March 13, 2019
Chatbots and the Future of Insurance
by Sean Kennedy and Federico Pienovi
With chatbots poised to play an ever greater role, several important questions remain for insurance companies.
The future of the insurance industry is the customer. More and more insurance companies are stepping up their games and moving to digital and customer-centric strategies.
The push to position the customer at the forefront of the industry is driving the adoption of self-service technologies — digital offerings capable of delivering more user-friendly customer experiences. In turn, the industry is embracing another customer-centered technology: chatbots.
But important questions remain:
- How will chatbots solve historic industry pain points around customer service?
- How can humans and chatbots work together to improve the customer experience?
- In what ways will chatbots change the insurance industry over the long term?
By answering these and other questions, the insurance industry can better leverage chatbots to improve the customer experience —and prepare for the changes ahead.
Chatbots: Why now?
Until recently, customer service has been frequently discussed but rarely prioritized in the insurance industry. Traditional customer-facing processes rely heavily on phone interactions and fall short of customers’ digital expectations.
Although some insurers have reduced the tedium of traditional processes, customers frequently experience long wait times and multiple touchpoints for a single action or request.
Taking a page from the e-commerce playbook, leading insurers are empowering customers with self-service capabilities, which augment the work of employees and agents, allowing them to focus on more meaningful customer interactions.
See also: Will Chatbots Take Over Contact Centers?
Chatbots are a natural extension of the push for self-service capabilities. They improve the customer experience through a cooperative approach involving both humans and artificial intelligence (AI). The timing is right for the widespread adoption of chatbots.
Just 34% of consumers report they have definitely not interacted with a chatbot in the past year.
By making it easier for customers to answer common questions and perform routine activities like filing a claim, chatbots reposition customers at the center of insurance processes.
How chatbots improve the customer experience
Retail and other sectors have successfully used chatbot technology to significantly enhance the customer experience. However, the buying and claims processes in insurance present unique challenges. Insurance customers purchase policies because they are afraid of losing things they care about: cars, houses, even loved ones. As a result, customers are more emotionally invested when buying insurance than when they purchase consumer goods or even big-ticket items like vehicles.
Chatbots help neutralize emotions during the transactional stages of the insurance lifecycle. In some ways, chatbots are an extension of a web search. The difference is that they go deeper and present customers with information that is otherwise difficult to access. Chatbots also streamline routine tasks, eliminating the frustration policyholders commonly experience when dealing with insurers.
Consumer acceptance of chatbots is largely predicated on the availability of human interactions for certain tasks. Nearly half (49%) of consumers feel better about using chatbots if they know they can escalate the experience to a human interaction.
The ability to defuse the emotional element of buying insurance accelerates the speed of doing business. In addition, agents and customer service representatives no longer have to perform transactional processes, which improves their quality of life in the workplace and leads to a faster pace of service and internal transformation.
There are limits: At some point, humans must engage customers directly and assist them with the emotional aspects of the insurance process. Still, with today’s most advanced chatbots, there is the potential to capture new insights and further improve the policyholder experience through personalization. For example, when a customer prices flood insurance, chatbots with AI running in the background can quickly identify the best and most affordable coverage for her situation.
Insurance customers have grown to expect this level of personalization from retailers and consumer-facing brands. As AI-powered chatbots gain traction, customers will expect the same from their insurers.
A look ahead: What’s next in chatbots for insurance companies?
Chatbots will have a transformative effect on the customer experience, but benefits may vary by insurance category.
Chatbots provide an opportunity to reimagine the role of health insurance and position health insurance providers as true partners in the quest for better patient outcomes. For example, chatbot solutions can provide free/low-cost health coaching or other services.
See also: Chatbots and the Future of Interaction
In life insurance, chatbots enable insurers to build on existing trust and serve as wellness partners to their customers. Leveraging AI, chatbots can deliver personalized recommendations that improve customers’ quality of life by promoting financial, physical and emotional wellness.
Similarly, chatbots have the potential to generate added trust with property and casualty insurance customers. With advanced analytics, chatbots can improve how customers price insurance policies or streamline the claims process. When combined with IoT devices, chatbots may even be able to provide real-time analysis, enabling customers to prevent incidents like a leaking hot water heater or a pending part failure on a vehicle.
By focusing on customer needs, chatbots not only strengthen policyholders’ relationships with their insurers but also drive sales through touchpoints that span a range of digital channels. Humans remain a vital part of customers’ experience with insurers, but, with chatbots on the team, human agents and customer service representatives have the freedom to focus on more meaningful aspects of customer relationships — a big win for customers, employees and insurance companies themselves.