How Insurance Chatbots Make Customer Service a 24/7 Operation

As an industry, the insurance world remains a leader in advancing artificial intelligence.

In 2017, insurance companies invested an average of $124 million per company in AI. This translates to $54 million more than the average for all other industries, says VentureBeat’s Kelsey Down.

Insurance chatbots are a form of AI that allow companies to remain available to customers at all times — even when human staff members are occupied with other tasks or are out of the office, says Silky Sinha at DZone. As the technology improves, it may even be able to replace certain human members of the customer service team, creating a world in which customers have 24/7 access to insurance experts.

How Chatbots Work

Today’s insurance chatbots offer interfaces that feel like ordinary chat windows, and conversations closely mimic talking to a human. Beneath the name, avatar and friendly personality of a chatbot, however, no one’s really there.

Instead, there lies an algorithm that can parse information provided by a human user and adapt its responses to those inputs, says Sharad Sachdev at Accenture insurance.

Chatbots are predicated on interactive voice response (IVR) technology that has been used in call centers for over 20 years. Unlike the phone systems, however, chatbots can leverage artificial intelligence (AI) to adapt more readily to differences in user input and phrasing, allowing for a conversation that feels more natural.

Some chatbots extend the IVR approach by using a voice-activated system. For instance, Liberty Mutual Insurance offers a voice-controlled chatbot that works with Amazon’s Alexa, says James MacPhee, an executive vice president at Liberty Mutual Insurance. Insurance customers can renew their coverage or file a claim by speaking. The process allows Liberty Mutual to address routine customer needs more efficiently and save its human customer service staff’s attention for more complex matters.

“The artificial intelligence in the system allows well-programmed bots to recognize patterns and repeat related actions when triggered by certain words, phrases or other stimuli,” says Alexander Pinker in Chatbot News Daily.

The interface makes it easier for customers to provide information when buying a policy or filing a claim, says Fazi Zand at PropertyCasualty360. Because information is exchanged in the form of a conversation, the process can feel simpler and less tedious than filling out a form. A well-programmed chatbot can hone in on the information required for the task, collecting only what it needs and shortening the interaction for the user.

Can Chatbots Change Customer Service?

Currently, AI-enabled insurance chatbots are connecting customers with companies and helping insurers gather information more efficiently. But the technology may not be ready to stand on its own just yet.

The artificial intelligence and natural language processing that drive today’s chatbots are still in development. Without careful development and monitoring, the bot can do more harm than good to the customer experience.

“When chatbots or other automation can’t fully address customer needs, it may make the brand seem cold and impersonal, leaving customers to question their brand affinity,” says Jason Kapler, vice president of marketing at LiveWorld.

Chatbots also got a rough start with consumers, thanks to early models that couldn’t adapt to the multitude of ways in which users phrase their queries. Newer, more adaptive chatbots are still working to win their way back into the good graces of users who have long been frustrated by their predecessors.

Fortunately, AI is being leveraged in a number of ways to help improve customer service chatbots. For instance, several companies are focused on creating AI-based systems that parse customers’ tone of voice, wording and other factors to determine the customer’s state of mind, says PropertyCasualty360 writer Joe Dysart. When integrated with chatbots, these tools allow the bot to better understand its human user and respond in helpful ways.

Chatbots and the Future of Customer Service in Insurance

As chatbots continue to improve, they are likely to thrive in the data-intensive insurance industry, where their ability to spot patterns and cross-reference information will allow them to make informed decisions quickly. Here, chatbots can improve the customer service experience in a number of ways.

Enhancing Understanding and Trust

Insurance is a complex subject, and many customers are confused by it. Seventy-two percent of insurance customers find insurance jargon tough to parse, says Paul Hiebert, data journalist at YouGov.

Trust is also low among insurance customers, in large part because customers associate confusing language with a lack of transparency, says Zevik Farkash in Chatbots Magazine. Insurance chatbots can help build trust and improve customer understanding by answering questions or clarifying key points of a policy.

The chatbot can also help customers understand the value of insurance, which can encourage purchases or renewals. Many customers choose to interact with an insurance company through its chatbot rather than by browsing a website, adds Bindy Egden, head of marketing at JRNY. When the chatbot is a prospective customer’s first stop, the bot has the opportunity to start demonstrating value and building trust right away.

Tailoring Information

Currently, most chatbots can handle only a limited scope of conversation. One way insurance companies can use this characteristic is to create different chatbots for different customer segments or needs.

For example, in May 2018, Allstate launched its Allstate Business Insurance Expert, or ABIE. ABIE is designed to have conversations with small business owners, who bring a particular set of knowledge and information to the conversation, explains Mike Barton, president of Allstate Business Insurance. ABIE is specifically designed to answer small business-related questions and to facilitate the relationship between small business insurance customers and their Allstate agent, says Barton.

Just as chatbots can be programmed to sense when it’s time to hand off the conversation to a live insurance professional, they can also be programmed to sense when it’s time to pass the conversation to a different chatbot. For instance, a user who logs into a small business chatbot like ABIE but asks about personal auto coverage could be redirected to a chatbot that handles new auto insurance policies.

Expediting Claims

The claims processing time for P&C insurance is typically measured in days or weeks. In late 2016, Lemonade made headlines by closing a claim submitted to its AI chatbot in just three seconds.

Within that three seconds, the AI claims bot had reviewed the claim, checked the insurance policy, run 18 separate algorithms to check for fraud, approved the claim, sent payment instructions to the bank and notified the customer of the results.

While there is no worldwide hall of records for fastest insurance claim processing, “in the 3,000 year history of insurance nothing like this has ever happened in 3 seconds. So we’re claiming the title,” says Daniel Schreiber, CEO and cofounder of Lemonade.

Three seconds is a difficult standard to beat for fastest claims processing. Yet chatbots are making it easier for insurance companies to compete on the basis of seconds rather than days.

Putting an Emphasis on Customer Satisfaction

“In the past, you would never hear someone say they like talking to their insurance provider. Now, insurance chatbots have the ability to change the face of the industry,” explains Rae Steinbach at Snaps.

As chatbots’ ability to assist customers improves, customers’ opinions of the technology has warmed up. In one study, 69 percent of customers said they preferred to use a chatbot when they had a quick or simple question, points out Mathew Sweezey at Salesforce. Chatbots’ popularity transcends age or geographic region, as well, making them a promising way to reach nearly any insurance customer.

P&C insurers face increasing losses and a lack of confidence and trust. With their streamlined data access and adaptable personalities, chatbots offer a way to bridge these gaps and build stronger connections with insurance customers.

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