Chatbots and the Future of Insurance

If your insurance business or brokerage does not have a digital component to its overall strategy you are what we would call a sitting duck.

The fact is, tomorrow’s insurance is here. It is in the unpredictable weather and resultant claims from it. It is in the demand for ‘pick and pay’ types of insurance services. It is in the growing types of liabilities out there. And fundamentally…it is in the way insurance companies deal with insurance clients when it comes to claims time.

A trial-by-error approach seems to be the go-to method for testing the viability of each new form of technology but all that most insurance underwriters, product developers, brokers and strategists want to know is which one is set to have the most significant effect on the local insurance industry.

The answer is likely “informational chatbots”. This, according to “Frans Cronjé, MD at Cape Town-based startup, DataProphet, could dramatically change the local short-term insurance industry.

Chatbots are powered by artificial intelligence and machine learning. These ‘bots’ learn, adapt and suit their responses dynamically according to a user query – just like humans. Developers the world over agree that these are the most sophisticated forms of customer service, right at our doorstep. American technology research business, Gartner, has echoed this sentiment, having predicted that artificial intelligence will power 85% of all customer service interactions by the year 2020.

The announcement last year by global instant messaging giant, Whatsapp, about the release of a Chatbot Application Programming Interface (API) seems to reinforce the idea that the answer lies with chat. “Nearly 70% of South African adults use Whatsapp and internationally, the majority of people under the age of 36 prefer a chat interface to a contact centre. Moreover, claims handling and enquiries represent a very large cost base of short term insurers and the return on investment for self-service for these types of business activities is overwhelming,” says Cronje.

In this era, most people prefer to seek new ways to digitally interact with service providers. Think about it, how often have you chatted to your Telkom service provider online as opposed to making a telephone call? Most customers want to deal with companies that offer them a range of ways to get in touch. That’s what makes chatbots the next frontier.

Dhaval Sahija, a subject matter expert for Artificial Intelligence (AI) practice at the American based business Softweb Solutions argues that chatbots can efficiently handle millions of one-to-one conversations with their customers by acting as a bridge between insurance companies and consumers. “They come integrated with capabilities of identifying speech patterns and interpreting non-verbal hints for smoother interactions. They can even register the first notice of loss for the insurer.”

Cronjé says in South Africa, comprehension and informational algorithms for chatbots are improving daily. “They can easily handle the frequently asked questions and increasingly can handle more complex questions in a natural language format of chat while referencing more information than a human could ever possibly do. While the end goal is informational chatbots being able to address customer queries directly, they can also be used to train or assist a business internally, providing staff with a great method to reference all the policy documentation a company has.”

So what does this push for automation mean for insurance brokers? Ben Pring, co-director of software development company Cognizant believes automation can eliminate day-to-day tasks for brokers which means their everyday administrative tasks will change. “But brokers will need to use these technologies to improve their businesses by leveraging these efficiencies to attract new customers. Future-proofing your business will thus mean asking yourself how you want your business positioned in light of changing broker advice models (and the legislation behind it) and providing critical risk advice to your clients,” says Pring.

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