The future of insurance is digital marketplaces and AI
Artificial intelligence (AI) and digital marketplaces have transitioned from frontier concepts into the mainstream of insurance. The shift has opened pathways to market for entrepreneurial start-ups with an appetite for reimagining journeys across the consumer, intermediary and provider landscapes.
Mishaya Chettiar, Co-Founder and Executive Head of everything.insure, was thinking about using code for problem solving and reimagining processes long before she entered the insurance world. “When I entered insurance almost eight years ago, it felt like I was stepping into a time machine,” she said. While other industries had embarked on the process of automation and digitisation, insurers were stuck in a quagmire of Excel spreadsheets, legacy systems and painstaking telephone calls.
Solving for customers’ pain
That frustration turned into opportunity with the launch of everything.insure in 2018. “Our goal was to build something for everyone in the insurance ecosystem: for the consumer, who just wants to understand their cover and get a fair price; for the intermediary, who is trying to service clients without drowning in admin; and for insurers, who are trying to keep up with digital demand,” Chettiar said.
The overarching aim was to empower all stakeholders to offer innovative, tech-driven insurance solutions. She used her platform at the Insure Talk 55 webinar to update attendees on the uptake of, and prospects for, digital insurance. The presenter noted that early forays into this paradigm, such as call centre automation and digitising manual processes using forms online, were just a beginning.
Step one is to digitise traditional processes; and step two requires evolving from digitisation into marketplace models. For those new to the phrase, a marketplace model is a digital platform that connects insurers, intermediaries and other service providers with end-users, enabling seamless comparison, distribution and fulfilment of insurance solutions. Chettiar unpacked the evolution as follows:
The then and now of shopping
Years ago, clients would walk into a store, interact with a salesperson, and complete a purchase. Then, with the advent of the Internet, it became possible to access products and services even when the brands had no local presence.
Online shopping has since evolved into marketplaces, with platforms like Amazon, Autotrader, Hopper and Takealot linking buyers and sellers across a wide range of products and solutions. As Chettiar notes, we no longer compare prices across individual competitor brand websites; instead, we turn to an online platform or aggregator and trust it to deliver the best deal.
“Marketplaces solve three major problems: accessibility, pricing and effort,” she said. In practice, consumers gain instant access to multiple providers and pricing, often supported by tools to compare offers. They also benefit from a consistent buying journey and reliable post-sales experience. If you buy through an Amazon or Takealot, you know exactly what to expect from the experience, from ordering to check-out to delivery to the returns process should the product not be to your liking.
Bringing the marketplace experience to insurance
The challenge is to bring this marketplace experience to insurance. “Insurance is more intangible than a jacket or a car, it is closer to buying a flight,” Chettiar explained. “You cannot touch it or test it before buying, and have to trust that your purchase will deliver on its promise.” At first glance, insurance is perfectly suited for digital distribution; but product complexity and the sea of terms and conditions that accompany each insurance contract have delayed its transition.
What might the future look like? The presenter asked attendees to use their imagination. In this case, imagine interacting with an online chatbot that asks a few pointed questions, guiding you every step of the way and answering any questions you may have. This interaction yields comparable quotes, side by side, with additional advice to explain any differences between options. “You choose, you pay, and you are covered; and if you need to make a change or submit a claim, you do it easily [without] paperwork, waiting or frustration,” Chettiar said.
In the not-too-distant future, moving your cover from one insurer to another may be as easy as clicking a ‘share my details for a new provider’ button, choosing from the resulting offers, and clicking on ‘switch’. “We are already seeing amazing digital start-ups where you can do most of that journey for a single product, and we believe the future will allow the same kind of journey for end-to-end multiple products,” the presenter said. Insurers will have to go this route to satisfy younger generations’ appetite for digital, frictionless, marketplace-driven experiences.
The next evolution for binder holders and intermediaries
Binder holders, brokers and insurers are in the same boat here, all facing the familiar ‘adapt or die’ inflection point. To bring the doubters on board, Chettiar reflected on the research that informed her honours thesis, completed in 2010.
She asked two groups whether insurance would ever go digital. Over 80% of the consumer group indicated they favoured this channel, provided the product was simple and advice was accessible. And yet, 98.4% of the C-suite at insurers said the opposite, claiming “insurance was too complicated, nuanced and bound by regulation and underwriting to ever go truly digital.” Wow. Dear reader, drop your eyes from your Amazon basket and ChatGPT interactions for a moment to reflect on this Kodak-level blunder.
“Fast forward six or seven years from then, and you find that true digital players have emerged, with thousands of consumers getting quotes and buying digitally … just as consumers had predicted, and exactly what insurers said would never happen,” Chettiar said. If this trend continues, and there is no reason to think it will stall, then traditional digital solutions will inevitably gravitate towards AI and marketplace enhancements.
Consumers always drive innovation, adoption
Chettiar’s message was clear: consumers will drive adoption, and insurers will be forced to follow. Turning to AI, she warned that its application in insurance was already far beyond what readers will experience when experimenting with Claude, ChatGPT or Co-Pilot. A digital insurer using AI agents can design in a few minutes what used to take teams of humans’ months to accomplish. You are talking here about AI that specialises in client advice, fraud detection, risk rating or underwriting, to name a few.
For example, everything.insure boasts an AI agent named Eve that can be trained on a new insurance product in under 30 seconds. After training, this agent can respond instantly, in plain language, to product-related questions that a broker or client might ask. An underwriting agent can be trained on any set of underwriting rules and apply them in real time, consistently and digitally on every single policy. “As a client answers questions, this agent can decide whether a policy can be bound online or not, and even generate the exact wording that needs to appear on the schedule based on a client's specific profile or risk rating,” Chettiar said.
To offer a proper glimpse of the future, the presenter said they had recently built an entire professional indemnity product in 48 hours, from concept to underwriting rules to rating to policy wording to endorsements to digital distribution. And the only delays were due to traditional insurer processes and legacy systems. The bottom line is that an AI agent can be given decades of human experience, whether in the actuarial, insurance broking or underwriting discipline, in minutes.
What are us humans to do?
This begs the now common question: what are humans going to do in the age of AI and digital marketplaces? The suggestion is that they focus on higher-order functions. Actuaries and underwriters can spend time analysing the market or studying data; brokers can dedicate their time to building relationships with clients.
The brokers among FAnews’ readership will relish how AI might reinvent their businesses. According to Chettiar, tech will empower you to “cross-sell, niche-sell and grow your practice without extra admin or red tape … we can turn brokerages into a digital powerhouse without the extra staff or costs.”
So, the future promises to move brokers from a state of overwhelm, where they struggle to get quotes on the traditional systems let alone compare one insurer to the next, to one where you have a digital dashboard of your entire business, can produce comparative quotes from multiple insurers in minutes, and deal with advice, disclosures and record keeping ‘in your sleep’.
The future is already here…
As Chettiar concludes: “The future of insurance is not just digital, it is marketplaces and AI, and it is already here.”
Writer’s thoughts:
Brokers and financial advisers are frequently told that AI will free up time for higher-level functions, but the list of unaffected functions is shrinking fast. Are we destined to become client emotional support figures while the machines do all the work? Please comment below, interact with us on X at @fanews_online or email us your thoughts [email protected].
