Optimizing artificial intelligence will help insurers improve customer interactions
Digital processes are increasingly integrated into the insurance customer journey, with more than half of leading insurance companies now implementing AI-powered chatbots to streamline the customer experience, according to a report by Altus Consulting.
More than 98% of insurance companies offer the option to purchase their products through digital channels. Despite these advances, data suggests stagnation in the evolution of online customer journeys post-pandemic. Even the most efficient insurance companies still face challenges in delivering a fully digital experience.
“Since we started this research 10 years ago, we have seen an increase in the number of insurers using digital channels for more than just quoting and buying, from 75% in 2015 to over 98% now. However, there was no materially discernible difference in the digital experience customers had 5 years ago compared to today,” says Mark Macdonald, director of the general insurance practice at Altus Consulting.
Analysts compared the insurance sector with other industries. Looking beyond insurance to other verticals such as retail, entertainment and banking, we are seeing more end-to-end digital experiences tailored to the needs of the consumer, but insurance customer journeys remain largely unchanged.
MacDonald emphasizes the need for the insurance industry to make better use of AI, saying, “The challenge is to embrace AI, use it as a tool across the insurance industry, and reimagine the value chains that underpin our organizations.”
Forinsurer wrote about how artificial intelligence can help insurers retain customers and drive sales.
Insurers should use it to augment existing processes, improve efficiency, process large volumes of data and provide immediate customer support. This will lead to benefits in the customer journey, while creating long-term ROI by improving the insurer’s operating model.
As the insurance market recognizes the potential of artificial intelligence, there remains uncertainty about how to effectively apply this technology to increase customer engagement and drive sales.
Swiss Re has conducted research on how insurers can optimize the use of AI-based tools to retain customers and improve the quality of interactions. Analysts emphasized the importance of using multiple AI models to achieve higher ROI.
Using behavioral approaches rather than demographic ones produces better results. In addition, responsible use of AI can help insurers attract and retain customers.
Most insurers use artificial intelligence primarily to identify customers who may not renew their contract. Single-target propensity models are very effective when it comes to identifying a specific subset of customers who are at risk of churn.
Using a targeted approach is practical when interacting with a customer is relatively expensive. However, if coverage costs are low and the identified subset of customers is large, the impact of the propensity model is reduced. In addition, propensity models may be less appropriate for responses to inbound queries.
Ultimately, this will lead to both improved internal processes and improved customer engagement, increased retention, and improved operational efficiency.