Automation is going to hit the insurance sector big time. Up to 60% of some insurance professionals’ job functions will be automated over the next 10 years, according to a new report from the McKinsey Global Institute, and as many as 25% of the industry’s full-time positions could be automated away entirely.
What’s driving this change? How will automation impact the health insurance and benefits industry in particular? And perhaps most importantly, how can health insurance and benefits professionals adapt and thrive?
Insurance is a vast, trillion dollar industry, with the life and health insurance sectors alone taking in $644.5 billion in premiums in 2014. Yet it’s also riddled with waste and inefficiency. Despite the availability of easily digitized data, much of the work—from quoting to decision-making to enrollment—is still done manually. In health insurance alone, this means $375 billion in extra costs each year.
By reducing waste through automation, everyone in the distribution chain stands to benefit: Insurance companies can grow their profits, insurance professionals have the potential to raise their incomes, and consumers can save more money.
Regulatory changes are also encouraging the rise of automation. Under the Affordable Care Act, insurance companies are required to lower their overhead costs to as little as 15% of total premiums. Automation offers carriers a way to meet this goal.
The impact of automation on the health insurance industry will be profound—and overwhelmingly positive. For example:
- Health insurers will be able to cut administrative costs and reduce overhead.
- Greater automation coupled with data analytics will give consumers and employers better decision support when choosing plans.
- In an ever-changing regulatory environment, remaining compliant is a major challenge. Automation gives insurers, brokers and benefits administrators the checklists and dashboards they need to keep up with regulations while reducing errors.
- Automation makes it easier for insurance platforms to integrate with other workflow systems such as HR, CRM, and payroll.
Above all, automation promises to make the insurance selection and buying process an Uber-like experience—seamless, fast, and hassle-free.
Not surprisingly, some insurance professionals may see automation more as a threat than a boon. It’s true that the changes on the horizon will transform roles across the industry. For instance, the
More threat or boon?
McKinsey report suggests that automation will replace up to 60% of the work done by sales agents. Even CEOs’ responsibilities may be reduced by 25%. And as the machines grow more sophisticated and less expensive, fully a quarter of insurance-industry jobs may be consolidated or eliminated entirely.
Quote"Insurance is a vast, trillion dollar industry, with the life and health insurance sectors alone taking in $644.5 billion in premiums in 2014. Yet it’s also riddled with waste and inefficiency."
For all the disruption, however, automation won’t replace insurance and benefits professionals. Consider TurboTax and LegalZoom, two services which have made it possible for everyday consumers to tackle some basic tax and legal issues on their own. By automating much of the administrative work involved in these processes, these tools allow consumers to do more of the work themselves. Yet, CPAs and lawyers remain as busy as ever.
But while insurance and benefits agents will still be needed, the nature of their work will change. Thanks to automation, insurance professionals will be able to reduce their own administrative burden and focus more on their true mission—providing excellent service and complex strategic advice to their clients. Agents will spend more time acting as trusted advisers, helping their clients get the coverage and benefits that best meet their needs. Rather than a development to be feared, automation will become a vital resource helping agents to do their jobs more effectively.
How should insurance industry professionals prepare for an automated future? In the words of one industry expert, brokers need to change, change some more, and then change some more. Not all agents will adapt to the new realities and will struggle. But today’s savviest insurance professionals will see—and even celebrate—the many ways they can use automation to gain a competitive edge.
By embracing the technology and learning how to get the most out of it, these agents will position themselves to achieve their greatest successes in the years ahead.
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