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Chatbots and the Future of Interaction

When it comes to the list of disruptive technologies, are we giving chatbots enough credit?

Chatbots are only beginning to show their potential, garnering initial headlines primarily due to Lemonade and its chatbot called Maya. That is interesting, considering that chatbots and AI will likely have a greater overall impact than many of the up-and-coming technologies we have grown to accept, such as autonomous vehicles. How is it possible that chatbots are silently sitting on the sidelines?

It’s simple. They aren’t sitting silently. Chatbot development and use is in full swing. The headlines are picking up. Research organizations are putting forward more predictions about chatbots than ever. Chatbots are easier to implement than many technologies and, operationally, they will provide real value. Text-based or voice-carried artificial intelligence and service-focused functions can readily swap with current human-based adviser/service functions. As complex as they are on the back end, chatbots don’t require major hardware investment, such as sensors, and they don’t require an inordinate amount of coding. So, for all of their disruptive potential to the way we do business, they may be far less disruptive to operations and IT, though operations and IT (and customers) stand to benefit from chatbots.

See also: Chatbots and Agents: The Dynamic Duo  

In an era where impatience is growing and speed is rewarded, chatbots can dramatically improve service levels and meet or exceed expectations. They can also make the economics work for providing service and executing transactions for the growing ranks of high-volume, on-demand, low-premium risk products coming to the market. They are the future of nearly all personal business transactions. For insurers, chatbots can be their own distinct channel as well as augmenting existing channels, supporting a multi-channel world.

Chatbots are growing in use and importance

In Majesco’s Future Trends 2017 Report, we discussed the impact and potential of chatbot growth. Chatbots aren’t growing merely because they have service potential — they are growing because automated non-human service is gaining acceptance among the Gen X, Millennial (Gen Y) and Gen Z cohorts.

Chatbots’ appeal and growth will likely make them one of the technologies to break out of age-based stereotypes. WeChat, China’s most popular chat app, is a great example. With nearly 1 billion users (889 million people), its impact is felt across generations and is even spurring older generations to adopt mobile technology. WeChat is popular — its users interact for an average of 90 minutes per day. Because it uses voice commands, it is also learning from conversations, illustrating the potential of chatbots to gain something from each interaction.

Business Insider said that 80% of businesses will be using chatbots by 2020, with 42% believing that chatbots will improve the customer experience. In addition, 29% of customer service positions in the U.S. could be automated with chatbots or other technology.

Chatbots offer immense potential for customers to interact with an insurer, through direct interactions within messaging or other social media apps.

Other technologies and their impact on chatbots

The “automated home” race between Amazon’s Alexa, Google’s Home, Apple’s HomePod/Siri and many other technology providers will enhance chatbot adoption and use. The more people become comfortable with interactions that are non-human, the easier it will be for people to feel comfortable in a chatbot purchase and service environment. Insurance is already adopting chatbot use and ramping up chatbot availability.

In the past year, for example, insurtech saw a rapid rise in the use of chatbots within startups ranging from Elafris, which enables customers to download auto ID cards and pay bills, to Denim, which markets to consumers and links them with insurers or agents for renter or homeowners insurance.

Robo-advisers represent a chatbot with real AI integration and rules management that can go beyond outside customer service and well into day-to-day executive assistance.

In July 2015, Zurich shared how it was using robo-advisers in two ways: First to accelerate and improve policy processing and issuance that improved quality and accuracy for international casualty programs. Second, Zurich used them in the U.K. to conduct routine diary reviews for open claims that traditionally required attention by human operators.

In the quest for improved customer service, quality, accuracy, speed and efficiencies, robots and robotics have significant opportunity for insurers. From automating processes to interacting with customers, the potential seems limitless, as well as creating a starting point for cognitive applications.

A natural link: AI and Chatbots

Cognitive systems help visualize, use and operationalize structured and unstructured data, pose hypotheses based on data patterns and probability and understand, reason, learn and interact with humans naturally. As a result, the systems help organizations create knowledge from data to expand nearly everyone’s expertise, providing continuous learning and adapting to the environment to out-think the competition and the market.

AI and cognitive computing technologies like IBM’s Watson have been touted as the link between data and human-like analysis. Because insurance requires so much human interaction and analysis regarding everything from underwriting through claims, cognitive computing may be insurance’s next solution to better analyze and price risks using new data sources, while adding an engaging and personalized advisory interface to their services.

A savvy insurance technologist can easily begin to draw the lines between that kind of intelligence management and its potential when linked to chatbot advisory and directive services. Just as many of today’s advisors and agents have experience in underwriting, tomorrow’s chatbot may carry with it the ability to market, gather data, quote, underwrite, issue policies and settle claims without human intervention. Putting one face on an insurance company probably couldn’t get more complete than that.

See also: Hate Buying? Chatbots Can Help  

For now, we can see the seeds of this complete chatbot value chain in its beginnings. At the recent SVIA InsurTech Bootcamp in August that we were involved in, we saw and discussed the array of opportunities to leverage chatbots, AI and cognitive … highlighting the opportunities unfolding.

In June of this year, PolicyPal, a Singaporean startup, announced the launch of its AI-enabled mobile app, which includes a chatbot supported by IBM Watson Conversation technology. The app not only helps prospects through the insurance selection process, it explains complex insurance concepts to consumers to enhance their overall insurance knowledge. The AI, having educated itself, is in effect giving back through chatbot interactions. That is the future of insurance interaction, a market where both parties have something to learn and gain from the insurance relationship.

When Gartner asserts that, “Chatbots will power 85% of all customer service interactions by the year 2020,” that may be enough to drive some business leaders to look into all that chatbots have to offer.

Home Is Where the (Smart) Hub Is

The smart home was all the rage at the 2016 CES (Consumer Electronics Show). The exhibit space and products devoted to smart homes was absolutely mind-boggling.

Well-known products such as the Nest Thermostat, the Roost Smart Battery for smoke alarms and Amazon Echo were displayed alongside a wide variety of other products to make every “thing” in your home smart. Want your refrigerator to assemble a grocery list for you by bar code scans of items about to run out? No problem – the Samsung Family Hub Refrigerator can do that. Looking for a bed with biometric sensors to track your sleep, monitor physiology and make adjustments to improve your night’s rest? Look no further than the Sleep Number-it bed. Need to separately monitor and manage the temperature and environment for each room? The Ecovent system has that capability – and can even alert you if your home is at risk for mold. The list could go on and on.

Given unlimited time and money, you could truly make your home an Internet of Things showplace with smarts everywhere you turn. Of course, you would probably not have enough room on your smartphone to manage all the apps that control the smart things. So how to make sense of all the options? And how should insurers capitalize on the smart home trend? For starters, it is useful to think of smart home devices in four categories:

  • Security/Safety: Existing home security companies are all evolving to provide smarter systems using wireless technologies and more sophisticated sensors. In addition, companies like Ring and Glue provide smart locks and doorbells for secure entry. Others focus on safety through monitoring and pre-emptive alerts for leaky pipes, smoke alarms, failing sump pumps and other things.
  • Entertainment/Information: Smart TVs are already a fixture in many homes, with availability from a variety of suppliers. The Amazon Echo responds to voice questions and prompts to provide news, weather and information, among other capabilities. Devices for gaming are incredibly powerful, and virtual reality headsets are gaining in adoption.
  • Energy/Environment: The Nest Thermostat device has led the way in providing a smart, connected way to monitor and manage the temperature and environment throughout the home for comfort and energy efficiency. Others, such as Lutron, offer controls for lights, shades and temperature, aimed at saving energy.
  • Commerce: The Amazon Dash Button may seem to be a gimmick, but it has opened up possibilities for e-commerce by allowing homeowners to reorder items with literally the touch of a button. Smart appliances and embedded touch screens automate the ordering of parts before they fail or common supply items before they run out.

Then come the questions about how (and even if) all of these devices will work with each other. There is a great deal of overlap and potential interaction between devices both within and between these categories. Enter the smart home hub. There are a number of companies and devices purporting to be hubs to connect the smart things in your home. Some operate well within just one domain – coordinating security-related devices, for instance. Others are broader and have the capability to connect a wider range of smart devices. The Apple HomeKit, Samsung SmartThings Hub and Amazon Echo are a few of the well-known hubs, but others are emerging.

The take-home is that insurers should consider three actions to better understand the smart home space and its potential opportunities and threats.

First, monitor the evolution of the companies and products in the space and the product adoption trends. It probably goes without saying that this is easier said than done.

Second, make sure your tech guys follow the standards, communication protocols and tech issues as they progress (especially related to data-security concerns).

Finally, actively partner with and invest in companies in the smart home space. First-hand learning and experimentation is paramount if you want to gauge the opportunities to offer new insurance product offerings or services that will set you apart from your competitors.