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Insurtech Review | May 2019
Robyn Bainbridge explores how the rise of chatbots is helping insurers to make the customer journey more user-friendly
 
In an age of artificial intelligence and instant messaging, there has been a surge in the adoption of chatbots by businesses – and they have seen a marked increase in popularity within the insurance sector in recent years, with many travel insurers quick to utilise them in their customer service platforms. So, what are the benefits? And how are these chatbots likely to shape the future of the travel insurance industry?
 
Abhishek Bhatia, Group Chief Officer and New Business Models CEO of online insurance company FWD Singapore, which recently launched its own virtual personal assistant called Faith, noted that the insurance industry is emerging as one of the biggest adopters of AI, and one of the prime examples of this is the chatbot. 
 
Chatbots are, for the time being, predominantly messenger-based
 
Chatbots have an incredibly rich and fascinating history – condensed down, it reads something like this: pioneering scientist and mathematician Alan Turing not only saved the day with his decrypting efforts during WW2, but also set the scene for the modern-day chatbot with his 1950 article Computing Machinery and Intelligence, as well as his renowned Turing Test. Influenced by these, in 1966 Joseph Weizenbaum created Eliza – one of the earliest forms of chatbot, which was able to simulate human conversation. A line can be drawn from momentous scientific and technological advancements such as these to later evolutions of the chatbot within insurtech, and these are appearing increasingly as part of customer-facing platforms, with extremely successful results.
 
The emergence of the chatbot 
Save a few exceptions (that may likely become the standard in coming years) – such as Etiqa Insurance Singapore’s recently launched, voice-activated chatbot Trix, available through Google Assistant – chatbots are, for the time being, predominantly messenger-based, in keeping with popular trends of communication. 
Some of the reasons for chatbots popping up are obvious: advancements of the internet, social media and mobile devices have paved the way for instant access to knowledge and communication, and with these advancements, consumers have come to expect a lot more in terms of customer services. 
Numerous insurance companies worldwide have adopted the chatbot in one of its forms: travel solution and chatbot provider Zumata, based in Singapore, launched its ‘Jiffy Jane’ travel insurance chatbot in collaboration with NTUC Income, which is able to answer FAQs while supporting the entire travel insurance transaction, and can be deployed across numerous messenger platforms; Swiss insurer Zurich created its chatbot Zara to handle a wealth of general insurance claims; and London-based Pluto utilised Facebook’s Messenger Bot Store to allow its customers to quickly access their policy and manage their travel insurance on the go using Facebook’s messaging platform.
The existence of Facebook’s Messenger Bot Store, which launched back in 2016, should be in itself enough to highlight the obvious market for the chatbot within business. Statistica revealed that there were two billion Facebook Messenger uses as of 2018 – a number forecast to grow to 2.48 billion by 2021. And there’s good news for app-based chatbots too, as consumer downloads ar hich revealed that use of messaging apps is growing, and notes that mobile continues to be the main driver of overall ecommerce growth. Certainly, it’s a good time to invest in the chatbot.
 
If a customer talks to the chatbot for five minutes or 45 minutes, it costs the same, which is a fundamental shift in metrics measuring performance
 
Josh Zeigler, CEO and Co-Founder of Zumata, told ITIJ: “Travel insurance is considered as a high-volume and low-value transaction, where the policy and benefits can be easily understood by consumers. This is an ideal use-case for chatbots to handle.” 
Renaud Million, Co-Founder and CEO of Spixii – a UK company that works to provide the insurance industry with customer-facing chatbots and has worked with several travel insurance providers such as Allianz Partners and Zurich UK – noted that some of the immediate advantages the chatbot has over face-to-face conversation and web forms is being able to ‘combine different methods of distribution, different claims services providers and low margins and high expectations from the customers in terms of digital experience’. 
Indeed, the chatbot in its messenger form appears to be one of the most organic developments of the insurtech landscape.
 
Benefits to the customer
“Chatbots, by their very nature, are there to support the customer when they need it, wherever they might be,” said Alex Last, Operations Consultant at Zurich Insurance. Truly, improved access is one of the greatest mercies that chatbots afford the customer, especially in an era in which, as Last put it, ‘society becomes data rich, time poor’. 
He noted that, while travelling, an incident can occur in another country, in a different time zone – both elements that can complicate the claims process in what is an ‘already stressful situation’. “Utilising automated service agents, the customer can reach their insurer whenever and wherever they are, safe in the knowledge that we’ve been notified and they can concentrate on alternative methods of resolution – be it an alternative flight, medical attention or finding accommodation – for their immediate needs,” he told ITIJ
 
A good chatbot should recognise its limitations and help connect a customer to a human at the right time
 
The 24/7/365 nature of the chatbot means that travel insurance services can cater to the customer’s schedule, on a device of their choosing, which Last reasoned ‘matches the lifestyle challenges of customers’. According to Rainey, this was why Pluto utilised the Facebook messenger chatbot – it enabled customers to quickly access, update or ask questions about their claim online, through their phones. And Bhatia notes that this 24/7 access is a ‘game-changer’, as it enables customers that would normally have to send an email or request a call-back outside of office hours to have their claims attended to immediately.
Additionally, Rainey noted that the vast majority of Pluto’s audience already has the messaging app installed, which drastically reduces the barrier of the customer needing to set up a new account or download a new app. Mike Hope, CTO of IBM’s Insurance Enterprise Unit, also explained that, by contacting the consumer on their preferred channel, customers can be kept up to date with their policy throughout the period of cover.
 
Simplicity goes hand-in-hand with accessibility when it comes to the chatbot. Zeigler explained that, unlike a website, where the customer is ‘forced to navigate and read potentially large blocks of textual information’, chatbots can provide ‘instantaneous responses’ to customer queries. Additionally, Rainey noted that the chatbot offers a speedier service for customers looking to search for contact details in an emergency.
Not only do chatbots provide the customer with a more convenient, time-saving solution compared to a website, but Million illustrated that they offer a more personalised solution, whereas webforms are a ‘one-size-fits-all’ technology. “[This] leads to limitations in the experience, maintenance, iteration and, ultimately, customer feedback and conversion rates,” he said.
What’s more, the ‘conversational approach’ of chatbots, which Zeigler identified, means that they can answer questions and tasks on a platform that ‘requires no learning curve for the consumer’. This makes for a far more engaging product for the customer; as Rainey puts it: “When your insurance is just sitting, buried in your inbox, it’s not really doing anything for you.”
Alongside all this, the chatbot offers still more benefits to the customer. Million points out that it can save customers both time and money: “From an operational perspective, if a customer talks to the chatbot for five minutes or 45 minutes, it costs the same, which is a fundamental shift in metrics measuring performance, moving the unit from time to the conversation itself.”
In another ground-breaking move, as of 2018, FWD Singapore’s Faith also gained the ability to pay out for claims electronically, which Bhatia notes eliminates the need to make payments via cheque, which can take five days or more, or even run the risk of getting lost. 
 
Mobile continues to be the main driver of overall ecommerce growth
 
The chatbot offers a cost-effective and on-trend digital solution that addresses the much-needed personal and professional balance, and as Zeigler highlighted: “The results in terms of ROI and improved customer experience are impressive.” 
The general reception of chatbots for these companies has been overwhelmingly positive. Talking of the introduction of both chatbots and messaging, Mike Hope said that Net Promoter Scores (NPS) for customers have increased significantly. Rainey notes that, for Pluto, ‘customers like the simplicity, and being able to access everything easily in one place’, while Bhatia stated that, thusfar, customers have given Faith an average satisfaction rating of 4.5 out of five stars. 
“The feedback we’ve received has been overwhelmingly positive, as consumers have been impressed by the additional convenience, better engagement, and instantaneous response offered by our chatbots,” Zeigler added.
 
Benefits to the insurer
As Rainey highlighted, ‘the main benefits are (and should always be) with the customer’. But luckily for insurers, benefits for the customers usually directly affect benefits for the insurer. “Allowing customers to self-manage their policies, which is what they want anyway, can reduce the number of customer support requests,” Rainey explained. “The same can be said for submitting claims. By making it easy to find out how to submit a claim – whether in an emergency or not – an insurer can further reduce the need for human customer support.” 
The reduction of costs and resources is a significant benefit for the insurer, and Bhatia also claims that the chatbot can reduce pressure on business operations during peak travel seasons, when there is a spike in questions and claims submissions. Million noted that by using chatbots to notify claims, time savings of up to 30 per cent can be observed: “Chatbots work 24/7 with no extra costs for serving customers out of office hours, which usually represent 40 per cent of interactions.”
Last highlighted that chatbots allow insurers to ‘receive a far deeper first notification of loss’. This both reduces the investigation time and allows staff to provide the best-case strategy decision from day one of the customer’s claim. He notes that Zara has the ability to ingest dashcam footage, video and still images of a loss/damage, and that this ensures that Zurich’s claims handlers have a better grasp of the incident, as well as ensuring that Zurich is able to provide its liability decision within a quicker timeframe. In this instance, chatbots provide far more accurate information, which is crucial when validating claims. “This ultimately reduces our time to settle metrics and provides a far more efficient customer experience,” said Last.
In addition, Last also pointed out that more accurate information leads to reduced claims costs, which in turn ‘ultimately helps to make Zurich – and other insurers – competitive in the market with its pricing’.
Zeigler also suggested that the chatbot offers businesses greater customer insight: “Each interaction can be logged, categorised, and analysed. Consumers’ interactions with a chatbot can help companies identify gaps in their messaging quickly, and even lead to new product ideas.” 
Million told ITIJ that one of the biggest potentials of chatbots is the ability to ‘give granular feedback on question after question’, which helps insurers to understand quantitative and qualitative feedback – both on the journey provided by the chatbots, and also on other traditional channels currently provided, such as the phone. “Analytics can tell in real time when chatbots are engaged or when customers are dropping out, as well as the NPS of their experience,” explained Million. In this instance, the chatbot is an investment that continues to give back to the insurer while it works, helping insurers to recognise how to further improve their services to increase customer satisfaction and efficiency.
 
Insurers can also benefit from chatbots’ simplicity: Pluto’s Facebook Messenger Bot not only provides ease of use and familiarity to the customer, but Rainey also notes that: “The Facebook bot platform is very advanced compared to the other options. It’s easy to build and set up a chatbot and there are a number of rich features, like web views, payment, human support, sharing and much more.” 
 
Chatbots allow insurers to ‘receive a far deeper first notification of loss’
 
As previously highlighted, launching a chatbot also allows insurers to meet the customers on their preferred platform. “[This can] significantly increase customer satisfaction with the brand, due to speed of resolution and convenience,” said Hope. 
Another result of this improved customer experience is that insurers have access to an even larger market of potential customers, helping them to gain the edge over competitors.
Being relatable and accessible, while maintaining a strong social presence, is increasingly important for providers looking to evoke positive attitudes of satisfaction in customers, while keeping up with the competition. 
 
The human touch
As with all advancements, it’s important to recognise the limitations in order to progress. The chatbot platform is still in the early stages of implementation within the travel insurance industry, and as such is still experiencing a few ‘teething problems’.
Chatbots.org’s recent survey of UK and US consumers highlighted that 55 per cent of people in the UK and 62 per cent in the US found that having to repeat information that they had already given to a chatbot to a human assistant afterwards was the biggest hassle when using chatbots. The survey also found that there appears to be a generational divide in terms of people’s reception of the chatbot – fewer numbers of older generations (Baby Boomers and the silent generation) rated chatbots as ‘very effective’ compared to Generation Z and millennials. 
Both Rainey and Hope recognise that the chatbot has its drawbacks; Hope says that chatbots are not effective in their own right, but that being combined with a messaging platform for agents is the ideal way for these to be implemented into insurance, while Rainey notes that: “Inevitably, customers do want to speak to a human, and this is a huge, often under-appreciated, part of the chatbot. A good chatbot should recognise its limitations and help connect a customer to a human at the right time. The insurer can benefit again here, because a support agent can support multiple customers, and the customer can pick up this conversation whenever and wherever they want.”
 
Rainey also acknowledges that he is a ‘little underwhelmed’ by the current Messenger Bot Store: “There is a lot of work still to be done to bring bot discovery on par with app discovery.” However, he reasons that Pluto promotes the chatbot after purchase, so it isn’t considered to be a key source for new customers.
Million stated that ‘it takes years to perfect chatbots with the right skills to deliver personalisation and scalable effectiveness’, explaining that the main challenge for chatbots revolves around culture. Rainey further illustrates this point, warning that chatbots still pose a slight risk as they are now in the ‘infancy of their implementation’: “More needs to be done to understand exactly what customers want to ask, and until a chatbot can deliver on these needs, insurers must be very careful to launch them – they can put themselves at risk of delivering a poor experience for customers.”
Still, this need not deter insurers from adopting the technology, as Hope highlighted: “Clients are used to messaging in their personal life, so business needs to catch up.” Zeigler concurs, arguing that insurers that lag behind in terms of adoption will end up with ‘bloated cost structures’: “Insurance company profitability differs primarily as the result of cost base, and as future-looking companies maximise use of chatbots, those companies will be increasingly competitive.” 
Zeigler claims that, going forward, chatbots look likely to expand their scope and be able to handle even more complex processes. “An area already being experimented with is the claims process,” he said. “Once this takes hold, the entire customer journey, from exploration to purchase to administration of a claim, will be possible to handle in an automated manner.” 
Bhatia believes that chatbots will have an impact on the way insurers deploy their human resources, as they take over common insurance tasks: “It will allow us to ‘up-skill’ our employees and help them gain knowledge in AI, machine learning, data science and conversational design – and potentially deploy them in roles that demand for greater skills.”
 
Looking further ahead, it seems increasingly likely that speech-recognition chatbots will be the new standard in travel insurance. As previously highlighted, Eqita has already advanced its insurtech onto voice-channel platforms, working with Google Home to provide chatbots that customers can converse with without having to touch a finger to a keyboard. And Meeker’s Internet Trend’s Report 2018 can also provide some valuable insight into this prediction: with Google’s machine learning word accuracy reaching 95 per cent and Amazon Echo’s install base surging to an estimated 30 million at the end of 2017, it seems an inevitable development.
For now, however, the current messenger-based chatbot offers an excellent addition to the services already offered by insurers – and occasionally, it’s good to balance it with a human touch. “People will always have a need to speak to humans in some situations,” said Rainey. “But for the other times – like being able to add winter sports to your policy at five in the morning on the way to the airport without speaking to someone – chatbots can provide a lot of value. It’s about knowing when they can be useful and when they cannot; technology will change where this line is drawn over time.”