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AI Is Bringing the Evolution of Small and Midsize Commercial Insurance Distribution

Artificial intelligence (AI) can guide agents and brokers to recommend policies tailored to the specific needs of small or midsize businesses, all while reforming the process for maximum efficiency.
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ai is bringing the evolution of small and midsize commercial insurance distribution

Piloting the business landscape as a small or midsize business (SMB) presents a myriad of challenges. In addition to addressing aggressive competition from industry giants, SMBs must also contend with supply-chain disruptions, effectively managing risk and navigating compliance requirements.

For instance, the recent Department of Labor (DOL) independent contractor rule adds a layer of complexity, requiring SMBs to assess whether a worker is an employee or an independent contractor. These types of multifaceted challenges demand SMBs to maintain vigilance and agility to effectively respond to obstacles and seize growth opportunities.

Oftentimes, this may mean insurance policies take a backseat to other pressing issues. However, securing adequate insurance coverage becomes crucial for safeguarding their assets and operations.

When collaborating with SMBs, insurance agents and brokers must not only acknowledge the challenges they face but also understand that each SMB has unique insurance requirements. Pinpointing these specific needs can be demanding, as each case presents its own array of risks and operational nuances.

The evolution of technology, especially generative artificial intelligence (AI), presents an opportunity to enhance insurance distribution for commercial clients that fall within the SMB range.

The Benefits of AI for Insurance Distributors

AI has the potential to revolutionize insurance distribution as we know it. It streamlines claim processes and optimizes the underwriting procedure, allowing agents to focus on other essential areas. AI can guide agents and brokers to recommend policies tailored to the specific needs of SMBs, all while reforming the process for maximum efficiency.

It also enhances risk management capabilities. By leveraging AI-driven algorithms, agents and brokers can analyze vast amounts of data in real-time to gain deeper insights into the unique risk profiles and requirements of SMB clients.

These factors offer invaluable assistance to distributors and present a significant competitive advantage. It's important to keep in mind that, while AI can automate many tasks, there remains a need for human oversight to ensure accuracy and reliability. At the end of the day, human expertise and judgment are still indispensable.

Key Considerations for Agents Contemplating AI

While the benefits of AI are plentiful and early adopters are poised to gain a competitive edge, agents and brokers must carefully weigh several factors before embarking on this AI journey.

On a foundational level, leaders should take a hard look at their data and assess where they are in terms of quality, quantity and overall organization. Data is the backbone of AI training as it provides input for building patterns and algorithms to make accurate output and predictions. If the data is not in proper standing, AI initiatives will fail.

Additionally, any AI undertaking should have company-wide alignment. It's essential for all stakeholders and employees of an organization to share the same objectives and fully commit to the AI initiative. This places the onus on company leaders to cultivate a culture that embraces AI with enthusiasm rather than apprehension.

This can involve developing educational initiatives to increase understanding of how to effectively use AI, appointing team champions to advocate for AI adoption, and underscoring the time-saving benefits of AI that result in teams conducting more critical tasks.

Getting started on AI implementation can seem like an overwhelming task, but agents and brokers do not have to go at it alone. Technology partners can offer invaluable support and expertise. By collaborating with InsurTech companies that specialize in AI capabilities, agents and brokers can tap into cutting-edge AI solutions without developing them in-house.

This provides a win-win for distributors, as it allows them to stay one step ahead of the competition while allowing them to focus on their core competencies without business interruptions.

The insurance industry is ripe for innovation with the advent of the next generation of technology. Integrating blockchain technology or exploring the next frontier in AI-driven analytics are just glimpses of what may lie ahead.

Jay Lee is the chief technology officer at Colonial Surety Company