AI isn’t cutting broker jobs. Here is what it is doing instead

The fear of job elimination spurred by artificial intelligence was palpable at every insurance industry conference this year. But there’s a more alarming trend no one is talking about: We are poised for a demographic shift that could leave millions of Americans without a broker or advice to help navigate a complex and costly insurance market.

Today, the vast majority of Americans with health insurance receive coverage guidance directly, or indirectly, from a broker. Just as the "Silver Tsunami" of baby boomers age into Medicare (this trend peaks from 2024 through 2027), health insurance brokerages are facing a critical labor deficit. Half of all brokers will retire between 2021 and 2036, yet only one new agent enters the profession for every six who leave. This puts significant downward pressure on our country’s “advisory capacity” just as brokers are needed more than ever. We’re headed for a major shortage of brokers over the next 10 years as Medicare agents and group benefits advisors leave the profession.

Plenty of headlines cite AI as the reason for layoffs across the insurance industry, particularly for back-office roles. This leaves many who have built careers in the industry to wonder if they’re next. We should appreciate that some of this may be exaggerated, as AI may simply be a broad cover to justify reducing the workforce. Business motivations tend to be much more complex. AI fear drives clicks, but it misdiagnoses the problem in this situation.

Brokers' jobs undergoing change

Even before AI, the broker’s job was undergoing tremendous change. With carrier market exits prompting massive book migrations, added verification steps lengthening every enrollment call, a proliferation of group coverage models - such as individual coverage health reimbursement arrangements, level funded plans, captives and more increasing complexity - brokers have reached the limits of their bandwidth. None of this operational drag is the broker's fault, and none of this work is optional. These capacity constraints are the worst threat to a broker’s livelihood and, without a solution, may negatively impact the consumers and employers who have relied on the broker as a source of guidance for years.

Far from eliminating jobs, AI is the only viable solution to this double-edged sword of retiring talent and skyrocketing administrative burden. And history shows that new technologies are more likely to expand markets, increasing productivity while also creating more opportunity.

It’s called the Jevons Employment Effect, and as Apollo’s CEO explains, when the cost of professional services goes down, demand goes up. Demand is already up from consumers and employers who need help navigating insurance, which has become painfully expensive and more complex in recent years.

Clients need more help

Furthermore, clients need help with more than health insurance. They have coverage gaps, financial questions and care navigation needs that are going unmet. When AI reduces the cost of routine administrative work and makes this work much more efficient, brokers can finally afford to step in and handle these extra services — unlocking massive hidden opportunities and expanding what it means to be a broker to more comprehensive healthcare and financial guidance.

We believe AI-enabled brokers will finally become the comprehensive guides to insurance, wealth, and health that they were always meant to be, and demand for them will only grow.

A recent report from Ramp shows that the firms that embrace AI most heavily see the most job creation. “If AI lowers the fixed cost of handling administrative work, doing analysis, or improving customer support,” economist Ara Kharazian wrote, “the gains can drive outsized growth and unlock new revenue streams that previously required higher fixed costs in the form of new salaries…[Teams] can go do more things now.”

However, firms that simply dabble in AI don’t see many new roles. This data backs our view that to properly embrace AI, broker workflows must be redesigned to unlock real operating leverage in the agency. AI Voice and SMS, and workflow automation capabilities, are now at a level where they can respond to clients much more quickly and accurately than humans, freeing up brokers to spend more time on revenue-generating activities.

The best brokers typically plateau after a few years of successful growth because client service and renewal work crowds out time for new business. It’s mathematically inevitable. As the broker workforce shrinks, losing the capacity to take on new clients is just as much of a business threat as it is a community crisis. Without brokers, families and employers could be left to navigate healthcare alone. If the industry would view AI as the path to deliver an even higher level of client service, it could unlock unprecedented growth and become more strategic partners to clients, carriers and health systems in their communities.

That’s the work AI will enable the best brokers to pursue. The ones who embrace this transformation will win the privilege of serving clients for decades to come.

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Will Johnson is CEO of Gyde. Contact him at [email protected].