The majority of today’s life insurance agents could be replaced by an app.
At least, that’s the opinion of Forbes contributor Russ Alan Prince, who recently suggested that advances in extremely sophisticated artificial intelligence are poised to eliminate the need for investment advisors, accountants and life insurance agents.
Those who do survive, he says, will fill lesser roles.
“The ability to source and construct life insurance portfolios, facilitate underwriting and monitor policies can all be accomplished by the robo-life agent. Such an approach would often prove to be both substantially more efficient, a way to provide superior solutions, and considerably less expense,” writes Prince.
“It is these critical reasons, the vast majority of life insurance agents of today will, in time, become a relic of a previous generation.”
Prince envisions an age in which attorneys and perhaps accountants will include the services of a robo-life insurance agent into their practices and collect a “dramatically lower fee” than what is currently paid to agents. The savings, then, will be passed on to consumers.
He concedes this change will not happen quickly, and will be resisted both by the life insurance agent workforce and carriers, as robo-agents will likely lead to greater consolidation. However, Prince concludes the outcome is entirely an eventuality.
Currently, employment in the life/annuity sector is actually on the rise. After long, generally downward trends, employment by life insurance carriers rose in February 2015 by 3.5% to 354,800. What’s more, it has not fallen for 10 consecutive months.
“We can say that the long downward trend is over, although the gains are still small in a historical context” said Dr. Robert Hartwig of the Insurance Information Institute.
The agent workforce, too, is on the rise. In the same report, Hartwig noted that “the segment has been fairly steadily gaining jobs and passed the pre-recession peak of 684,500 reached in July 2007.
Yet companies like Betterment and Wealthfront have made waves in the financial services sector by offering portfolio management online – without advisor involvement – at a significantly lower price. The companies have managed to construct algorithms based on modern portfolio theory, operating much the same as human advisors, and the appetite for such a solution is growing among certain demographics.
It is advances like these that have Prince convinced the industry will eventually see a significant change in life insurance distribution methods. However, not all are doomed for irrelevancy.
“There will be a select percentage of innovative, forward-thinking life insurance agents who will leverage the technology and the accompanying changing industry dynamics to create tremendous value for others,” he concludes. “These agents will, consequently, create considerable personal fortunes providing life insurance.”
