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What are robo-advisors in insurance?

Robo Advisors - Find out what are robo advisors, how does it works and key benefits of Robo Advisor in the Life Insurance sector. Visit Kotak Life to know more Life Insurance

  • 6,931 Views | Updated on: May 24, 2024

Traditionally, the insurance industry has been operating on the maxim, “Insurance is ‘sold’, not ‘bought’.” Hence, the intermediary’s role in driving the sales process has been the backbone of this industry.

However, with advancements in technology, consumer behaviours are changing. Consumers today seek expert guidance without the need for face-to-face interactions or making appointments with advisors. This need led to the innovation of robo-advisors.

Robo-advisors, artificial intelligence-driven digital platforms, use sophisticated algorithms to automate the guidance process. Human involvement is minimal or non-existent.

How do robo-advisors work?

  • These automated advisors use simple online questionnaires to collect client data, such as their financial status and insurance goals.
  • Then, the data analytics software processes the information and applies financial planning models.
  • In seconds, the customers get recommendations on the insurance products matching their specific needs.

However, automating the process does not make it impersonal. Robo-advisory platforms capture granular customer data and purchase behaviour. Thereby, these advisors incorporate a wide range of scenarios and parameters.

Thus, customers can find out the type of coverage they need as per their financial situation. They get instant and accurate quotes through the software’s advanced underwriting techniques. Only the human interface is eliminated, making the purchase process easy and self-directed.

Benefits of robo-advisors

  • Lower insurance cost: Robo-advisors are integral parts of the insurance provider’s digital sales channels. The software automates sales and service processes. Such automation with digital interfaces lowers commission costs required for human agents. The insurers pass on these savings to customers through more affordable insurance products.
  • Round-the-clock customer support: Customers can access robo-advisors at any time they choose. The platforms deliver automated advice in a self-service model.
  • Tailored advice: The efficient and superior analysis capability of robo-advisors provides personalized insurance recommendations.
  • Attentive service delivery: Automated correspondence and follow-ups, like reminders on premium payments, improve customer engagement.
  • Fast policy issuance: These virtual intermediaries accelerate the application review process. These instantly assess risk-levels and apply premium loading factors in real-time. It removes the drudgery of document processing and underwriting. Thus, these algorithms reduce policy issuance time.

Are robo-advisors going to make insurance advisors obsolete?

The automated algorithms cannot completely replace an expert insurance advisor’s ‘human touch’. The robo-advisory platforms can handle most “predefined scenarios”. But some customers might have unique queries or needs. Such scenarios can be difficult to predict and build into the planning algorithms.

Moreover, not every customer has a do-it-yourself orientation. They prefer their questions answered in real life.

Hence, the best scenario for customers is when robo-advisors complement the work of human intermediaries. Customers can then make the best use of the available resources as per their preference. For customers more comfortable with human interactions, robo-advisors can serve as initial data capture and analysis tool. It speeds up the transaction process.

Conclusion

Robo-advisors have already become an integral part of insurance purchase. The algorithm’s capabilities will improve with time through machine learning technology. Robo-advisors will increasingly handle more complicated decisions, such as claim processing. Intermediaries and robo-advisors coexisting together will make buying life insurance easier for every customer.

Kotak Lifeoffers the perfect blend of automated policy suggestion and instant quotes with Life Advisors’ skilful guidance. You can choose your objective from pure protection, children’s needs, retirement, savings or wealth creation. You will get personalized suggestions and quotes based on your age, gender, lifestyle habits, annual income, and other details. You can decide to buy directly online or request help from a Life Advisor for making an informed decision.

Visit the website today and avail of the innovative services to buy the right insurance plan as per your financial goals.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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