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Because I'm in the midst of moving from California to the East Coast to be nearer to my daughters and my siblings, I've been canceling service with various companies. One handled a question horribly — and I think offers lessons for insurers, both in general terms and in terms of how they integrate chatbots into their service operations. 

So I'll tell the story here, then suggest an exercise that can keep executives from falling into the most common traps.

Because my problem wasn't with an insurance company — Xfinity is the villain here — I don't even need to pretend to be polite.

Here goes.

Some weeks ago, I canceled service with Xfinity as of May 14 but recently got a bill for service through June 3. The bill was $150 or so more than it should have been, so I went to the website and began a chat to find out what was going on. Xfinity has nickeled and dimed me in the past and generally been hard to deal with, so I was prepared to believe they had just missed my cancellation notice. 

I quickly made it past the chatbot and got to a human, who took a long, long time to dig into my bill and then gave me what turned out to be a very wrong answer. The person told me my cancellation hadn't been recognized because I hadn't provided a "verbal confirmation." 

That made no sense. I had spoken with a representative on the phone, had told the person I wanted to cancel and had received confirmation. But the rep on the other end of the chat wouldn't budge. 

The rep said they could have someone call me to get that confirmation, but before that could happen the chat dropped. I tried to reinitiate but got several error messages from Xfinity telling me to try later. When I finally reconnected, the new rep offered the same nonsensical "verbal confirmation" line and said I had to call the main service number. 

I did so and got a recorded message about some sort of billing issue related to new channels that apparently lots of people in northern California were calling about but that had nothing to do with me. After maybe a minute, the message said I could hold for a representative. I held. No representative. Instead, the recorded message started again. At the end, I held again. Still no rep. Just the recording again. I waited a third time. No rep appeared. I hung up and tried again. Same deal. I phoned again. Same thing. 

Finally, a rep from Xfinity called me — apparently, that first online rep had managed to initiate a call before our chat dropped; Xfinity just took half an hour to make the call. The rep calling me needed only a few seconds to diagnose the actual problem. Xfinity had registered my cancellation, but its information systems couldn't see the halt when it generated the bill at the beginning of the month. I should rest assured, though, that Xfinity would later adjust the bill based on my days of actual usage before hitting my bank account.

Fine, but... the rep blamed me for not understanding the intricacies of Xfinity's (brain dead) approach to billing, rather than acknowledging that Xfinity should have at least told me at the top of the final bill that it would prorate the charges for May. Nor would she acknowledge that her colleagues at the online chat shouldn't have led me on a wild goose chase based on bad information. 

In her harsh New York accent, she kept saying things like, "I'm sorry you didn't understand, but we've been billing you early in the month for years, so you really should have expected a bill from us." 

Yes, I expected a bill from you. I just expected it to be correct. Silly me. I also expected to get an accurate explanation when I contacted customer service.

I never did get any satisfaction from her. She and Xfinity were in the right, and I was just a dumb customer.

The house I'm moving into this week is serviced by Xfinity. Guess who won't be signing up with them. 

Xfinity's Strategic Mistakes

But setting my obvious frustration aside, I think Xfinity made some core strategic mistakes about customer service and believe some in the industry are making the same ones, or at least will be tempted to as the industry adopts more chatbots.

Just about every company these days, certainly those in insurance, talks about wanting to be "customer-centric," a truly ugly term that is hard to define in operational terms (a point Alan Demers and Stephen Applebaum address in their excellent piece on empathy that is one of the six articles I've highlighted this week). Companies may track whether an issue was handled on the first try, a valid concern for any customer, but typically mix in efficiency goals that complicate life for the customer. 

In my case, Xfinity was clearly trying hard to reduce the number of phone calls that get through to live agents. That's why it steered me toward the chat in the first place, and that's why they posted the long message about a billing issue that they made everyone listen to before they could even request an agent. (I hit "0" and said "agent" or "representative" any number of times with no result.) Who knows, Xfinity may have even deliberately kept the message on repeat to frustrate customers into dropping the call.

I'm all for efficiency, but those goals have to be kept separate from goals to keep customers happy and serve them better. Xfinity should have offered an easy handoff from the chat to a live call with an agent, once I hit a dead end online. The handoff should never be: Call the main number. 

I suspect Xfinity has a silo problem. Its chatbot and live online agents worked together smoothly — the chatbot really just served as a simple front end to direct inquiries to the right sort of live agent — but weren't at all integrated with the agents reachable via phone. The agent I spoke with on the phone had much more experience, likely more training and seemingly even access to more information than the online agents had. It's as though the online functions were grafted onto an existing call center organization but never really integrated. 

Xfinity certainly has a problem with the agent on the phone. She's fallen into the trap that can come with expertise. She knows everything about what she's discussing, and, if you don't, too, then you're deficient. She also seemed excessively defensive about her employer, which can come with long service. And she'd lost the good grace that would have at least tried to hide from me her low opinion of my knowledge about Xfinity's billing systems. 

Assuming what she told me is accurate, Xfinity also has an IT problem. It boggles my mind that its systems generated a bill for me on May 3 while unable to see that I had called weeks earlier to cancel service as of the 14th. 

The Dangers for Insurance Companies

I imagine many insurers also have a silo problem, perhaps an even bigger one than Xfinity has, because insurers may sell many different lines and have traditionally organized data by business group. To truly serve customers, insurers need to make sure data about them is integrated so that anyone interacting with them — whether online, in a call center or in an agency or brokerage — can see the whole picture. 

As insurers have chatbots increase their responsibilities for customer service, companies will surely measure what percentage the chatbots handle on their own and will try to keep increasing that number. But that measurement can lead to a mindset that discourages handoffs and even the sort of recorded message that Xfinity afflicted me with in an attempt to keep me from connecting with a phone agent. Customers need to be able to self-service when they want, interact with a chatbot when they want, and clear up problems with a phone agent when they want. 

Insurers also need to watch out for the problems that come with expertise. I can't imagine any insurer's rep being as strident and rude as the Xfinity rep was, but insurance is a complicated product, and those who sell and service it know an awful lot more than customers do, so there's a lot of potential for miscommunication.

The good news is that generative AI will help with some of these problems. It's really good at assembling information, so it can pick and pull from different information systems to provide a deep, integrated picture of a customer and perhaps avoid the kind of mistake that Xfinity's online service function made with me. 

Generative AI can also produce communications that provide an even, appropriate tone, heading off the sort of rogue behavior that the Xfinity phone rep showed with me. 

But insurers will need to be careful as they rely more on AI chatbots, to make sure that they're fully integrated with the other aspects of customer service and that all handoffs are smooth.

An Exercise That Uncovers Deficiencies

Beyond those general cautions, I recommend an exercise that comes from the Silicon Valley dictum that "You have to eat your own dog food." In other words, don't just get reports about metrics on your customer service. Experience it.

You obviously aren't going to file claims or apply for policies to see how you're handled. But you can latch on to perhaps one customer a month and follow them from start to finish. 

If you're involved in supervising customer service in any way, get notified when someone first makes contact with your organization, whether you're with a carrier, a TPA or other service provider, or an agency or brokerage. Then get notified every time your organization contacts them or they contact you. Read every email, text or letter. Listen to every call that's recorded. And do it in as close to real time as you can, so you wait with the customer for that week or two or three before something happens. You'll get a sense of what frustrates customers, both with your organization and with others that are part of the process, and can perhaps improve how you do things. If nothing else, you'll be more empathetic.

I hope you learn some useful things. In the meantime, I'll let you know if Xfinity really does prorate my May charges. I'm not betting on it.

Cheers,

Paul

The expression “empathy in insurance” is as abused and misunderstood as “innovation in insurance.” The underlying intent and value of both are important but vague. They are also contradictory at times and often misapplied by industry practitioners. 

Insurance innovation began to emerge with the insurtech wave roughly a decade ago. Insurance carriers added “innovation” in job titles, opened “labs” and launched corporate venture funds attracted by the prospects of modernizing insurance. Despite these advances, outsiders and many insurance insiders appropriately viewed “insurance innovation” as an oxymoron, challenging the notion that the industry is or can be legitimately innovative. This was most evident when sincere expressions of cheerleading for true breakthroughs evoked gushing terms like “transformational,” “revolutionary” and “game-changing.”

The same can be said about the debate over empathy in insurance, including empathy in claims. Escalating this debate is the introduction of conversational AI, emergence of generative AI and opposing views on just where and how far to apply these in insurance. A popular explanation from insurance executives is that artificial intelligence should have boundaries to certain functions or in replacing people. Rather, they advocate equipping people to perform better in their jobs by automating repetitive, menial tasks so people can concentrate on more valued work. Connecting information in new ways, faster, better and cheaper while keeping humans in the loop is the popular current thinking. After all, insurance is considered a relationship business. 

What Is Empathy in Insurance?

The answer to what is insurance empathy really depends on who is asked. Departments of Insurance evaluate customer service in terms of complaint volume and regulatory compliance as observed in market conduct studies. Yet there is no generally accepted standard measure for how much or how well insurers deliver empathy. The metrics associated with measuring empathy are elusive, inconsistent and focused on activities and time lines.

The JD Power 2024 Auto Claims Satisfaction Study examined auto repair cycle times which averaged 22.3 days, down one day from 2023. However, the report goes on to say that those with premium increases prior to a claim were highly unsatisfied, while those using mobile apps to file claims received scores above call centers and live agents. These may be a current example of the many contradictions and fluid criteria affecting insurance empathy.

In 2003, Fred Reichheld, while at Bain, developed the famous NPS (Net Promoter Score), which has been embraced by some of the largest companies across diverse industries. The concept focuses on customer loyalty determined by the highest survey scoring and subtracting low scoring “detractors.” In short, it’s all about keeping and attracting customers in which insurers monitor retention rates and loss of policyholders after a claim and a variety of survey findings. Yet measuring empathy delivery remains subject to assumptions or a belief more than a tangible finding.

Measuring Empathy

Elusive to measure, so-called empathetic service is best illustrated by examples and testimonials, whether through hand-holding following a home fire or battalions of adjusters descending on weather-ravaged communities to provide relief. Empathy can also be found in the everyday transaction whether during loss reporting or answering questions about recent rate increases, which can go much more smoothly with a friendly, caring touch.  

However, empathy is often more complicated and dynamic. Efficiency, competence and outcomes can matter even more than the delivery itself. Consequently, insurers persistently place a high value on the potential degradation of empathy when it comes to evaluating AI more than any other previous technology. And for good reason – agentic AI has the power to replicate human judgment and the many associated functions.

One pathway to business excellence is to apply the principles of; what gets measured, gets done. JD Power also reported that the highest-ranked key performance claim service indicator involves good communication. Conversely, the top reason for claim dissatisfaction stems from customers not being informed and updated during the process. Yet adjusters, pressed for time, often default to a reactionary mode by responding to inquiries and complaints. Therefore, insurers measure things such as the speed of customer contact and claim cycle time, while empathetic delivery can only be sparsely observed and subjectively gauged.  

Obstacles to Empathy

Meanwhile, claims leaders constantly strive to juggle loss costs, expenses, employee engagement and a cascade of organizational priorities. Better said, insurers strive for blended positive outcomes in which the right amount is paid with efficiency, keeping expenses contained -- all with satisfied customers. 

Claim adjusters receive extensive policy coverage education, claim system and estimating software training with a heaping of technical development and customer service training during their apprenticeship-styled onboarding and often-lengthy career paths – all of this with the goal of reaching claim excellence. But empathetic claim delivery in which adjusters are tested and stretched to balance work volume, complaints and customer pressures is one of those acquired skills and remains inconsistent at best.

What does the customer want?

Large enterprises probably are the most challenged to know exactly what customers want. Layers of structure get in the way. The customer may be nearly out of sight, left to reports, spreadsheets and data augmented by marketing analytics to decipher. Insurers face additional obstacles as there are numerous uncoordinated touchpoints during a claim, including medical providers, agents, repairers, solution providers and others staking individual ownership for the customer experience. 

Today’s insurance claim model is highly specialized, and a single claim can include multiple adjusters assigned, laden with handoffs and reassignments along the way. Communication channels span phone, email, text and insurer apps, clouding how empathy is experienced. All of which raises the key question of what do customers really want? This question further recognizes differences in wants and needs in a moving target scenario throughout the claim life cycle.

Redefining Empathy in Insurance

As technology advances and digital channels become more effective and commonplace, human interaction is evolving. Generational differences account for shrinking demand for live call support, especially when an automated or self-service channel is competent and efficient. Acceptance of digital-first is widespread. No need to call a taxi cab company when a few clicks of a rideshare app is much more efficient and friendly, introducing driver by name, car and license plate and live mapping pick-up time. Numerous other experiences are blending efficiency and friendliness, thus personalizing – a key ingredient in empathy. The insurance industry has already started on the path of offering digital and self-services, albeit cautiously, by providing options and soft-selling such as offering paperless and other hassle-free alternatives. 

AI and Empathy

In our related article, AI Can Fix Everything in Insurance we explore the outdated claim intake process, which remains highly dependent on human touch. Yet the claim reporting process is mainly about information gathering, only to hand off to others who routinely confirm and repeat these steps. While this model can lend a human expression of empathy, it is often outweighed by a lengthy Q&A conversation – all of which is automated and can replace live agents in all but a few circumstances. Several newer insurtech entrants take a digital-first mindset and are proving effective and efficient.

Redefining empathy in insurance must consider outcomes vs methods. Such outcomes should entail efficiency and completeness of the service experience as well as the degree of confidence assessed by how far users are able to navigate the process, whether a claim, policy change or other function.

Insurance is complex, so human experts will likely remain involved for a long time. Modern systems allow for reaching or scheduling a human-to-human conversation when the customer wants/decides. But this is the opposite of today’s typical, human-first funnel throughout insurance. Although bots probably deserve a D- grade, they are now getting smarter and more capable, with conversational AI causing insurers to consider just how far to go.

Creativity in non-human interactions can go a long way in making things friendly and welcoming. Allstate recently said Gen AI communication letters were found to be superior to human-written communications because of clarity. Digital responses can and do include friendly messaging such as, “sorry for your loss” or “congratulations on your new car/home.” This is similar to how human agents are trained, with a key difference – consistency in application. Such examples tend to muddy the water in delineating value of human touch from other customer expectations of clarity and competency.

Agentic AI offers the prospect of replicating judgment. This is crucial when it comes to personalization. The P&C industry strives for more personalization when it comes to premiums, marketing products, changing coverages and knowing their customers. Sensor technology enables real-time data capture to monitor, alert and guide risk behavior, which opens the door to Predict & Prevent imperatives designed to make insurance more effective and affordable. 

Our Take

Empathy is the ability to understand and share the feelings of another. Technology need not and does not displace sharing of feelings. Empathy will always be important – especially in claims – but it would be irresponsible of insurers not to leverage high-impact technology or remove humans from the process where judgment and experience are critical. 

The future success of insurance depends on repositioning the industry for higher relevance to the new consumer and stakeholder alike. Redefining empathy amid exponential gains in technology is a big step forward in thoughtful and responsible use of AI in insurance.

Human touch in insurance is not going away any time soon, but your next co-worker is likely to be AI-powered.

I had the briefest of interactions with Warren Buffett — and he nailed it. 

When an authorized biography of him was published in 2008, I wrote a very favorable review for the Wall Street Journal. This was just weeks after my own book, "Billion Dollar Lessons," had come out, and I took the liberty of mailing Buffett a copy, along with the WSJ's rave review of B$L. 

Buffett had a cameo in my book (written with Chunka Mui) on lessons to be learned from business failures because he once invested in USAir while it was in the midst of doing a bunch of dumb things. I figured that connection, plus my having written a review he surely liked, might merit at least a glance. Who knows? Maybe he'd even read parts of the book and say something nice while Chunka and I were out hyping it.

Exactly one week after I mailed the book, I received a return letter from Buffett. He thanked me for the book, adding:

"Yes, that investment in USAir was the worst I ever made. I expect to make a worse one soon."

Buffett has said a lot of folksy, smart things to a lot of people over the decades, and I've been reading as much as I could for more than four of those decades, so I thought I'd mark his retirement announcement with some of his greatest hits, especially ones that apply to insurance. I'll start with my favorite: 

"It's when the tide goes out that you see who's been swimming naked." 

I've always liked this line because of its sense of accountability. For decades, I've watched companies try to blame troubles on anything they could lay their hands on — an earthquake in Japan, storms in Europe, sure, whatever, whether or not they did much business in the affected area. But the best companies just kept their heads down and worked their way through the problems, making sure they kept their swimsuits on even as the tide went out. 

Look at Geico. After Berkshire Hathaway acknowledged in 2021 that it had fallen behind on telematics, Geico worked and worked and caught up — as Matteo Carbone described for us last summer. Even as supply chain problems and bad driving habits left over from COVID caused many auto insurers to try to raise rates in a panic, GEICO had a combined ratio in the first quarter that started with a 7. (It's not just GEICO. Progressive, which pioneered the use of telematics to price risk, never had a blip and recently announced plans to hire 12,000 people.)

(If you're interested in learning more about Buffett's pioneering work in insurance, I recommend this piece by Adrian Jones.)

Here's another great one: 

“If you start fooling your shareholders, you will soon believe your own baloney and be fooling yourself, as well.”

My favorite study of all time is one by BCG that Chunka and I cited in B$L. It found that 80% of executives thought they had the best product in the market — and that 8% of their customers agreed. Surely influenced by that, in a cynical moment Chunka and I wrote in our book that "marketing is when you lie to your customers; market research is when you lie to yourself." 

Companies, including insurers, would be so much better off if they could take a brutal look at themselves.

(That quote comes from this article in the Washington Post, which includes a number of other worthy lines.)

"It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently." 

'Nuf said. Insurers know this all too well.

"Someone is sitting in the shade today because someone planted a tree a long time ago."

While sitting in London's Hyde Park once, I marveled at the grace and beauty of a section enclosed by trees that had been espaliered — the leaves and branches formed what you could think of as a very broad, perfectly manicured box hedge extending from maybe 40 to 50 feet off the ground. I realized that those trees had to have been planted many decades before to grow to that height and be trained so well. So whoever planted those trees surely didn't expect to experience the serenity I was being allowed to appreciate. 

I dearly wish that more long-term thinking could exist in business, including insurance. Insurers do a better-than-average job of thinking about the long term, but we still get buffeted by tariffs and storms and so on and need to focus on that next quarter. I'd love to see more companies taking out a clean sheet of paper, designing the perfect version of themselves 10 or more years out and driving toward that vision.

My old friend and WSJ colleague Roger Lowenstein notes that as recently as this weekend, Buffett responded to a shareholder question by saying, “We don’t do anything based on its impact on quarterly and annual earnings. What counts is where we are five or 10 or 20 years from now.” 

How great would it be if the rest of us could adopt that attitude?

Well, Roger provides some numbers in an op-ed in the New York Times:

"Since [Buffett] took the helm of Berkshire — on May 10, 1965 — General Motors, then the largest American corporation, has greeted 11 new chief executives. Sears, Roebuck, the biggest retailer, has vanished from the scene. Eleven U.S. presidents have come and gone (two of them having survived impeachment and one forced to resign), and Coca-Cola changed its formula, but Mr. Buffett didn’t change his....

"Berkshire’s stock that day in May closed at $18 a share. When he delivered the news [of his impending retirement[, it was above $809,000 — almost 45,000 times as high. Over the same span, the Dow Jones industrial average is up just under 45 times."

Words to live by.

Cheers,

Paul

P.S. It's not clear that Buffett ever did make a worse investment than the one in USAir, at least by his telling. He once wrote of airlines: "A durable competitive advantage has proven elusive ever since the days of the Wright Brothers. Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.”

Paul Carroll

To start out, could you tell me how you think about chatbots?

Adam Fischer

When I started at Clearcover eight years ago, I was very anti-chatbot. They were these tree-based, logic-based chatbots that everyone hated using. Let's be honest. It didn’t matter how friendly you tried to make them. They just didn't work.

So we focused on our mobile app, and that has really paid off for us. Over 90% of our customers have downloaded and created an account on our mobile app. It's only for our customers, so people don’t do any shopping in the app. We just wanted to make it easy to interact with your policy after you buy it, whether that's getting your ID card, handling changes on your policy, or filing claims. Our app has always been at the epicenter of what we've done.

As generative AI took off, we started to say, okay, we finally have chats you can automate, and they are a good experience. We’ve really leaned into Gen AI for about a year, and it’s been a tremendous success both for customers and for Clearcover.

Paul Carroll

Tell me a bit more about what you’re doing with Gen AI. I've yelled at my share of chatbots over the years, and I’m still not finding them to be that great.

Adam Fischer

That’s a good question. Everything depends on the context. When it’s tight, and the chat is iterative, the AI is very accurate.

If you’re using a general tool like ChatGPT, the nexus of knowledge you’re interacting with is the entire internet. And the old saying is right: Garbage in, garbage out. You remember the famous story from five or six months ago, when somebody asked how to keep cheese from sliding off a pizza.

Paul Carroll

And the AI’s answer was: Use glue.

Adam Fischer

Right? And the technology was actually performing well. It had sourced different pieces of data and found a joke post on Reddit.

But when you have a very controlled use case like we do, there is a solid knowledge base with all the information the Gen AI tool needs to get the user to the correct answer fast and accurately. That's where Gen AI can really be powerful.

Paul Carroll

How do you quantify the benefits for Clearcover?

Adam Fischer

As a growing carrier without a large call center, we implemented Gen AI so we can answer a lot of our customers’ questions 24/7 now. A customer might have a question about billing. They might have a question about their policy. Now if it's 11 at night, one in the morning, maybe they were driving around and had a bit of an issue: Whatever the case may be, they can get that answer whenever they're interacting with us. We serve the customer in the moment when they want to be served.

As we're growing, our hiring curve doesn't have to be as steep. And the folks who are already here in our call center can focus on providing better service to customers when they do need to get in touch with a human.

Paul Carroll

My favorite geek joke is: Why did it only take God six days to create the universe?

Answer: Because God didn’t have an installed base.

I assume there are things Clearcover can do more easily than older carriers can with their legacy systems.

Adam Fischer

We're completely API-centric from the perspective of our custom-built policy administration system. So our chatbot can interact with it in powerful ways. If you have a question about your policy, the chatbot can pull up your specific policy and use that to provide your response.

As we see patterns, we try to integrate the chatbot more deeply. Because billing is a good portion of our chats, for instance, we've started integrating with our payment provider so customers can pay by link during those interactions.

Paul Carroll

How do you handle the coordination between your human agents and the chatbot?

Adam Fischer

For example, if you want to add a vehicle to your policy, we can gather a large portion of the information via the chatbot and then have a human complete the change and make sure everything is accurate.

If you have any questions, we're here, but we take a lot of time out of that conversation, which then lets our humans use their superpowers to provide really good service when they do get connected with the customer.

Paul Carroll

What are you finding people tend to do with the chatbot?

Adam Fischer

The questions are consistent with what they’ve always been. We get a lot of questions about billing and about adding vehicles and drivers or, say, about whether a customer needs to buy coverage from a rental car company.

We’re always keen on compliance and make sure we're not giving coverage recommendations or advice, but we can help you retrieve information you could find on our website.

Paul Carroll

I've often heard insurance companies say they want to interact with the customer more, because studies find a link between number of interactions and loyalty. But I think that’s often correlation but not causation. Right? Sometimes I want you to interact with me, sometimes I don't.

When do you reach out to customers as opposed to just waiting for them to come to you?

Adam Fischer

We focus on providing a good experience when we’re needed.

But we’ve been running a service pilot called Car Care for a little while, where we make it easy for customers to save money and book on common maintenance they need for their vehicle. Customers can browse shops and book online to save on oil changes, new tires, or whatever. We don’t bombard you with emails. You won’t get happy birthday emails from us or, “It’s July, so here are some barbeque tips.” But if you use a feature in our app that lets you report your mileage to us, we’ll let you know that you’re due for an oil change. We’re going to remind you of the benefits we offer, but we don’t assume insurance is at the top of your mind all the time.

Paul Carroll

I’m the perfect insurance customer. I’ve never filed a claim for anything other than healthcare. But people who do file claims often express frustration about how little they know about the progress of their claim. Shouldn’t it be easy these days to keep people posted, like Amazon does on its deliveries?

Adam Fischer

We have a claim center within our app that tells you, when you initiate a claim, what the process will look like and how long each step may take. The app also has a sort of Domino’s pizza tracker that will tell you where you are in the process.

We're also working on a product that lets people provide information to our AI on a claim, so they can do it on their own schedule and not have to wait for a rep to call or schedule an appointment. The Gen AI, which we internally affectionately call TerrenceBot, or Terry for short, will also answer detailed questions, like, Okay, what now?

Paul Carroll

If you and I reconvene in two years, where are we? Terry is out to the customer. What other things are going on?

Adam Fischer

The Gen AI is just going to keep getting better and better, so it’s going to be able to make the claims process more efficient.

And there's more than just the first party in a claim, right? There are third parties. There are passengers. There are other folks involved. We're planning on kind of spidering out our Gen AI to those interested parties, as well.

If you think about how a typical claim is processed, well, if the customer tells us there was a passenger, our rep has to call the passenger. Passenger's unavailable. You leave a voice mail. You play phone tag for a while. Finally, you get the statement. Now imagine a situation where we contact the passengers via bot and can collect that entire statement via the Gen AI and then have our human reps call to confirm some pieces of information and provide a nice finishing touch.

Reps won’t be spending all their time chasing x y z piece of data. Gen AI can be very good at doing that.

Paul Carroll

That sounds great. Thanks, Adam.

About Adam Fischer

Adam Fischer is chief product and innovation officer at Clearcover. He brings more than a decade of experience at industry leading consumer brands like Apartments.com and Redbox. In addition to being the first product leader at Clearcover, Fischer has worn many hats on and off during his tenure, including overseeing the rapid expansion of the technology department from 30 to 160 employees during a two-year stint as CTO as well as over 100% YoY growth for two consecutive years as head of growth. His latest role is creating an innovation team at Clearcover, which is currently responsible for Clearcover Advantage, which is aimed at delivering superior value for policyholders. He remains focused on embedded strategies, constantly striving to improve on the foundation he helped establish at Clearcover. He uses his passion for technology and building products to help bring industry-leading experiences that delight customers. Fischer holds a BS in information systems from DePaul University.

Selling insurance, whether automotive, home, life, or other types, has traditionally been a relationship-based experience. Many agents work with clients for years, and knowing their customers' evolving needs is key to upselling and building a book of business. As artificial intelligence (AI) seeps into every industry and consumers are more cost-conscious than relationship-driven, insurance companies and agents are taking a critical look at the technology to determine how it fits into the insurance business model.

On the surface, AI can lessen the administrative burden for agents who answer frequent and simple inquiries, while also helping to process claims, identify potential risks, and deliver personalized plans based on historical data. Up to 20% of claims filed are fraudulent, and AI is analyzing patterns to help insurers identify which cases are legitimate.

Yet, pushing too much of the relationship to self-service, automation, and bots can hurt brand loyalty.

While there are many potential benefits to AI, how it is implemented within the structure of the business is key to using it effectively and supporting a better customer experience.

Barriers Between Insurance Companies and Customers

Industry data has identified a generational divide between younger and more technologically savvy customers, who prefer digital solutions, and older generations, who prefer traditional phone-based services where they can speak directly to a human.

Across generations, some people are open to using self-service chatbots, automated SMS messaging, or AI agents, while others are less interested in this style of communication. In fact, up to 40% of people feel "unfavorable" toward chatbots due to past negative experiences or a lack of trust in the technology.

To protect the customer's experience when researching or purchasing insurance, filing a claim, or requesting support, insurance companies should consider an approach that integrates the human touch with elements of AI. This approach will ultimately optimize efficiencies and cost savings without sacrificing the quality of the member experience connection.

Taking a Human-First Approach to Filing Insurance Claims

There are several key downsides when human oversight is left out of the customer experience journey. Many interactions with insurance companies follow stressful experiences like a car accident or home damage caused by a natural disaster. While efficient, automation does not have the capacity to deal with these situations using empathy.

Customer needs are too complex for AI. Allowing a human agent to be the first touchpoint in the journey ensures that the customer is receiving personal and empathetic support, lessening their stress and anxiety and helping them through difficult scenarios.

For example, if someone experiences hail damage and is looking to file a claim, they may contact their insurance agent via the app, phone, or online. From here, a human agent can evaluate the customer's needs and communicate the best route for effectively filing a claim while helping to put the customer at ease. Then, it is up to the agent to decide if and when AI should be used.

In this case, AI could deliver basic information such as next steps in the claim process, common safety measures homeowners should take after a hailstorm, such as securing broken windows, and how to photograph damage. AI can also gather data from the customer, such as date and time of incident, address, and property details. AI can help schedule an inspection with an adjuster and automatically input all data into the customer record.

During this part of the transaction, it is important that the customer has the ability to reconnect with a human agent if they have questions or concerns to ensure they are not stuck in a frustrating loop with a chatbot or AI agent. Balancing this combination of human and AI interaction creates a sense of personalization, supports empathy, and frees agent time by offloading common or administrative tasks. It also supports brand loyalty because the customer feels supported by their insurance agent and always has a path back to a human.

Continued Optimizations for AI Advancements

Insurance companies should continue to monitor technology advancements and be open to adapting customer service models as AI evolves. There is not a one-size-fits-all approach when it comes to AI and automation. As roles and responsibilities of human agents continue to shift due to AI, it is important to document where humans and AI each add their own value to new and existing processes. Finding a strategy that effectively balances human support and AI will lead to increases in productivity and efficiency while still ensuring that customers are highly satisfied with their experience.

Technology plays a pivotal role in transforming the insurance industry, but it's not always an easy relationship. Many insurers struggle with outdated work methods as well as legacy systems.

While most insurance companies view technical debt as a major hurdle for innovation, it's easy for them to overlook the other two legs of the stool: process debt and organizational debt. These three legs work together to form a complex system, and neglecting any one of them can lead to stagnation.

Tackling technical debt

Technology is the backbone of the modern insurance industry, yet many companies still grapple with how to replace, integrate or phase out their older technologies.

Approximately 70% of IT budgets is consumed by legacy system maintenance, according to Forrester. Meanwhile, insurers struggle with complex integrations that are costly and hard to implement. As a result, they are constrained by outdated, siloed ways of operating.

For example, an outdated policy management system used by a life insurance company can result in long claim settlement times and difficulty complying with new privacy regulations.

The good news is that cloud, AI and other solutions can help insurers modernize their technology infrastructure and work more efficiently. For example, AI tools are available to help with migrating, consolidating and even converting a company's multiple legacy policy administration systems into a more modern, future-proofed solution.

Overcoming the weight of process debt

Insurers are under pressure to accelerate growth and innovation, streamline operations and provide faster, more reliable services to policyholders. However, they are often constrained by complex and highly manual, outdated processes and workflows. This leads to wasted time, money and productivity.

HFS Research estimates the insurance industry is burdened by $66 billion in process debt, which is the buildup of outdated, overly complex, or inefficient workflows and practices that made sense at one point but no longer align with goals or realities.

The key to overcoming process debt is to identify and address its root causes. This requires a thorough assessment of current workflows and practices, followed by targeted interventions to streamline and simplify processes. Then, businesses can recapture lost productivity, reduce waste, and ultimately achieve their goals more effectively.

For example, new technologies like smart workflow systems and persona-based portals help connect different front-, middle- and back-end tasks (like customer service, policy administration and billing/collections) so they can be completed automatically. This allows a company's external users (e.g., customers and producers) to do front-office work on a self-service basis, freeing internal staff to focus on more complex middle- and back-office tasks. As a result, insurance companies can offer more modern, efficient and personalized experiences for their customers.

Unburdening organizational debt

When insurance companies tackle technical and process debt, they often overlook the accumulation of inefficiencies, outdated practices, and structural impediments that hinder their ability to adapt and evolve with the times. In addition, organizational debt accumulates when the knowledge of these products, processes and procedures is not documented effectively and is only available from an aging workforce.

Think of organizational debt as the "interest" an organization pays for not addressing these problems. Overcoming it requires a fundamental shift in how teams collaborate, how culture manifests and influences decisions and overall team dynamics, and how customer needs are met at every turn.

For insurance companies, this means understanding the individual experiences customers crave — from preferred channels to accurate recommendations. It means using data intelligence to identify specific touchpoints that meet customer needs. It also means making sure that all the different departments in the organization (claims, finance, legal, underwriting, etc.) are aligned to the same goals.

From debt to innovation

Paying down each of these three types of debt isn't easy, but it is a worthwhile goal to pursue.

It requires a holistic approach that involves upgrading technology infrastructure, streamlining workflows, and aligning organizational culture with modern practices. New tools and solutions can help by automating manual processes, improving data visibility and reducing overall risk.

By shifting the focus from maintenance to innovation, organizations can explore new ways of working, create a culture that is flexible, adaptable and forward-thinking and be free to focus on what truly matters: delivering value to their customers.

The International Insurance Society's 2025 Global Priorities Survey found that two-thirds of the senior insurance executives surveyed listed artificial intelligence as a top priority for their technology and innovation agendas. That is up from 55% last year and represents a huge increase from 17% in 2021. 

But it also means that one-third of the executives DON'T think AI is a top priority for innovation. Hmmm.

The survey also found that "concerns over the speed of technological advancement have eased." Really? 

I just published an article that predicted that an AI available to insurers a year from now will be 10 times as powerful as today's, at 1/100th the cost. Whether that's precisely right, it's certainly directionally correct. So I, at least, am thoroughly discomfited by the speed of change and can't imagine why others aren't, too.

The IIS survey provides a great baseline every year for understanding the state of play in the insurance industry... and I have thoughts.

The survey — which I encourage you to preview here — includes a number of responses that suggest executives are alive to the possibilities of AI. For instance, among internal priorities, operational efficiency is a top issue for 50% of respondents, making it the highest priority for the second year in a row. I suspect that emphasis doesn't just reflect a need in a highly competitive environment but also shows an understanding of the huge number of relatively straightforward opportunities that generative AI presents for automating processes. 

I think the possibilities of AI also show up in the near doubling of respondents who said the aging workforce is a top priority (from 11% last year to 20% in 2025). Again, there is a huge need, given that hundreds of thousands of insurance company employees are expected to retire over the next few years. But AI also presents great opportunities, both to preserve the knowledge of those walking out the door and to provide data and tools to new recruits that can bring them up to speed much faster than in the past. 

The responses on cyber seem to incorporate some AI optimism, too. The percentage of those identifying cyber security as a top three priority in the political and legal category dropped to 57% in 2025 from 75% in 2024. While AI certainly makes hackers more effective, the good guys seem to be using advances in technology, including AI, to improve defenses at least as fast as the attacks are intensifying.

It's certainly encouraging to see a huge increase in the number of respondents saying they are focused on addressing technological advancements — 41% in 2025, up 16 percentage points from 2024.

But I worry that too many executives are still too complacent about all the change that AI will effect. Yes, we're almost 2 1/2 years into the generative AI era, and the sky hasn't fallen. But Amara's Law is undefeated. It says we overestimate the effects of a major technology change in the short run but underestimate its effects in the long run, and we're starting to move into the long run. 

I think insurers are getting a pretty good handle on the operational efficiencies available to them, but they should be acutely aware of the larger possibilities. Someone may figure out how to reinvent processes for claims or underwriting or to radically improve agents' and brokers' productivity. There's also a huge amount of effort going into producing AI agents that can operate as, essentially, employees, with considerable autonomy. Imagine a world where you can give every employee 10 or 20 or 30 AIs that work for them at essentially zero cost.

So I'm delighted to see the emphasis on AI and innovation in this year's IIS survey. I just want to be sure we don't get comfortable.

Cheers,

Paul 

In today's insurance market, policyholders have more choices than ever. Switching providers is quick, easy, and often encouraged by comparison tools and challenger brands. And while price has traditionally been the battleground, it's now only one part of a much bigger picture. According to new research from Nuvei, nearly half of policyholders who switch insurers do so for reasons unrelated to cost.

At the center of this shift lies the claims experience, and more specifically, the speed and flexibility of payouts to customers.

Why faster payouts are the future of customer loyalty in insurance

For many policyholders, filing a claim comes during moments of stress or financial uncertainty. They expect insurance to provide reassurance, yet many are met with delays, outdated processes, and inflexible options. Long wait times, lack of transparency, and rigid payout options erode confidence—often permanently. In fact:

• The average claim lifecycle exceeds 100 days, while most policyholders expect significantly faster resolutions.
• 48% of policyholders say they would pay more for a faster payout, proving that speed isn't just convenient—it's valued.
• Only 35% of claimants receive direct deposit payouts, despite 58% saying it's their preferred method.

These delays can seriously affect customer satisfaction. A slow payout undermines confidence in an insurer's ability to deliver when it matters most. With 40% of policyholders switching providers annually, that perception can be costly.

How flexible payouts can give insurers an edge in a highly competitive market

Flexibility is increasingly essential. Policyholders want to choose how they receive their funds, whether that's a real-time bank transfer, digital wallet, or scheduled installments for larger claims. Meanwhile, 18% were still paid by check, introducing additional wait times and banking steps.

When insurers fail to provide this flexibility, frustration builds. The result? 19% of claimants report struggling to access their payout, reinforcing the belief that claiming is more hassle than help.

Meanwhile, digital-first insurers are raising the bar. With streamlined onboarding, transparent communication, and instant payouts built into their platforms, they're capturing market share from traditional providers who haven't kept up.

To stay competitive, insurers must stop viewing payouts as a back-office function and start seeing them as a core part of customer experience and retention.

The bottom line?

Faster, more flexible payouts build trust. They increase satisfaction. Ultimately, they give insurers a lasting edge in a market where loyalty is harder than ever to earn.

Discover more insights, data, and strategies in Nuvei’s latest whitepaper: “Mind the Claims Gap – Why UK Policyholders Are Losing Faith in Insurance Products, and How Payments Can Fix It.”