As I indicated in Part 10, I’m expecting the future role of the broker or agent to be severely curtailed. But that’s not to say there’s no role for intermediaries of a different type.
In the commercial lines field, I expect to see an expansion of the push that some of the brokers have already made into broader risk management. The Risk Manager of the Future will provide a holistic risk management service to its biggest corporate clients —drawing heavily on IoT and Big Data analytics to predict risks real-time and prevent them from crystallizing.
Only a small part of the risk manager’s service will involve insurance, but the risk placement process will be highly efficient. The risk manager will be seamlessly integrated with a wide network of insurers who, together, can meet all of the insurance needs of its clients.
The risk manager will place business in two ways: standard and bespoke. However, those terms describe their relationship not with their clients, but with their partner insurers.
If a risk is standard, such as marine or aircraft cover, the Risk Manager of the Future will already have made arrangements to place pre-agreed percentages or exposure bands with a range of different insurers. And those business rules will be built into a “risk placement hub” linked directly into those insurers’ core systems. This means that the risk can be underwritten in accordance with those pre-agreed arrangements, and policy documents generated, in a matter of seconds.
If, on the other hand, the risk doesn’t match previously agreed arrangements, the Risk Manager of the Future‘s “cognitive placement engine” will swing into action. This will pull together all the information it can on the risk, trawling multiple internal and external sources. It will then automatically pass that data to the underwriting systems of multiple different insurers, negotiating pricing with the AI engines of those individual Insurers and constructing the optimum cover for their client-making trade-offs between the different insurers as appropriate.
Again, once the cover package has been designed and placed, policy documents will be generated automatically and issued to the client.
Using the power of data analytics and AI, this entire process, end-to-end, will take no more than a couple of minutes.
For my final predictions in this series, please see Part 12 – Employee Benefits.