The insurance industry is rapidly adopting new technologies to improve customer experience and streamline operations. One innovation that holds immense potential is chatbots – AI-powered conversational agents that interact with customers to provide services, information, and recommendations.
In this comprehensive guide, we will explore how chatbots are transforming key areas of insurance, outline the top use cases delivering value today, and analyze future trends that will shape implementation.
Overview: Why Insurers are Embracing Chatbots
Several factors are driving insurance companies to invest in chatbots:
Meeting Customers Where They Are
Today‘s consumers expect seamless digital experiences. Over 85% of interactions between insurers and customers happen across online channels. Chatbots conveniently meet customers on popular messaging apps and are available 24/7 to provide instant responses.
According to McKinsey, COVID-19 has accelerated consumer preference for non-face-to-face conversations. Chatbots align with these digital-first expectations.
Automating Repetitive Tasks
Many inquiries handled by insurance agents are simple and repetitive – questions about policy coverage, premiums due, or claims status. Chatbots powered by conversational AI can take over these routine conversations, freeing up human agents for complex issues.
Cross-Platform Flexibility
Humans are often limited to assisting customers through one channel at a time. Chatbots easily operate across multiple platforms like websites, Facebook Messenger, WhatsApp, SMS and more. This omnichannel capacity significantly expands an insurer‘s reach.
With clear benefits in improving CX and efficiency, chatbots have become a high-priority investment area for insurance executives. Now let‘s examine the top use cases generating value.
Top 10 Chatbot Use Cases in Insurance
1. Provide Customized Quotes
Chatbots can have personalized conversations to gather relevant information about a customer‘s profile and needs. With this data, they can instantly provide quotes for coverage options that align with the individual‘s situation. Rather than handing customers a generic, one-size-fits-all quote, this conversational approach allows insurers to give tailored recommendations.
For example, chatbots from [InsurTech providers](https://www.historytools.org/insurtech/) like Lemonade and BIMA ask customers questions about their lifestyles, assets, budgets, and more to suggest optimal plans. This level of personalization helps drive higher quote-to-purchase conversion.
2. Cross-sell and Upsell
Drawing insights from the quote process and policyholder data, chatbots can identify and recommend additional products aligned with each customer‘s needs. This may include upselling to raise coverage limits or cross-selling highly relevant offerings.
Chatbots have an advantage over traditional channels in their ability to deliver timely, individualized suggestions at the right moment based on ML models. Rather than showing every customer the same blanket offers, chatbots take a targeted approach to identify the best match between needs and solutions.
3. Answer Policy and Claim Questions
Whether customers have questions about what a policy includes or want updates on a recent claim, chatbots offer an instant resource for self-service. Key policy details like deductibles, country-specific coverage, and effective dates are readily accessible without customers needing to call in or email an agent.
For claims, chatbots provide real-time status — from filing and verification to final settlement amounts. This prevents frustration from waiting on hold or in mailboxes. If the inquiry falls outside of the chatbot‘s knowledge domain, it automatically escalates the issue to a representative.
According to [Haptik](https://www.haptik.ai/resources/case-study/zurich-case-study?utm_source=blog&utm_medium=expert), an IVA they built for Zurich Insurance now handles 70% of client questions fully automated without human assistance. For the remaining 30%, the chatbot simply passes the conversation to an expert agent for support.
4. File First Notice of Loss
Submitting notice for a new claim (known as First Notice of Loss) can be tedious and time-intensive if done manually. Chatbots simplify this critical first step by allowing customers to report losses through a natural conversation.
The chatbot asks relevant questions to gather essential claim details, documents required forms, and files the notice automatically based on the policyholder‘s responses. Rather than navigating complex phone trees, customers enjoy a smooth self-service experience.
5. Assess Property Damage
Verifying extent of damage is key in claims processing. Insurance chatbots can request images, videos, or descriptions of property damage from customers then analyze these digital inputs.
Basic assessment of factors like location, type and scale of damage can often be automated based on the media files submitted. For more complex cases, chatbots route the media to specialized teams for additional human review.
For example, [Metromile](https://www.metromile.com/blog/new-ai-claims-assistant-ava/) developed a chatbot called AVA to handle claims. AVA assesses damage from photos, asks clarifying questions, determines repair estimates, and approves ~80% of claims immediately without adjuster input.
6. Streamline Claims Processing
After initial filing, insurers must determine liability, evaluate loss, verify details, calculate reimbursement value, and communicate status updates to keep policyholders informed. Chatbots excel in automating these repetitive processing steps for faster resolution.
By tapping into existing policy and claims databases, chatbots can pull relevant background details. Applying decision rules and analytics models, they validate info submitted, compute settlement amounts, send approvals, and notify customers of payment timelines and transfer status.
7. Provide Settlement Details
The final step of the claims journey is settlement when the insurer releases funds owed for the loss. Post payout, chatbots give policyholders transparency by sending updates on payment confirmation, account adjustments from settlements, and close out the process with an experience survey.
8. Detect Potential Fraud
Fraud costs the insurance industry over $80 billion per year in the US alone. AI-enabled chatbots help mitigate this risk by reviewing claims, cross-checking details against databases, assessing damage evidence, and routing high risk transactions for additional verification before approvals.
Applying analytics models to identify suspicious patterns combined with natural conversations to gather more contextual data from applicants allows chatbots to serve as a powerful fraud detection channel alongside human investigation teams.
9. Provide 24/7 Support to Insurance Brokers
Insurance brokers often face general inquiries from clients on products, pricing, and policy terms which divert focus from selling. Chatbots help brokers control repetitive Q&A so they can better utilize their specialized skills for acquiring and advising clients. AI assistants act as seamless self-service hubs – handling common questions while routing more complex issues to broker reps.
10. Communicate New Customer Policies
When brokers sell a policy for a partner carrier, they must immediately communicate customer data for the insurer to initiate coverage. Any delays can cause problems if a loss occurs right after purchase. Chatbots enable reliable transmission of structured policy info thereby minimizing such transition gaps.
Additionally, they proactively inform brokers of exceptions like missing data or errors in forms submitted to accelerate resolution. By processing broker input 24/7 and providing analysis plus feedback, chatbots facilitate seamless customer onboarding across sales channels.
According to McKinsey, 85% of customers now use digital platforms to interact with insurers. As this preference grows across demographics, conversational interfaces will become the dominant entry point for insurance engagement.
The Future of Insurance Chatbots
Insurance executives recognize chatbots and AI as pivotal for next-gen customer experience and scalable operations.
Let‘s examine two key predictions shaping chatbot adoption.
Prediction 1: Insurance Budgets for AI Will See Significant Increases
A 2022 insurance outlook survey from Deloitte found that 74% of executives planned to invest more in AI technology over the next year – higher than any other emerging capability.
As insurers continue modernizing legacy systems and processes, they are prioritizing AI foundations like machine learning, NLP and analytics which enable automated assistants to handle higher complexity conversations.
We can therefore expect more intelligent chatbots accessing insights across data silos to deliver hyper-personalized recommendations and navigate complex customer issues independently.
Prediction 2: Insurance Chatbots Will Become Mainstream
Chatbots in insurance began with basic use cases like FAQs. With sophisticated AI capabilities maturing, they now resolve claims, offer quotes, tailor recommendations, verify applications, and act as the frontline for virtually every customer interaction.
As insurers double down on AI investments in response to accelerated digital adoption, chatbots will evolve quickly from nice-to-have innovations to essential mainstream tools.
Within the next few years, it is likely that customers may never need to speak to a human agent unless they expressly choose to, as most routine needs are managed at scale by conversational UI. The human role will transition to specializing in uniquely human skills like emotional intelligence, empathy and strategy.
Key Takeaways
- Insurance chatbots deliver value across areas like improved CX, efficient operations, lower costs and higher revenue.
- Leading use cases generating results today span quotes, cross-sell, claims management, fraud mitigation, broker tools and new policy integration.
- As digital engagement accelerates across demographics, AI adoption rises, and capabilities mature, chatbots will become a mainstream self-service interface.
Next Steps
To learn more about conversational AI and chatbots:
- How chatbots work: Understand the underlying NLP and ML technology
- Use cases in other industries: See examples spanning healthcare, ecommerce, finance and more
- Vendor selection guide: Data-driven framework to identify top providers
The insurance industry sits on the cusp of a paradigm shift driven by digital experience, data and artificial intelligence. As part of this transformation, chatbots are set to fundamentally redefine customer and agent roles by enhancing self-service and amplifying human capabilities. Insurers who embrace this shift will gain sustainable competitive advantage through improved customer loyalty, accelerated growth and lowered costs.
