How AI technologies are transforming operational efficiencies in the industry

By Tom Shrive, founder and CEO of askporter

The coronavirus crisis has inflicted untold damage on individuals, businesses, society and the wider economy around the world over the past 18 months, largely due to the unprecedented level of disruption it has caused.

As is the case with most sectors of the economy, the insurance industry has not escaped the effects of COVID-19. The pandemic has not only changed how and from where work is performed, but it has also impacted how insurance companies interact effectively with their customers.

This is supported by a recent industry report that found that the increase in operational pressure brought by COVID had affected the ability of insurers to meet their targeted service levels, leading to much longer waiting times for customers, The report also goes on to say that this dip in service levels had been particularly evident in firms where there was a lack of digital capabilities.

At a time when the volume of claims being made is very high – the Association of British Insurers [ABI] estimates that insurance companies will pay approximately £1.2 billion in compensation by the end of the crisis – the need for a strong level of customer service is more important than ever.

Fortunately, the emergence of new Artificial Intelligence [AI] technologies has helped to mitigate the impact that the disease has had on the sector, and has laid the groundwork for firms to enhance customer experience in preparation for a post-pandemic landscape.

COVID has shook the insurance industry

In many ways, the pandemic has been an especially challenging time for the insurance industry – not only from a customer service perspective, but also in terms of the disruptions brought to operations.

Work from home directives issued by the Government in response to rising infection rates, coupled with social distancing measures, meant that workers were largely kept apart from one another, which created significant challenges for both team cohesion and communication.

This is shown by a report conducted by Ernst & Young [EY] that concludes that many insurance industry employees – especially sales personnel – found it challenging to maintain performance levels, communication and connectivity while working from home.

This had a knock-on effect on the ability of firms to communicate efficiently and effectively with customers, and capacity problems were exacerbated by the huge strain placed on services by the rapid growth in life insurance and business interruption claims.

As a result, customers found themselves having to wait longer to speak with their insurers, and in many cases, processes were more complex and drawn out.

For example, Lloyds Bank PLC received the largest number of customer complaints among the insurance and pure protection service providers during the first half of 2020, with a total of 190,392 – a huge rise from 10,813 in the second half of 2019.The figures from Statista show that the vast majority of these complaints were related to the quality and delivery of products and services.

This stark difference helps provide an insight into the frustration felt by so many customers in having their claims heard during the pandemic, and reflects the extent to which operational deficiencies affected the quality and availability of reliable customer service.

It was clear, therefore, that insurance companies needed to adapt their customer relations models in order to reflect the changes to the sector brought by COVID, with some businesses recognising the potential that AI has in helping them to achieve a better standard of customer service.

How AI can provide a solution

While many insurance companies have deployed AI platforms, it is true to say that not all are fit for purpose, with limited capabilities and the frustration from using them causing many customers to end up speaking to a live agent anyway.

The most proficient virtual assistants, however, go beyond the functions of a conventional AI platform by offering tailor-made advice and delivering this through an understanding of what customers want and what services their insurers are able to provide to them.

For this to be achieved, it is vital for AI platforms to be conversational, comprehending key phrases and having the ability to speak in a variety of different languages, and in doing so accommodating as many customers as possible.

However, digital assistants have the potential to go further by taking the interaction beyond the conversation and into a complete workflow.

This means that the technology transcends more conventional AI platforms that simply move the bottle neck from the call centre to the operational teams, instead providing a more holistic approach in which customer claims and issues can be resolved more effectively and efficiently, thereby enhancing the customer experience at the same time as keeping costs low.

Another key element by which to mark the success of a digital assistant lies in its ability to perform the same actions as a human. Luckily, AI platforms have the capability to do this by communicating with an insurance company’s back-office systems, meaning that they work in harmony with all other areas of the business.

Crucially, platforms must be seen to be reliable if they are to be adopted by customers en masse, and any error in communication or interpretation on the part of the technology could lead to the loss of a customer.

Part of that reliability is that they must be deployed on multiple channels to reflect how customers want to interact with their insurers, whether that is by a phone call or via a mobile app, smart home device, or messaging platform.

Another key element to AI platforms being implemented successfully is in their ability to allay customers’ concerns surrounding security.

According to an Accenture report, 40% of customers cite data protection as an integral part of trusting their insurers, so it is important that conversational data is integrated into a centralised authentication system and is not made accessible to third parties.

If AI platforms can provide all of this to customers, firms can begin to relieve the strain that COVID has placed on their workers over the last 18 months, and take meaningful steps towards plugging the most significant gaps in their service offerings. 

Looking to the future

While the coronavirus crisis continues to create uncertainty, it will remain difficult to predict with real accuracy what is around the corner for the insurance industry.

What can be said with complete certainty, however, is that the role AI will play in the sector is only going to become more integral as time goes on, with a recent McKinsey article providing a vision of what the insurance industry might look like in the year 2030.

In it, the authors’ predict that, by the start of the next decade, the process of underwriting will have become much faster – having largely shifted towards automation – more than half of claims activities will have been replaced by advanced algorithms that increase efficiencies and accuracy, and that automated customer service apps will handle most policyholder interactions via voice and text, with turnaround times being measured in minutes rather than days or weeks.

As technology continues to evolve and its applications within the insurance sector grow in number, this vision is increasingly likely to become a reality – and one that is sure to be welcomed by customers and insurers alike. 

However, insurers must recognise the responsibility they have now to embrace the technology and the benefits it brings so that this bright future can be fully realised.

Tom Shrive is the founder and CEO of askporter

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