, your writer asked the pseudo-AI to summarise the key points shared by the second presenter, Frank Kgwathla, Actuarial Pricing Manager at Bryte. He waxed lyrical on the evolving role of AI in insurance and managing risks through improved customer interactions before offering his take on new business models and skills for brokers. 

Kgwathla held that AI was radically changing the insurance industry by hastening the shift from traditional methods to more dynamic, data-driven approaches. According to Kgwathla, the conversation has shifted from simply providing information to delivering timely, relevant data. For instance, where insurers once gave clients lengthy policy documents, AI now enables real-time updates and insights tailored to specific events. “We need to move from an information environment to a data environment,” he said. “The broker’s role is shifting from information gathering to strategic data use.” 

He challenged the brokers in attendance to take their customer experience to the next level by anticipating the client’s needs before noting that future brokers need new skills such as data analytics and data validation to stay relevant. As for business models, the idea is to adapt to technology changes by investing in data capabilities and enhancing communication to better serve clients. 

Macro environment mayhem

It was left to Liza Morris, Bryte’s Regional Manager, Western Cape, to consolidate the message. Her starting point was to revisit the macro environment, defined globally by extreme weather, supply chain disruptions, and war; and domestically by a lack of infrastructure development and slow economic growth. 

“Extreme weather is a known factor; it is something that we as underwriters and as a community have to look at, and we have to find ways of insuring against these risks sustainably,” Morris said. She added that global supply chain disruptions, geopolitical tensions and rising social unrest among younger generations were redefining how insurers, insurance brokers and risk managers should conduct business. As economies continue to face challenges, the insurance industry must focus on using big data and AI to anticipate customer needs and streamline both product and operations. 

Future customers will demand faster, more efficient and highly personalised experiences. To stay competitive, insurers and their brokers will have to invest in digital transformation and embrace AI and big data to personalise products and services, and thereby exceed customer expectations The speaker urged, “if you want to be the market leader, you need to exceed your customers’ expectations,” hinting that simply meeting expectations was no longer sufficient. Brokers must strive to go above and beyond to forge deeper connections and loyalty. 

Relevance through evolution

Brokers must leverage AI and big data to understand and exceed customer expectations, address new risks, and adapt to shifting market demands – or risk irrelevance. Your focus should be on creating meaningful interactions that align with customer values and provide immediate, personalised service. As Morris concluded, “you need to utilise AI to grow; to add value; to be more knowledgeable; and to be more helpful to your future customers.” 

Writer’s thoughts:

AI and machine learning have taken data-based decision making to the next level. Do you think small short-term insurance brokerages are in a position to use tech to leverage data, or is this something that sits firmly in the product provider space? Please comment below, interact with us on X at @fanews_online or email us your thoughts editor@fanews.co.za.