Digital innovation has paved the way for roboadvice, and while roboadvice capabilities can offer some benefits to consumers, in my view they would be wise to tread carefully.
Roboadvice is incapable of capturing the sheer complexity and myriad of factors that go into selecting the correct policy. One size does not fit all. Most people who seek online advice still struggle to understand all their options. The danger is that could leave them exposed.
Technology is a great enabler and can certainly be used to support and inform. It can amplify what already exists and create great value. My question though is this - is roboadvice actually giving advice, or is it simply outlining options?
If I went online and used three different price calculators, the reality is I’d get three different outcomes. So what is the right price? What is the right coverage? Who’s going to give the client guidance and support when it comes to making an informed decision about these things?
While roboadvice is increasingly being welcomed by many, it has its pitfalls. The argument may be that simple insurance policies do not necessarily require the input of a broker, but what defines a simple insurance policy?
People talk about simple products, but what are simple products? It may seem quite straightforward to buy a home and then insure it. However, we know from the Christchurch earthquakes that many homes were underinsured. Some people didn’t have the right terms and conditions.
As brokers, we’re selling a claims response with the ultimate goal of getting people back to where they were before the event by being adequately compensated for their loss.
No one talks about premiums at claim time. That’s when people know whether they’ve made the right decision or not. So it only stands to reason that there needs to be a lot more focus on what’s going to happen at the other end if disaster strikes. We need to ask the questions. What is the willingness of the underwriter to pay a claim? What is their claims philosophy? What is the track record of the insurer?
Roboadvice is largely going to focus on price and the screening of the client at the outset. While it can be useful for doing price checks, it should only ever be used as another tool in the toolbox.
