Filed Under:Carrier Innovations, Technology Solutions

Jake from State Farm, meet your new neighbor: Chatbots

Opinion

Insurance companies must recognize that humans alone cannot provide the quick, seamless and user-friendly experiences that today’s policyholders expect. (Photo: Shutterstock)
Insurance companies must recognize that humans alone cannot provide the quick, seamless and user-friendly experiences that today’s policyholders expect. (Photo: Shutterstock)

Jake from State Farm, Flo from Progressive, the Allstate Mayhem Man — what do these three have in common? They’re human.

Related: Why artificial intelligence could become a P&C game-changer

The insurance industry has certainly developed a reputation for its signature spokespeople. However, while we may love the comical nature and trademark khakis of Jake from State Farm, insurance companies must recognize that humans alone cannot provide the quick, seamless and user-friendly experiences that today’s policyholders expect.

Consumers’ needs are diversifying, and insurance companies must evolve and scale their existing customer service offerings to meet all policyholders’ demands. As progressive insurance companies push the industry toward automated solutions and more advanced digital touchpoints, traditional insurers need to take steps to update their offerings to include similar capabilities. A major component of this revolution is AI chatbots. The technology will never fully replace humans, but a chatbot’s ability to personalize the insurance experience and automate routine interactions is already dramatically improving the insurer-policyholder relationship.

Related: Insurance customers need to get used to talking to machines

Why chatbots?

With tech like Google Home and Amazon Echo making it easier to complete routine tasks, chatbots and AI technologies are a clear choice for insurers for many reasons, beyond the obvious popularization of the technology. Gartner predicts that humans will have more conversations with bots than their spouses by 2020, and 80% of decision makers say they already use or plan to implement chatbots by the same deadline.

Forward thinking insurance companies are demonstrating that chatbot technology is not only possible, but that it’s also a preferred option. Lemonade, for example, has leveraged AI and chatbot technology successfully. The company, which helps users instantly obtain renters, condo, and homeowners insurance, is using AI technology to follow through on that promise. Lemonade’s chatbot, Maya, helps users get a quote and obtain a policy, which was instrumental in helping the insurer surpass its goal of 13,000 customers by the end of 2017 seven months early.

The success of Lemonade’s chatbots, which is a true reflection of the insurer's digitally native mindset, is proving that consumers now expect a more diverse set of technology capabilities from their insurance companies. AI-powered solutions are particularly valuable at the top of the insurance funnel, where insurers can either win consumers over with an educational and intuitive experience or lose new business due to confusion and a lack of access to information and/or support.

Related: Execs look to artificial intelligence (AI) for insurance revolution

(Photo: Shutterstock)

Two areas ripe for chatbot intervention are purchasing and payments:

Purchasing insurance

Picking the right insurance policy is easier said than done. Particularly for homeowners, purchasing homeowners’ insurance for the first time can be an overwhelming experience filled with new questions and unfamiliar terms. Chatbots can greatly improve this experience by simplifying the quote process and helping customers find the best insurance solutions to meet their unique needs, all on the interfaces they prefer.

When purchasing homeowners’ insurance, for example, customers may not know the answer to basic questions about their property like the type of materials the walls are made of, let alone where to independently find this information with 100% accuracy. Potential policyholders may not even understand what type of insurance they need, or how much. Key coverages of a policy, such as protection against water damage caused by a flood versus by a broken pipe, can be easily misunderstood and feel like a foreign language to those less familiar with insurance terms and topics.

Rather than struggling through an online or mobile form, insurers can use chatbots to help users navigate these complexities and prefill tricky questions using third-party data sources. Equipped with natural language capabilities, chatbots offer an experience often indistinguishable from a human conversation and can assist customers from initial queries to policy purchase. All of this can be done on an insurer's own website or within popular chat solutions like Facebook Messenger. Not only does this improve the user experience by removing friction, but it also gives insurers greater control over the entire user journey, which can avoid major problems down the road.

Related: IT makeover: NU panelists explore innovations in underwriting

Payments and claims

The multi-step, routine nature of payments and claims lends itself nicely to AI automation, and streamlining these experiences with self-service chatbot technologies benefits both insurers and policyholders.

For many insurers, significant portions of policyholder calls are about the claims process. Customers want to know the status of their claims and if they should be doing anything to keep them moving forward. Chatbot interfaces can easily handle these queries and offer the level of transparency that users now demand. In the same way that a 21st-century consumer expects to be able to track a package from order to delivery, chatbots can help insurers stay connected with policyholders throughout every step of the claims process.

(Photo: Shutterstock)

For instance, in the case of a homeowners’ water damage claim, multiple parties are involved in the path to resolution, including emergency repair and water mitigation contractors, general and specialty contractors, insurance adjusters and more. With so many hands in the mix, policyholders can easily lose track of where their claim is and what needs to be done, as can the insurance company.

Insurers should develop chat interfaces to improve situations like this. First, chatbot technologies can prompt users for information when it’s required and be a hub of information that keeps policyholders informed every step of the way. Chatbots can manage a higher volume and frequency of conversations than human agents. Second, chatbots are a 24/7 insurance touchpoint. Policyholder needs don’t necessarily follow normal business hours, and chatbot interfaces allow users to pursue claims when it’s best for them.

Related: Keeping the human touch as AI takes hold in insurance

First steps for insurers

For property and casualty insurers, the need to embrace digital solutions cannot be stressed enough. As younger generations begin to purchase homes and other major goods like cars, insurers must offer the self-service offerings these consumers have come to expect from other digital market leaders like Amazon.

Although the insurance industry may be on the cusp of exciting digital transformation, there’s still work to be done. Many insurers are still making sense of emerging technologies and have yet to incorporate these solutions in meaningful ways throughout the insurance value chain. Leading insurers are developing patterns for chatbot and AI usage — namely quick quotes in sales, answering policy and payment questions via natural language interfaces, educating customers on different types of coverage — and each insurer must personalize these solutions to meet the specific needs of its target audiences.

Unfortunately, considering the average insurer’s existing technologies, this is easier said than done. Nearly 4 in 5 insurance companies still use legacy systems that impact the speed of development of new digital experiences, and 29% of insurers say it is difficult for internal developers, third-party partners or service providers to integrate with their organization’s existing systems.

While the insurance industry has started to migrate from policy-centric strategies to more digital and customer-centric ones, findings that antiquated processes and mindsets still limit how easily and effectively insurers can embrace emerging solutions. Nonetheless, as insurers uncover the needs of their key audiences with more qualitative and quantitative research, most will find that chatbots and AI technologies solve for common deficiencies in the existing user experience and empower humans to do their best work.

Jake from State Farm isn’t going anyway, he’s just getting some much-needed company.

John Cammarata is the insurance transformation leader at PointSource. As the lead for architecture and development, Cammarata is continually identifying ways that technology and digital engagement patterns are the catalysts behind disruption in the insurance industry. Prior to PointSource, he worked at IBM. Cammarata can be reached at john.cammarata@pointsource.com.

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