How Insurance Carriers Can Improve Their Customer Service With Chatbots

AI offers unprecedented opportunities for insurance companies to leverage data, assess risk and improve customer service. In fact, insurance outspends several other major industries when it comes to artificial intelligence investments, says Kelsey Down at VentureBeat. 

In the customer service realm, artificial intelligence has made chatbots easier and friendlier to use. Chatbots allow customers to communicate with businesses anytime, from any device. With an AI assist, the chatbot can answer a wide range of questions, gather information and evaluate a customer’s needs. 

Chatbots are making major impacts in a number of industries worldwide, especially in marketing, sales and customer service departments, says Julian Harris of CognitionX. These tools have the potential to revolutionize insurance customer service, as well, if they’re deployed thoughtfully. 

Understand the Functions and Limits of Chatbots

Chatbots often mimic text conversations between humans. The human customer types a question into the chat window, and the bot responds with information, follow-up questions or options. 

By emulating a natural conversation, chatbots allow customers to complete tasks as if they’re chatting with a customer service agent via text, says Jana Bergant, an instructor at Udemy. 

“A conversational interface allows people to tell computers what to do in a more natural way through messaging or speaking.”

This is more meaningful than asking chatbots to memorize and input specific commands. Chatbots equipped with a conversational user interface (UI) can guide insurance customers easily through simple administrative tasks, coverage purchases or frequently asked questions.

Although artificial intelligence has made chatbots easier and more comfortable to use, these tools won’t solve every problem — and they certainly won’t replace human customer service staff, says Casey Phillips, AI chatbot product manager at Intuit.

“No matter how advanced your chatbot’s AI and NLP capabilities are or how much attention you’ve paid to its design, there are bound to be moments where it stumbles.” 

Often, these stumbles won’t be caused by any fault in the bot itself, but in misunderstandings by users about what the chatbot knows or what it can do. 

While customers are increasingly interested in using chatbots, most customers still want the option to speak to another human when they have a particularly complex or technical question, says Michael Mills, senior vice president for CGS. Customers seek human support when they need a more nuanced response than they perceive the chatbot will provide. 

In some instances, chatbots make better virtual assistants than customer support representatives. Chatbots working as virtual assistants don’t interact with customers. Instead, they help customer service representatives find the most efficient answers to a customer’s questions while the service rep talks to the customer, says Alyssa Verzino at Talla.

“The key to implementing a virtual assistant is to integrate it deeply and directly into your workflow so it can help as many team members as possible and draw information from as many sources as it can,” says Verzino. Virtual assistants with access to a strong knowledge base are ready with answers whenever customer service needs them to help a customer. 

When considering chatbots for internal use, evaluate your staff’s readiness to adopt AI-based tools as well as the business’s need for such tools, says David Karandish, CEO of Make sure your team understands that the AI will need to learn its job and adapt, and that it will need help from its human users to do so.

“Set the right expectations internally, and encourage everyone to collaborate on getting their new virtual teammate up to speed,” says Karandish. 

Set Goals for Your Chatbots

Chatbots share one common feature with all digital tools: They work best when directed toward a particular goal. 

By understanding the conversations the chatbot will have and the tasks that customers will ask it to do, insurers can develop the right chatbot for each job. For example, consider the initial greeting of a chatbot. The greeting creates a connection with a human customer and sets the tone for the entire conversation. It affects the customer’s comfort level and willingness to proceed.

Chatbots that recognize when a customer is new or returning, and adapt accordingly, can improve customer experiences and provide a more personalized approach.

“Continuity drives human conversation. Remembering the previous conversation and resuming from where it ended previously will bring handsome returns to your chatbot strategy,” says Samrat Roy Chowdhuri, blogger at

The best chatbots will bridge the gap between human and machine, making the conversational experience feel more like a natural exchange while leveraging the computer’s ability to access and manage data, says Chowdhuri. Thinking of the chatbot as a brand ambassador and interpreter can help insurers develop their bots’ unique personalities and tone. 

What’s in Your Chatbot’s Job Description?

While conversational AI has made chatbots more adaptable, they’re still limited by the parameters of their programming. One of the best ways to ensure chatbots remain maximally helpful is to embrace these limits by deciding what each chatbot’s job is and tailoring its conversational flows to that job.

Start by understanding which questions your customers are already asking and categorizing these by overall intent or goal, says Lakisha Hall, director of Watson Expert and Delivery Services at IBM. Then, delineate chatbots to handle each task. For instance, one chatbot might focus on password recovery, while another might help customers check their coverage periods.

When chatbot jobs are clearly defined, the bots can more easily hand customers off to one another. They can also more easily recognize when it’s time to pass the customer to a human representative. 

Anticipate and Prevent Conversational Frustration

One of the best ways to prevent frustration is to clarify from the start that the customer is speaking with a chatbot rather than a human, says Ed Smith, chief product officer at Humley. 

Also, make it easy for chatbot users to reach a customer service representative at once, instead of waiting for the chatbot to determine that human intervention is required, says Smith. Coordinating chatbots with live customer service staff can help customers get the service they need, improving their experience and boosting loyalty.

Take care to ensure the chatbot’s overall design is user-friendly, as well. Aaron Dun, vice president of product and growth marketing at Datto, expresses frustration in a LinkedIn post over chatbots that reappear on every page even after the user has attempted to close them. 

Dun likened these interfering chatbot windows to a shopkeeper who won’t stop asking if a customer needs help. “Just as in the physical world, when the shopkeeper keeps coming back asking if I need help even after I said I didn’t (two, three, four? times) I am going to get annoyed and bail.”

Chatbots can be designed to track whether a customer has closed the chat window. Small design features like these make a big difference to customer comfort with chatbots. 

Creating and launching a chatbot that aligns with a company’s overall customer service goal helps insurers provide real value to customers. A well-intentioned approach to chatbots communicates the company’s core values while also helping reduce the workload faced by staff. A thoughtfully-built chatbot is a win-win. 

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