How Insurance Chatbots Improve the Client Experience

How Insurance Chatbots Improve the Client Experience

How Insurance Chatbots Improve the Client Experience
Nick Gallo
Dec 20, 2022
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Artificially intelligent (AI) chatbots are becoming increasingly popular in the insurance industry. Businesses can use the technology to automate many customer-facing functions to significantly improve their client experience.

In a world of ever-rising customer expectations, insurance agencies that embrace the utility of chatbots can gain a competitive advantage.

Let’s explore how insurance chatbots are changing the industry and the benefits they can provide to businesses and their customers.

What is an Insurance Chatbot?

what is a chatbot

A chatbot is a digital assistant that uses AI, machine learning, and natural language processing (NLP) software to answer text-based inputs. Businesses primarily use them to automate client-facing functions and supplement their customer service.

Chatbots can assist prospective and existing clients by answering their questions and guiding them through certain processes. As a result, they can improve the client experience and increase operational efficiency.

For example, chatbots can provide immediate assistance, saving clients the frustration of waiting for a live representative. Since they’re available around the clock, they can also handle questions outside business hours.

Chatbots may play a more supplemental role when humans are available, but their benefits are just as significant. By handling common customer service requests, they reduce the burden on live representatives, allowing them to serve in more sophisticated capacities.

Some specific functions chatbots handle in the insurance sector include generating quotes for leads, processing insurance claims with existing policyholders, and answering questions clients have about their coverage.

The Rise of Insurance Chatbots

In recent years, chatbots have become prevalent in the insurance industry and with businesses in general. The global market is expected to have an average annualized growth rate of 24.3% between 2020 and 2025, eventually reaching $1.25 billion in value.

Technological advancements are one of the primary factors contributing to this aggressive growth. This includes the widespread adoption of mobile apps and rapid improvements in AI-related technologies.

However, cultural factors are also at play. Text messaging, social media apps, and online chats have normalized the communication method. Chatting with an AI via text is novel enough to be interesting but familiar enough to be readily accepted.

In fact, many consumers already prefer to use chatbots for some interactions. In one study, 69% of consumers said they’re most likely to use chatbots for service-related inquiries because they appreciate their instantaneous responses.

The insurance industry is already starting to embrace the new preference. Unsurprisingly, InsurTech startups are leading the way. For example, Lemonade has been using chatbots to generate highly personalized policies and quotes through its mobile app since 2015.

Incumbent insurers haven’t been as quick to adopt the technology, but they’re also getting on board. The Nationwide Online Response Assistant (NORA) went live in 2021 to help customers get answers 24 hours a day without calling. They can use it to reset their passwords, check on claims, and get links to insurance product details.

Benefits of Insurance Chatbots

benefits of insurance chatbots

Insurance chatbots provide two primary benefits to businesses. First, they can increase customer satisfaction to combat client turnover. For example, some of the ways conversational chatbots improve customer satisfaction include the following:

  • Providing immediate answers to questions: Speed and convenience are of the utmost importance to modern consumers, and being unable to reach a helpful representative in a timely fashion is a common complaint. Chatbots can reduce that issue.
  • Facilitating communication through preferred channels: Many consumers prefer communicating with brands via text-based digital channels rather than phone calls. Businesses can provide that by adding chatbots to their websites and mobile apps.
  • Conveying personalized information in conversational terms: Chatbots save customers from doing manual research, which often only yields generalized answers to frequently asked questions. Instead, they can ask questions using their own terms and receive a response that feels more like a person's.

The other primary benefit of insurance chatbots is that they can improve operational efficiency. Using the technology is much less expensive than paying a customer service team to manage the same functions.

In fact, chatbots are expected to generate over $8 billion in savings globally by the end of 2022. Businesses can realize these savings by employing fewer workers with customer service responsibilities or redirecting those employees to more productive activities.

3 Ways Insurance Chatbots Can Help Agencies

chatbots help insurance agencies

Let’s explore specific use cases to demonstrate how chatbots can benefit insurance companies.

1. Query Handling

Automatically answering frequently asked questions is one of the ways insurance chatbots can help agencies the most. The technology excels at recognizing variations of common queries and providing accurate responses.

For example, Excalibur Insurance Brokers uses a chatbot named Aiden that you can interact with on the agency’s website, its Facebook page, or your audio device. Aiden can answer over 125 questions about the agency, its products, and insurance, and she’s always learning.

2. Quote Generation

Guiding customers through key processes, such as generating an insurance policy quote, is another great way for insurance chatbots to help agencies. Instead of manually filling out forms, prospects can have a conversation with a chatbot and feel like someone’s actually there to help.

For example, Lemonade uses an AI-powered chatbot named Maya in its mobile app to give users customized quotes. It has a charming personality, and users can conveniently swipe to complete their assessment and get personalized offers in minutes.

3. Lead Collection

One underutilized way insurance agencies can use chatbots is to handle first contact with new leads. Despite its simplicity, that process can be time-consuming due to volume constraints, but capitalizing on interest effectively is essential for becoming a top-producing agent.

For example, LeO offers a web-based chatbot specifically for insurance agents. Once agents add the software to their websites and Facebook pages, it automatically engages with visitors to capture their contact information, schedule meetings, and answer preliminary questions.

Implement Insurance Chatbots

Insurance chatbots can automate many aspects of the customer journey, improving the customer experience and increasing operational efficiency. Put them to work for your agency.

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