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Brokers Prepare for the Next Crisis with AI and Predictive Analytics

Brokers are on the front lines of business continuity for their clients. This position isn’t a convenience - it's a necessity. The expanding pandemic is creating unparalleled challenges that await the business insurance sector:

  1. How to handle what P&C360 calls the oncoming “claims tsunami,” or dramatic influx of commercial lines insurance claims.
  2. How to regain control and grow the business in an uncertain and rapidly changing world.
  3. Where and when to implement new technology, AI, and predictive analytics.

Liability claims are sure to swell in the coming months, and this will be a challenge for brokers and carriers to settle. One of the scenarios that Louie Castoria suggests in his article, 7 steps to prepare for the coronavirus claim tsunami is the use of Artificial Intelligence (AI).

How Insurance Brokers Can Benefit from AI and Predictive Analytics

Brokers can benefit from AI when comparing claim histories with market indices. With the help of user-friendly analytics tools, brokers can leverage data to make critical decisions on reserves and rates without guesswork and in much less time. Across the industry, we see firms with these tools already in place, responding rather than reacting to the challenges of working from home, shifting workforce across business units, and outsourcing.

The nationwide WORKFORCE WAS DOWN 26 MILLION coming into the last week of April, according to unemployment statistics provided by NPR. The data is literally off the charts, and if it’s any indication, the fallout for insurers will be equally severe. As business interruption claims swell, and as companies consume the federal funding programs under the CARES Act, brokers have a chance to become more resilient under these circumstances.

The incorporation of AI and predictive analytics can dramatically transform how the insurance sector responds to these changes in the market.

Advantages of predictive analytics and AI include: 

  1. Keep brokers and insureds one step ahead of emerging trends. 
  2. Provide insight so organizations can identify, monitor, and analyze key information.
  3. Shape product offerings that are relevant and timely. 

Beyond COVID-19: Helping Your Clients Recover and Prepare for What's Next

During a crisis, the financial impact of incoming claims, the performance of loss control visits, exposures of renewals, and clients’ peace of mind are all achievable with the right software platform. Assessing the risks before they happen is possible, and it’s part of the evolution of the art and science of insurance.

COVID-19 has awakened the industry to the importance of predictive analytics, a variety of data sources, and the ease at which users can access, analyze, and model this data. We may be entering an era where spreadsheets just aren’t powerful enough.

Maybe we won’t see another “black swan” event in our lifetime, but perhaps we will. The current pandemic will certainly have long-lingering effects, and future events of all magnitudes must be handled accordingly.

The growing need to prepare for the uncertain is also fueling the InsurTech industry, as these companies provide the tools for brokers to be proactive in good times and bad. As the market changes, one thing is for sure: technology will be a driving force in guiding insurance brokers to brace for future calamity and pave the way for rebuilding afterward.

Learn More

To take a deeper dive into how AI and predictive analytics can help brokers create a competitive advantage in an ever-changing market, check out this article by our VP of Analytics. 

Apr 29, 2020

  

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