Conversational AI in Insurance


With the continuous increase in the popularity of messaging platforms as well as due to several advancements in Artificial Intelligence (AI), many enterprises have started making use of conversational AI for better digital consumer experience. Now we are observing a significant rise in the use of AI in the insurance world for behavioral premium pricing, speeding up the claims process and for improving customer experience. Insurers have been experimenting with conversational AI for more than 10 years because insurance giants receive massive volumes of customer service requests from email, chat, and phone. Nearly 80% of the companies globally are projected to adopt conversational AI by 2020. According to some estimates, digital agents or Conversational AI are expected to generate over $8 billion in savings globally by 2022.

What is conversational AI?

A conversational AI is a computer program or an artificial intelligence which conducts a conversation via textual or auditory methods. These are typically used in dialogue systems for various purposes like customer service or information acquisition. It can conduct natural-sounding conversations on text with human beings.

The increasing popularity of Conversational AIIn one study, around 70% of users said that they prefer digital agents for faster responses. Several factors due to which the usage and popularity of digital agents are increasing day by day include the ever increasing users of messaging apps like facebook messenger and the advancements in AI. Many big firms see these digital agents as a mean to enhance the customer experience as well as reducing operational costs.

Why conversational AI in insurance?

The insurance industry started making use of conversational AI or digital agents 16 years ago when the Conversational AI Hanna started working for the Swedish Social Insurance Agency in 2003. When someone thinks about an insurance company the very first thoughts are lengthy forms, long questionnaires, less staff, and a very complex customer support service. The insurance industry is making use of the digital agents to overcome all these barriers and to stay at the top of their game. US auto insurance company named Geico has a new intelligent agent named Kate who serve their 14 million customer base when they type or speak to initiate a conversation with her.

As already discussed, the insurance giants receive massive volumes of customer service requests from chat, phone, and email and instead of paying someone to sit and respond to consumer chats, a bot does it all for these giants automatically. These conversational AI can help a customer 24/7 and can handle multiple customers at once. A homeowner may receive a message such as “Your refrigerator is making a lot of noise lately. Your insurance policy entitles you to $30 worth of servicing every six months. Do you want to schedule an appointment with a refrigerator mechanic?” or a message such as “Insure your new car at just $2 per month”.The insurance industry outspends 12 major industries when it comes to investing in AI. Messaging apps like Facebook Messenger and WhatsApp are acting as the major facilitators for many insurance companies to take benefit of the opportunities available. By the use of these digital agents across industries such as insurance, financial services and customer service the expected savings are over $174 billion.77% of insurance executives believe that AI is creating a new era of computing, rapidly moving from mobile-first to AI-first.Many insurance firms have started taking advantage of the new digital agents: The New York City-based property and casualty insurance company called “Lemonade” has introduced two digital agents already: Maya and Jim. Maya helps in selling insurance to homeowners as well as renters whereas Jim’s job is to settle claims which he successfully performs in three seconds.

Benefits of Conversational AI

1. Profitable – These digital agents are a great investment because they can be deployed onto all messaging platforms like WhatsApp and Facebook Messenger which helps the company in reaching billions of users.

2. Accessible round the clock- One of the most important benefits of these digital agents is that they can answer the customer’s requests 24/7 and they never complain about working overtime.

3. Reduces staffing cost – The companies don’t have to look for highly skilled people and they can save money on the process of staffing as now they can make use of Conversational AI which can handle many customer requests at a time.

4. Faster claims settlement – The use of Conversational AI or digital agents makes it easier and faster to settle and pay claims and simultaneously decrease the chances of fraud.

5. Underwriting and pricing – With the help of the digital agents the process of underwriting can be reduced to a few seconds because the majority of underwriting is automated. These digital agents will diminish competition purely in terms of price and rather the competition will range from topics like customer differentiated experiences to features and value.
Challenges to overcome

1. Confusion – Digital agents can be more precise and faster than a human customer service assistant but sometimes due to complex user requests even these smart agents can get confused.Digital agents don’t understand sarcasm and can easily lose track of conversation and can go off topic.

2. Wastage of time – The users have to write a lot because talking to a digital agent means talking via text and due to which a customer might not be able to express his/her needs and can leave the conversation at any time because in case that the digital agent doesn’t understand the user’s request, he will have to keep writing and thus, talking to a chatbot does not save time always.

3. Impersonal User interface – These digital agents provide robotic and sometimes even frustrating responses. A business can ensure that they design a human-centric interface by equipping the digital agents with NLP or ML capabilities.

4. Language barriers- Different nations have different languages and many different accents and many ways of expressing a message and the digital agents are not yet fully able to overcome these barriers and as a result, they may face several challenges in multi-lingual countries like India. Customers share personal and important data while talking to a digital agent (conversational AI) and the companies need to follow the privacy and data protection regulations so that the data of the users remain in safe hands.

The future of AI in the insurance industry

Nearly 80% of insurance company executives believe that AI will revolutionize how they gather data and how they interact with customers. There is no surprise in saying that AI can take over the insurance industry in the coming years in such a way that will revolutionize the ways in which insurance industry giants communicate with their customers. Insurance may look like a complex industry but the advancements in Conversational AI helps in easing out various insurance related processes. It is a challenging task for the insurers also to prepare for the accelerating changes that will be observed by the ever-increasing use of conversational AI in the industry The board members, as well as the customer-experience teams, will have to invest some time and resources to build a deep understanding of the trends in the AI-related technologies. Also, the insurers must develop and implement strategic plan which should present a road map of how AI will be used to accomplish several goals like improving customer experience and a detailed schedule of goals to be achieved will help the organizations in determining how the plan relating to the use of AI needs to be modified with the continuous change in the trends. Although some people predict that AI will lead to huge loss in the jobs of the earlier workers but some people do believe that the role of the insurance agents will not be over but it will be promoted towards an advisory role instead of being a mere intermediary. Agents will be able to help customers in tasks such as managing their portfolios while the Conversational AI will be doing its work by making the conversations with the clients short and meaningful.

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