AI tipped as ‘next growth area’ despite lack of broker investment

Technology has the capability to overhaul claims processing, speed up submissions, provide real time risk and underwriting information as well as share data more easily – but many brokers, according to the latest exclusive research published by Insurance Times and Applied Systems, revealed that many “have no plans to do so”.

For example, this year, less than half (45%) of brokers said that they had invested in IT cloud infrastructure – a marginal rise from the 41% last year.

The Digital Adoption report 2023, which surveyed approximately 220 brokers, also revealed that 45% of brokers had no plans for investment into artificial intelligence (AI) technology, while only 2% had completed investment in it.

Despite this, AI is taking off in other areas of insurance, such as claims and underwriting.

Meanwhile, only 8% of brokers had invested in AI over the last 12 months.

Stephen Murphy, Applied Systems’ senior director for customer experience, told Insurance Times: “Industries around us are transforming with technology and insurance is no different.

”Some of the secret sauce or differentiators in the market can be driven by technology investments. [Brokers] can then spend more time choosing the right projects and having personalised conversations and cross selling etcetera.

“AI will be moving up the top in terms of the next investment for growth.”

To counter this finding, technology solutions provider FIS’ research, published on 15 August 2023, revealed that more than half of UK insurance executives are investing in AI and machine learning.

For Murphy, “technology investment can create internal efficiencies, and if people are more productive, they might scale more or have more market presence”.

Only 16% of brokers had no plans for investment in the cloud.

Growth areas

Two areas in the survey were identified by brokers as having contributed to the most business growth over the last 12 months – broker management systems (BMS) and customer service. 

Murphy was “happy” and “not surprised” to see that this was 45% for BMS, while customer service was split across marketing (43%), data and analytics insights (43%), customer relationships tools (24%) and self-service (10%).

He continued: “If brokers get their BMS right and meet core needs, then things such as self-service, third-party integration and AI are all very much more available to you.”

Although, “face to face meetings are probably more important than ever,” he added. “The technology enhancement on virtual meetings means we can connect with people globally, but the need for in person meetings still exists. Hybrid is the most efficient [model].”

The top three benefits for technology investments were business growth (25%), a clearer picture of the whole brokerage (17%) and automating responses (15%).

On a more detailed note, more than half (56%) of respondents said integrated or streamlined processes were the best business investments, while 53% said employee productivity and 49% said remaining competitive in the market.

‘No one size fits all’

Cost was listed at the “biggest barrier” for brokers in terms of technology adoption. Meanwhile, disruption to changing business processes and lack of software house innovation came in second place at 22%.

Murphy added: “We have taken a lot of feedback on board from brokers last year and we [now] offer different ways of implementation, scales, speeds at which firms can implement Applied Epic.”

Applied Epic is a cloud-based insurance BMS that can help brokers manage customer relationships…

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To continue reading this article and much more, download the free full Insurance Times Digital Adoption Report 2023