Five ways AI-powered chatbots will impact the insurance industry

Chatbots have been utilized by insurance firms for years. Until now, the usefulness of chatbots has been limited and have had mixed results with customers. Now, with new advancements in generative AI, chatbots have been upskilled with fresh capabilities that can serve a variety of use cases across insurance enterprises.

As companies seek to gain the benefits of AI-powered chatbots, competition has intensified. The global chatbot market is expected to reach $1.25B USD by 2025.^[1] This means insurance companies should be evaluating chatbots very carefully to determine how they can be leveraged to gain a competitive advantage.

From customer acquisition and engagement to underwriting and claims management, here are the top areas that will be impacted by the adoption of AI-powered chatbots:

Customer Acquisition

AI-powered chatbots can collect and analyze large swaths of consumer data very quickly. This allows chatbots to offer prospective customers detailed information and advice about available insurance policies. Chatbots can also provide accurate quotes to consumers based on their personal criteria. This allows customers to understand what they need before they reach out to a sales representative-helping to promote a friendly first touchpoint to potential customers.

Underwriting

Underwriters can leverage AI-powered chatbots' unique capabilities to help them make better decisions and more accurately assess risk. AI enables chatbots to run decisioning models based on consumer data to give underwriters a sense of consumer risk and the potential opportunities presented by a prospective customer.

Customer engagement

Chatbots have had a place in the digital customer experience for years. However, they have often been limited in what they can do. Now, chatbots can provide 24/7 customer support and answer specific policyholder questions about coverage, claim status or new policy information. They also help to streamline the customer experience by providing high quality, low-touch engagement that can smooth the claims experience and give your customers peace of mind when they need it most.

Claims management

Chatbots will have a variety of uses through the claims journey. Adjusters can leverage chatbots to help collect information from a customer or notify them of their claim's status. Adjusters can also use chatbots to improve analytical capabilities. Once a claim has been filed, chatbots can help adjusters determine what the claim needs to move forward and, potentially, how a claim might turn out.

One example of chatbots in claims would be First Notice of Loss (FNOL), the initial part of any claim. Chatbots enable policyholders to initiate the claims process quickly and smoothly by conversing with a chatbot that can gather the right information to move the claim forward.

Fraud detection and prevention

Fraud is growing ever more sophisticated, and it can be hard for a human adjuster to catch. Chatbots help add an additional layer of security so insurers can strengthen their fraud protections without compromising the customer experience. Chatbots can catalogue information, review policy details and flag suspicious activity by running fraud detection algorithms before a payout is made.

While chatbots represent a major opportunity for insurers, it is important to keep the human touch intact for your employees and customers. Chatbots are a great way to provide customers with exceptional customer experiences without allocating time in an adjuster's busy schedule. However, customers should always have the option to speak with a human representative at any time. It is also important to remember that while often accurate, chatbots are imperfect and adjusters shouldn't be leaning on them alone to make decisions.

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