Artificial intelligence (AI) is continuing to digitally transform the insurance sector.
In particular, insurance has seen AI and machine learning systems increasingly used for areas of business like customer service and claims handling, but also in areas such as fraud prevention and analysis. However, insurance companies are still not fully embracing the new technology in some areas, having only scratched the surface of what is possible.
With this in mind, we spoke with Founder and Managing Director at Starpeak, Julian Hucks, about AI and machine learning and its potential to transform areas like the customer experience, claims processes and policy management.
How is AI and machine learning automating customer service in insurance?
“It’s clear that AI and machine learning have the potential to revolutionise customer service within the insurance sector. Given these technologies’ potential, they can be instrumental for businesses as they look to navigate a challenging economic climate.
“For example, we have seen AI-driven chatbots and automated telephone systems capable of handling routine inquiries, policy-related questions, and claims processing efficiently, reducing the need for human intervention.
“AI also plays a pivotal role in the analysis and evaluation of customer interactions during calls. For instance, through speech recognition, AI can pinpoint prevalent issues, customer concerns, and potential compliance breaches. Additionally, AI's sentiment analysis capabilities identify the emotional nuances of conversations, assessing vocabulary, tone, and speech cadence. This aids in discerning customer satisfaction levels and the early identification of issues that may need immediate attention.
“This allows insurers, like us, to allocate resources more effectively, focusing expertise on complex cases and providing the best in personalised assistance to businesses.”
How can embedded insurance offerings help with bespoke sales offers?
“We understand that the distinct needs of business owners can vary significantly. As such, a one-size-fits-all approach often falls short of meeting diverse requirements. By using data analytics specifically, we can gain deep insights into customer preferences, behaviours and needs, enhancing their satisfaction and fostering long-term loyalty.
“For example, when buying an expensive mountain bike, customers can be offered insurance coverage that protects against accidental damage, theft, or loss, providing a bespoke solution for their specific situation. This personalisation not only enhances customer satisfaction but also boosts efficiency by reducing the time required to underwrite policies”.
How is AI making claims processes more efficient?
“AI plays a pivotal role in claims processing, assisting insurers in their pursuit of reducing claim frequencies and, in turn, safeguarding their profit margins. Through predictive analytics, insurers can assess the probability and financial cost, helping them set appropriate premiums and manage risk effectively. This automation reduces the administrative burden on insurers, enabling them to process claims faster and more accurately.
“AI can also enhance customer support by providing personalised experiences through avatars and virtual interactions, further improving customer engagement and loyalty.”
Is AI making policy management more easy/digestible?
“We can use AI to transform policy management, significantly enhancing accessibility and comprehension. When it comes to insurance policies, AI can streamline their complexity, especially for niche or specialised businesses, which can often overwhelm small business owners.
“Through natural language processing and machine learning algorithms, AI can break down intricate policy details into more straightforward, more understandable terms. This helps businesses understand the essential coverage they require without being bogged down by jargon or intricate clauses.
“AI-driven chatbots and virtual assistants can also provide instant support and guidance for customers, addressing queries and concerns promptly. This means businesses can access real-time information and advice, enabling them to make informed policy decisions. Additionally, AI helps automate routine administrative tasks like claims processing and renewals, saving time and reducing the administrative burden for business owners”.
Is it still important to retain a balance between technological upgrades to customer service and maintaining a human touch?
“In the realm of insurance and customer service, it’s crucial to strike a balance between technological advancements and maintaining a human connection. The influence of AI and digitalisation in the insurance industry presents both opportunities and challenges.
“On one hand, AI-driven innovations, like personalised digital experiences and data-based customisation can enhance efficiency and accessibility, making insurance more bespoke for businesses navigating complex coverage needs.
“However, while technology can automate processes and provide personalised recommendations, it can’t fully replace the human touch in emotionally charged situations or complex decisions.
“We believe that insurance providers should continue to offer human support, especially in critical moments, such as when businesses face unexpected events or need guidance to navigate intricate policy options. Humans can provide responses based on their extensive training and expertise, reducing the likelihood of AI providing inaccurate or misleading information regarding insurance policies.
“As a small business, customer-centricity drives our technology development. The key lies in integrating technology to enhance customer experiences while preserving the human element of empathy. Striking this balance will enable insurers to meet the diverse needs of businesses, whether they are dog walkers or beauticians and cultivate trust and loyalty in the digital age”.
How important is it that insurers see customer service automation as a practice in need of constant evolution?
“When considering technology preferences among consumers, we believe it’s critical for insurers to view customer service automation as ongoing and evolving. Advancements in digitalisation and analytics are fundamentally reshaping the way businesses engage with insurers and service providers. This provides insurers with an opportunity to distinguish themselves in an exceptionally competitive market.
“Insurers need to move beyond short-term initiatives like updating existing products and systems. Businesses are actively seeking insurers who can provide disruptive products that align with shifting consumer preferences and challenges.
“While prioritising the ongoing improvement of customer service remains a top priority, it's equally crucial to tailor approaches to the distinct characteristics of unmet needs in each niche market. We observe notable variations between products aimed at the older generation (such as golf and personal accident) and those catering to the younger generation (like nail tech, hair, and beauty).
“Insurers must tailor their products to directly address these niches. This might involve designing innovative insurance solutions that cover emerging risks in new ways”.
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