11 Insurance Chatbot Use Cases (and Why Providers Need AI Now)

Insurance Chatbot

Chatbots are providing a new avenue of innovation for the insurance industry. The use cases for an insurance chatbot are beneficial for both insurance companies and their customers alike. On the customer side, an insurance chatbot gives them 24/7 access to support, even in the middle of the night. The best AI chatbots can even provide an instant quote and change policy protections without the help of a human agent.

For insurers, chatbots are a scalable solution to quality support. In an industry where customer lifetime value is so high, implementing an insurance chatbot can pay massive dividends that will satisfy the customers, C-suite, and investors. When companies are able to offer a streamlined solution, it can also lead to a better price for the customer. We’ll cover all that and more later on.

A Brief History of Insurance as a Service

The insurance industry is rapidly evolving. For centuries, the industry was able to rest on its laurels because information was inaccessible. Customers were operating in the dark with little insight into competitive policies and coverage. Insurance was often mandatory or a necessity for financial security. For decades, there was not a need for insurance providers to prioritize the customer experience because – although people lacked trust and affinity for their providers –  turnover was low. The industry, though, looks a lot different today. 

Why Insurance Providers Should Evaluate an AI Chatbot for Business

Consumers are now in control. Information is readily accessible at their fingertips. Policyholders are empowered to look at reviews, see coverage options and pricing, and compare offerings from a growing set of established auto, health, car and life insurance providers as well as digital disruptors. 

To thrive in this new environment, providers need to become truly customer-centric and rise to meet the expectations of the modern policyholder. People today expect effortless, convenient and omnichannel interactions. If expectations are not met, consumers are quick to switch to a competitor. With pricing, policies and coverage so similar, a key way for insurance providers to differentiate is on customer experience. Increasingly, insurance providers are investing in modern conversational artificial intelligence (AI) to scale personalized, effortless and proactive customer experiences.

The CX woes for insurance providers and the threat of churn 

Insurance is complex. Purchasing a policy can incorporate many different factors; and filling a claim involves a complex ecosystem of providers, adjusters, agents and inspectors. Getting clarity and the support needed along the customer journey is often difficult. 

There’s also widespread mistrust amongst policyholders, which is influencing retention: 42% of customers don’t fully trust their insurer1 and only 29% of policyholders are satisfied with their current providers2. According to a 2020 survey, “50% of consumers question their medical and life insurance policies3.”

Keeping existing customers happy is more important than ever as the costs associated with customer acquisition have never been higher: 15.8% of gross written premium (GWP) in 2018, 16.6% in 2020, and an expected 17.9% in 20221.  In just one example of the high acquisition costs for insurers, one study shows that insurance-related keywords for Google and Bing ads are among the most expensive at 50 or more per click4

graph illustrating consumer trust in insurance companies

The Insurance Industry’s Investment in CX is on the Rise 

Insurance providers recognize the need for CX investments: while 60% of insurance executives agree their organization lacks in CX strategy, 85% are deploying CX to at least a moderate extent. In fact, investment in customer experience tools is rapidly rising from “1.1% of GWP in 2018 to 1.5% of GWP in 2022, an increase of 36%1.” And when we drill down into the specific areas of investment, two-thirds are significantly focusing on customer service, claims, and the phases of customer onboarding1.  This is good because 61% of insurance consumers in the United Kingdom, 76 percent in Germany and 79 percent in Spain say their insurer choice is influenced by the carrier’s claims handling and customer service quality5

IThe insurance industry's breakdown of customer experience initiatives

Customer Service Chatbots Powering Self-Service in the Insurance Industry 

A big part of customer service CX investment is around automation and leveraging AI to automatically resolve inbound tickets and proactively reach out at key parts along the customer journey. Customer service chatbots can be deployed across key digital channels, including: email, Web chat, messaging, SMS, social and voice channels. When providers rely solely on human agent teams, it’s difficult to provide the effortless and immediate resolutions that people expect. AI can help automate resolutions to repeatable tickets, assist agents by gathering information from customers and back-end systems before handing off to an agent, and even drafting responses for an agent to review. 

Which Insurance Companies Use Chatbots?

In 2017, Aflac aired the first ever commercial to feature an AI chatbot. They were the first major insurance company on record to have a customer service chatbot on their website. Since then, advancements in artificial intelligence have made chatbots significantly more powerful. As a result many insurance companies have invested in AI for a better customer experience. Watch Aflac’s insurance chatbot commercial below:

As AI advances, it will be able to take on a more significant role within the support team. Today, there are a few key use cases that insurance carriers should leverage AI.

Top 11 Insurance Chatbot Use Cases

 

  1. Immediate, personalized quotes
  2. When a prospective customer is looking for a quote, a chatbot can gather key information about vehicles, health, property, etc., to provide a personalized quote in seconds. Chatbots that leverage Natural Language Understanding (NLU) – instead of rigid decision trees – enable people to ask questions during the information gathering process, a similar experience to engaging with a human agent.

  3. Claim filing
  4. When a policyholder needs to submit a claim, a chatbot can collect the right data to process the claim. This can include probing for the required documents and –  depending on the type of insurance or claim –  request images or video. By leveraging AI-powered image recognition technology, chatbots can also ask for new pictures or files if a file does not meet requirements. For example, an American car insurance company, Metromile, was able to approve 70-80% of claims immediately after launching its chatbot.

  5. Claim status updates
  6. As soon as there is a change in the status of a claim, chatbots can proactively reach out to policyholders to keep them informed throughout the process. This reduces the time that a customer has to contact a customer first, and makes a dramatic impact on the overall customer experience. 

  7. Tailored coverage advice and education
  8. If a policyholder reaches out with questions related to coverage and specifics of their policy, a chatbot can provide updates in seconds. A chatbot can also answer general questions related to a provider’s products and services. At key points along the customer journey, a chatbot can also preemptively reach out with key information based on patterns of when questions arise based on products used and profile attributes. 

  9. Fraud prevention
  10. In the US, property-casualty fraud accounts for $30 billion a year6.  AI-powered chatbots can flag potential fraud, probe the customer for additional proof or documentation, and escalate immediately to the right manager. This fraud prevention can result in significant savings for providers.

  11. Personalizing responses
  12. 88% of insurance customers demand more personalization from providers7. AI can help agents respond to customers faster with tailored responses by curating data from back-end systems on agents’ behalf and even drafting personalized responses.

  13. Instant responses to FAQs
  14. AI-powered chatbots can instantly respond to everyday questions, including: account management, cancellations, discounts, cards and documentation, and billing / payment. By automating these highly-repeatable queries, agents can focus on more complex issues.

  15. Ticket triage
  16. In more complex cases, an AI chatbot can act as the first line of defense to gather information from a policyholder before passing it off to an agent. This can help agents work faster while decreasing resolution time.

  17. Cross-selling and up-selling
  18. AI-powered recommendation engines can identify the right services and products for agents to cross or up-sell, and the exact moment during a conversation or the customer journey that a policyholder is likely to purchase.

  19. Proactive care
  20. AI-powered chatbots can act on signals from back-end systems as well as contextual data in order to preemptively intervene before a problem becomes a bigger issue or a policyholder has to reach out to a company themselves. For instance, after a big storm, a property insurer can preemptively reach out with steps on filing a claim and all necessary information and documents.

  21. Broker communication
  22. Beyond customer-facing chatbots, insurance providers can deploy chatbots to manage broker relationships. Chatbots can answer queries, especially if they are facing complex client inquiries or need an update on the status of an application.

The payoff of good Customer Experience in Insurance is more than happy customers 

Making the right investments in CX improvements can dramatically impact revenue. McKinsey found that auto insurers that provide excellent experiences have seen 2-4X more growth in new business and 30% higher profits than other firms8. Why? Satisfied customers are 80% more likely to renew their policies. In even more proof, 90% of customers who feel appreciated and 69% of those who feel valued will increase their spending with an insurance company9

Insurance is a lot like the travel industry. Rooms and airplane seats are remarkably similar, as with many insurance policies. There is little differentiation between coverage, pricing and policies. Customer service is now a core differentiator that providers need to leverage in order to build long-term relationships and deepend revenue. With the lifetime value of policyholders so high, and acquisition costs also sky-high, keeping current customers happy with stellar customer service is an easy way to reduce churn.  

Find out what your ROI will be if you build an AI chatbot. Try our free chatbot ROI calculator today.

References

  1. https://www.ibm.com/downloads/cas/AAV81JLZ
  2. https://ins.accenture.com/ins-capturing-customer-of-tomorrow-rp.html
  3. https://liveperson.docsend.com/view/idj9hf42866jwqcc 
  4. https://www.wordstream.com/blog/ws/2015/05/21/how-much-does-adwords-cost
  5. https://insuranceblog.accenture.com/customers-experience-demands-illustrate-the-importance-of-insurers-going-digital-now
  6. https://insurancefraud.org/fraud-stats/
  7. https://insuranceblog.accenture.com/customers-experience-demands-illustrate-the-importance-of-insurers-going-digital-now
  8. https://www.mckinsey.com/industries/financial-services/our-insights/the-growth-engine-superior-customer-experience-in-insurance# 
  9. https://www.quadient.com/blog/why-insurance-companies-need-mind-gaps-when-it-comes-customer-experience

Emily Cummins

PR and Content Writer

Emily has worked in the AI industry for many years. She loves researching and writing about evolving trends in AI in customer service. She graduated from the College of Charleston.

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