Insurance chatbots: How to improve the customer experience with AI

Even if you haven’t heard the word “chatbot,” you’ve likely come across one while browsing online. Chatbots are computer programs that simulate conversations with customers and answer their questions. If you’ve ever participated in a live chat on a company’s website, you’ve probably interacted with a chatbot. They have been around for a while, but recent developments in artificial intelligence (AI) have brought them into the spotlight.

Although they are mentioned in the same breath as AI, not all chatbots use AI in the traditional sense. Some chatbots are programmed to follow a script and can only respond to straightforward queries. These bots, often referred to as rule-based chatbots, are best used for answering frequently asked questions and basic customer service issues. Chatbots powered by AI use machine learning and natural language processing to adapt and learn from its conversations with customers.

How are chatbots used in insurance?

The insurance industry uses both rule-based and AI-driven chatbots. Both types of chatbots tend to improve the customer experience, as customers can receive quick and clear answers when requested and have more human-like encounters when they are looking to feel more understood and listened to. Here are five specific use cases.

• Answer common questions. Insurance can be complicated. Customers often have a hard time understanding the nuances. Chatbots can answer both easy and hard questions in seconds, turning long documents and longer conversations into concise and accurate answers by breaking everything down for customers. For the questions it can’t answer, the chatbot is smart enough to suggest connecting the customer to a live agent, making the experience ultimately more efficient and seamless.
• Collect payments. Payments and processing are one of the biggest pain points for customers. Chatbots can help customers find where to make payments and remind them about upcoming payments due. Filling out the form becomes easier with chatbots, too, as it can be automated with information the customer has already provided.
• Manage policies. Chatbots can handle more than just payment collection; they can manage the entire policy management cycle. Chatbots can help customers apply for or change their policy, update their information and more. This goes for claims management, as well. Claims processing and settlement are complex and time-consuming, but a chatbot can handle all minute details and automatically initiate the claim filing. Customers appreciate the stress chatbots take out of this thorny process.
• Cross-sell and upsell. By design, chatbots collect data. Armed with that data, they can predict what a customer might need or want and recommend solutions or services directly to them. This boosts profits without making additional investments. If the visitor isn’t already a policyholder, the chatbot can share discounts, provide educational content and recommend other informational items that might turn them into customers.
• Detect fraud. Fraudulent claims have always been a challenge in the insurance industry. AI-driven chatbots can run policy details through an algorithm that detects fraud before moving on to processing. Fake documents and false claims are easy for chatbots to detect, and experts believe that AI will be used more than any other method to detect fraud within the next decade,^[1] especially since it’s already being used widely and successfully today.

Benefits of chatbots in the insurance industry

The five use cases detailed above represent just a handful of potential applications for chatbots in the insurance industry. Adopting AI and the use of chatbots specifically all aims to improve the customer experience, which is crucial to the success of insurers and agents alike. Here are six specific benefits.

1. Provide continuous customer support. Claims don’t always happen during business hours, so insurance companies need to be available 24/7/365. Chatbots can provide human-like conversation while maintaining a schedule no human could. Customers don’t have to wait for answers or support with chatbots.
2. Generate leads. As mentioned above, one use case for chatbots is cross-selling and upselling. While those are mostly related to existing customers, chatbots can also generate leads from people not already in the insurance company’s system. A curious potential customer may visit the insurer’s website looking for information and interact with a chatbot, which collects the information the customer provides and uses it to provide targeted solutions.
3. Customize plans. AI-driven chatbots can use the data it collects not only to cross-sell, upsell and generate leads but also to offer personalized advice based on demographic data and analytics. This allows the insurance company to administer tailored quotes, plans and terms. Agents can also provide customized plans, but using chatbots speeds up the process, freeing human resources up to perform other tasks.
4. Simplify complex documents and conversations. Even if you’re the best insurance agent in the world, the nuances found within insurance policies can be difficult to convey to a customer. Chatbots simplify and standardize the process. Customers appreciate the hassle-free interface, and because you’ve fed the chatbot all the correct information, there are fewer errors.
5. Quickly process claims. Customers appreciate a streamlined claims process, and chatbots work extremely efficiently when it comes to claims. The chatbot can manage the whole process, including the initial incident report to any customer follow-up on the claim’s status. Plus, as mentioned, chatbots are available 24/7, which decreases customer stress. Chatbots can also free up agents on the claim validation, evaluation and settlement side.
6. More time for high level tasks. By automating tasks, claims and other processes with AI, you’ll will free up your employees day-to-day so they can focus their time and energy on higher-level tasks. Enough said.

Enhancing the customer experience

The implementation of chatbots provides numerous benefits for the insurance industry. By leveraging AI and natural language processing capabilities, chatbots offer enhanced customer service experiences, 24/7 availability and efficient handling of routine inquiries and transactions. This enables insurance companies to streamline their operations, reduce costs and increase productivity.

Additionally, chatbots contribute to faster claims processing, improved data accuracy and personalized policy recommendations. The ability to gather valuable customer insights and deliver targeted marketing messages further strengthens the case for incorporating chatbots into insurance businesses. Ultimately, embracing chatbot technology empowers insurance professionals to meet evolving customer expectations, stay competitive in the digital age and foster stronger relationships with policyholders.

Learn more about updating your website to improve the client experience.

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Chatbots help Nationwide customers too. For the last three years, NORA, Nationwide’s Online Response Assistant, has provided customers 24-hour access to answers without having to call Nationwide. NORA can help customers reset a password by engaging an insurance professional in a live chat, obtain product information, and check on a claim status.