4 minute read
Insurance Computers Can’t Do Everything
from CAM November 2022
by MediaEdge
Computers Can’t Do Everything
Human interface continues to play a key role in insurance transactions
by Andy Schwartze
Ten years ago, I wrote an article entitled, “Technology and Insurance” for Canadian Apartment Magazine. With a few updates here and there, I’m pleased to share some of it with you again now.
We have become very “fashionista” over the years about the technological innovations that power our daily activities. Just witness the buzz in an Apple Store and you’ll see the unending fascination that new products can generate. The line-ups tell it all. A visitor from another planet might wonder what we humans do with our lives other than bow our heads in supplication to ever-shrinking new toys with lit-up screens.
I remember the first desktop computer I purchased in the early 80s. It came from IBM’s fancy new computer store in downtown Toronto for the enormous sum of $3,000. After unpacking it at my office, I sensed something magical was about to happen— although, it needs to be said that this heavy beast, once turned on, sounded like a small Pratt and Whitney turbo. The black and white monitor displayed a host of computer engineergenerated hieroglyphics that were barely understandable. After a six-week, self-taught tutorial on the basics of this new business toy, the magic became evident, and the technology has been a focal point of my business that has served me well ever since.
From that time, nearly forty years ago, we have seen business make every attempt to incorporate the latest technology into
its processes. We’ve watched simple computer software programs evolve into complex “platforms” that allow users to conduct business almost entirely on computers. We’re at the point now in 2022 that military wars can be fought, in part, by remotely controlled creations. Without question, key elements of business life have improved drastically—especially since COVID transitioned so many of us to remote working.
No industry, however, remains attached to the human side of a business transactions quite like insurance does. This is a business that pits the cost-sensitive insurance buyer against the big balance sheet of the insurance company. It is a business that has, as its fundamental common denominator, a requirement for honest and open disclosure between the buyer and the seller. If the buyer can hide one or two material facts and save a few dollars without voiding the insurance contract, then the insurer gets less premium for a loss that inevitably must be paid. On the other hand, if the insurer is shrewd enough to be able to identify the higher risk insurance buyer, it is protected against needless losses and, of course, fraudulent attempts to tap into its bank account. There is no technology, in an era of significant privacy rights legislation, that can weed out the potentially costly insured that the carrier never wanted in the first place.
After all these years of technological innovation, human interface is the one element that continues to play an extremely important role in the insurance transaction. In service businesses, where this remains a key part of any deal making, we typically rely on intermediaries. Be they brokers, or agents, these people play a significant role in sorting out the partnerships between insurance company “supplier” and client “insured”. It remains a balancing act that requires personal skills which no technology can duplicate. Eyeball to eyeball dealings give humans the ability to take advantage of senses that help us decide who we want to do business with and who is best avoided. Intermediaries who do not develop the requisite skillset, that brings buyer and seller together in a mutually beneficial manner, quickly hasten their own professional demise.
The world of insurance, still very heavily dependent on human interaction in its unique business model, has added a great deal of technology to its delivery systems. What has happened since I first wrote about this issue 10 years ago, however, is the explosive growth of remote working, hastened by the covid years. Remote working was inevitably going to encroach on our very old fashioned “cubicle” style office structures anyway; Covid just moved things along at a much faster pace.
With this development, we have created a work environment that is much less influenced by human interaction and has significantly been affected by screen-driven templates and electronic barriers to flexibility. The most important activity—the one that ensures the honesty and integrity of the partnership between carrier and client—is now somewhat subjugated to the rigidity of technology. This has resulted in a significant watering down of the business styles of the “good old days” when face-to-face negotiations could lead to a good deal for everyone.
Technology’s explosive growth, soon to be augmented by the almost scary concept of AI (automated intelligence), is slowly squeezing human interaction out of many business transactions. While that may be an efficient and more predictable way of doing business, it remains for me a very sad, albeit unavoidable, development.
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