How AI is revolutionizing customer satisfaction in insurance
By Bhaskar Kalita
In today’s insurance landscape, one fundamental truth reigns supreme: Customer experience is everything. Policyholders now demand more than just great coverage; they seek highly personalized, efficient and engaging interactions—whether that’s during the quote process, underwriting, filing a claim, or anywhere else in the process.
AI can analyze communication history and customer feedback to provide agents with
valuable context during interactions, leading to more informed and personalized conversations.
This customer demand drives a new compelling discussion for us in the industry: How is artificial intelligence (AI) revolutionizing customer experiences, especially for independent insurance agencies and brokers?
In the most recent 2022 report, the Big “I” noted that more than 60% of all property/casualty (P-C) insurance and nearly 90% of all commercial line premiums are generated through independent agency channels. Despite the large market share, independent agencies are overrun by tedious administrative tasks, limiting time to serve customers in a meaningful way, which can ultimately expand their business.
For such independent agents, AI integration is imperative for a competitive insurance business. It not only serves as a transformative tool for mundane tasks but it’s become synonymous with exceeding customer expectations. From personalized interactions to streamlined claims processing, the possibilities AI offers are boundless and future-shaping for independent insurance agents as it relates to their customers’ experiences and effectively, their overall retention and referrals.
Understanding the customer-centric shift in insurance
Policyholders who have recently lived through uncertain pandemic times are now arming themselves with bolder, more well-rounded policies than in years past. With the shifting economy, climate change and natural disasters directly impacting their customers’ decisions, consumer needs are taking a different shape than before.
[A]dvancing technology—particularly the rise of Generative AI—and changing customer preferences are shaping independent insurance agents’ strategies more than any other external factors.
Data show that advancing technology—particularly the rise of Generative AI—and changing customer preferences are shaping independent insurance agents’ strategies more than any other external factors. In insurance, a great customer experience is not just a nicety; it’s the mortar binding customers to their agent.
Digital experiences have raised the bar for personalized service and created a demand for instant access to information and rapid issue resolution. Mobile apps, social media, and online comparison tools have transformed the customer journey—leading to a departure from the traditional in-person or telephone-based engagement with insurers, making way for digital platforms and self-service options.
These platforms are not only changing the way customers engage with their insurance providers but also influencing their decision-making. In light of these shifts, it’s important to prioritize customer satisfaction to remain competitive.
Positive customer experiences drive brand loyalty, referrals, and long-term revenue. The expectation of hyper-personalization is no longer a luxury, but a necessity as customers grow accustomed to such experiences in other facets of their lives. Consequently, the same level of personalization is expected in their insurance interactions.
AI solutions for all: tailoring innovation for insurance
No longer a technological buzzword, AI is the driving force behind an industry-wide revolution. In a time when data is the new oil, AI unlocks unprecedented value for insurers to streamline operations and enhance customer experiences.
AI offers a range of solutions for the insurance sector, with the ability to fit into a toolbox of both small and large-scale insurance providers. The scalability factor is not only limited to an organization’s size, but extends to its goals and capabilities. The versatility allows independent agencies with limited resources to benefit from AI’s efficiency gains just as much as their larger counterparts.
The introduction of Generative AI-driven chatbots revolutionized customer service by making customer query resolution swift and personalized. Insurance agents can automate customer interactions, allowing quick and efficient responses to customer concerns. Their availability 24/7 enhances not only the overall customer experience, fostering loyalty and satisfaction, but also reduces the burden on staff, making it a win for both customers and insurers.
AI’s predictive analytics applications are pivotal for risk assessment. With massive data crunching capabilities, it’s possible to analyze vast datasets to make more accurate underwriting decisions, reducing the risks and the time and resources required for manual assessments. Insurance agencies and brokers can identify patterns and make more informed decisions about risk assessment and underwriting, leading to more accurate pricing and better risk management.
Underwriting and claims processing are other areas where AI is reshaping the industry. McKinsey estimates that by 2030, underwriting as we know today will cease to exist, with half of all claims being processed without human intervention. Advanced AI-powered solutions can automate various aspects of claims processing, from document collection to fraud detection and claims analysis.
AI-enabled document processing platforms like our Dociphi, for instance, exemplify how such automation can modernize document-heavy business workloads across the insurance value chain. The result is higher operational efficiency, increased customer retention, and re-enrollment.
It also means less time will be spent on data collection and information sharing, and more time providing the required counsel to customers.
Leveraging data for better decision-making
Data is the lifeblood that fuels informed decision-making. For independent insurers, AI plays a pivotal role by employing its data analytics capabilities to extract invaluable insights from the massive volume of data available.
From policyholder information to historical claims data, market trends, and more, AI is the ultimate data detective, sifting through the information to identify hidden patterns, correlations and opportunities. Here is how it works:
- Advanced data processing. The journey begins with the processing of structured and unstructured data. It includes everything from text to images, allowing for a more comprehensive analysis of all available information.
- Predictive analytics. AI doesn’t just depend on historical data; it leverages predictive analytics to forecast future trends and ensure that providers stay one step ahead of risks and opportunities.
- Customer segmentation. With accurate data analysis, insurance agents and brokers can segment their customers based on their characteristics, such as age, location, and actual and potential risk profile.
- Risk assessment. AI can give insurance providers a nuanced understanding of the risks associated with different policies or customers by analyzing historical claims data and external factors.
But how does this affect customer experience? By harnessing AI’s analytical capabilities, insurance agencies and brokerages can substantially enhance the offerings and experiences they provide to their clients, such as:
- Personalized policies. AI can suggest policies that are closely aligned with a customer’s needs, ensuring that they receive tailored coverage.
- Proactive issue resolution. By analyzing data, AI can predict potential issues, such as an impending increase in premiums, allowing agencies to address customer concerns before they become problems proactively.
- Enhanced customer communication. AI can analyze communication history and customer feedback to provide agents with valuable context during interactions, leading to more informed and personalized conversations.
One of the most significant advantages AI has to offer is identifying potential customer needs and risks before they escalate. By analyzing historical data and external factors, AI can detect changes in customers’ circumstances that may affect their insurance needs. This proactive approach not only enhances the customer experience but also helps agencies retain clients by meeting their evolving requirements effectively.
Actionable implementation for agents and brokers
According to a recent Gartner survey, customer experience and operational excellence are the driving factors for a majority of insurance digitalization initiatives. Considering that AI applications within the insurance sector have the potential to enhance efficiency, it’s essential to recognize that interactions with consumers and high-cost areas are prime candidates for achieving significant efficiency improvements.
The rapid evolution, fueled by the adoption of fintech and deep learning, makes it difficult to predict exactly what insurance might look like a decade later. However, there are strategies that ensure independent insurers and brokers are prepared for the change and stay ahead of the curve:
- Assessing AI adoption readiness. By taking a comprehensive inventory of their existing tech environment, independent agents can identify areas where AI will add operational value. This includes evaluating customer interactions, claims processing, underwriting and other functions that can benefit from automation and data-driven insights.
- Choosing the right solutions and vendors. There are myriad AI solutions and vendors to deliver them. It is essential to select a vendor that is aligned with the specific needs and budget of the independent agency or brokerage. Factors such as scalability, ease of integration and the AI vendor’s track record should be considered.
- Developing a strategic roadmap for implementation. The roadmap needs to include timelines, milestones and metrics so that it serves as a clear guide for the deployment of AI solutions. It also ensures a structured approach, keeps implementation on track and allows for continuous evaluation and adjustments.
- Ensuring responsible AI adoption. In the early stages of AI adoption in the insurance sector, a basic governance structure that can track and manage AI is necessary to ensure a level of responsibility within the entity. Maintaining data privacy is a must to comply with regulations and protect customer information. Explainability ensures that AI decisions can be understood and justified. Bias mitigation is crucial to prevent discrimination, while accountability guarantees that the agency is answerable for AI-related actions.
By analyzing historical data and external
factors, [artificial intelligence] can detect
changes in customers’ circumstances that
may affect their insurance needs.
In the ever-evolving insurance landscape, the central message is crystal clear: AI is the compass guiding independent insurance agencies and brokerages toward achieving customer-centricity. Customer expectations are reshaping the industry, and AI is the versatile tool enabling agencies, whether small or large, to meet these evolving demands.
AI’s scalability ensures that agencies of all sizes can harness its transformative capabilities to stay competitive. It leverages data for personalized policies, proactive customer engagement, and sound decision-making. Creating a comprehensive blueprint for AI implementation underscores the need for thoughtful assessment, vendor selection, and ethical practices.
Independent insurance agencies and brokerages must embrace AI as a strategic partner to elevate customer experiences, ensuring competitiveness and long-term success. The time for AI adoption is now.
Bhaskar Kalita is Global Head-Financial Services and Insurance at Quantiphi, an “AI-first” digital engineering company founded in 2013. The firm combines deep industry experience, disciplined cloud and data-engineering practices, and cutting-edge artificial intelligence research to achieve quantifiable business results. For more information, visit quantiphi.com/industries/insurance.