Intelligent, automated robo-advisors are already dispensing wealth management advice and will soon be helping insurance customers. Brokers and agents will need to improve their service to avoid losing out to smart machines.

Rising competition and flat economic growth are dampening insurance sales in southern Africa. And insurance agents and brokers will soon face a further obstacle. They’ll have to compete not only with their traditional rivals but also with a new contender – robo-advisors.

Demand for insurance advice, as I mentioned in my previous blog post, is soaring. Advice is becoming an increasingly important driver of sales, as well as being vital to retaining and building customer relations. To satisfy this craving, and to curb costs and improve efficiencies, many insurers are looking to roll out online robo-advisory services. These automated services use artificial intelligence to answer customer queries and recommend suitable solutions. They’re able to deliver sophisticated and complex advice to customers and can also assist and empower insurers’ human advisors.

The “Amelia” robo-advisor developed by US firm IPSoft, for example, can speak more than 20 languages and is even able to discern the emotional state of a customer by applying sentiment analysis. It can handle a broad range of complex enquiries and learn as it acquires experience.

Robo-advisors have begun to appear in the wealth management market. US start-ups Wealthfront and Betterment, as well as big investment houses, Vanguard and Charles Schwab, have introduced these intelligent digital services. In South Africa, Sanlam and Sygnia, among others, offer similar services.  Steven Nathan, CEO of local investment services firm 10X, recently forecast strong consumer demand for robo-advisors because their ability to curb costs, increase transparency and simplify investing in assets such as index-funds.

It won’t be long before consumers can turn to robo-advisors for insurance advice. Insurtech firms such as Brolly and Spixii in the UK and EchoSage and Insurify in the US have developed intelligent interfaces that allow customers to conveniently find suitable insurance products by using their mobile devices. More comprehensive insurance robo-advisors that advise, as well as sell products, will soon debut.

Faced with such competition, how can insurance agents and brokers secure their future? They need to master four key areas of their business.

Quality of advice: The information that brokers and agents provide needs to be more detailed and personalized as well as easier for customers to understand. It also has to be much broader. Providers of short-term insurance, for example, should be able to advise consumers about new risk-prevention and risk-management offerings. Life insurance representatives will require a good understanding of wealth and health management. Insurance advice will increasingly be bundled with other financial services information such as wealth management and retirement planning.

Digital integration: While more insurance customers are demanding access to digital platforms, most also want highly personalized service. Insurance agents and brokers need to develop hybrid customer service platforms that combine information from digital channels with personal advice provided by product and subject-matter specialists.

Digital tools: As customers increase their use of online channels they’ll require a greater variety of digital tools to help them manage their insurance policies and portfolios. Advisors should be able to supply their clients with financial planning, portfolio management, personal finance and scenario analysis tools.

Customer relationships: The rising tide of digital insurance information will prompt consumers to look for a select group of trustworthy and credible sources. Advisors need to build strong relations with their customers, through regular contact, a deep understanding of their requirements and the provision of tailored products and services, to establish themselves as trusted and informed providers of information.

In my next blog post, I’ll discuss how insurers and brokers need to change their remuneration and rewards to build loyalty among their advisors. Meanwhile, have a look at some of these links. They contain plenty of useful information.

Voice of the advisor: Growing life insurance through a fusion of advice-based selling models and digital.

The broker of the future: Winning in a disruptive environment.

The rise of robo-advice: Changing the concept of wealth management.

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