By Fridtjof Detlefs, Head of Insurance Domain, Tata Consultancy Services

Industry veterans reminisce back to the times when the insurance sector was highly regulated. Competition as we understand it today did not exist and products and services were hardly distinguishable. Customers were rather “granted protection” by the company their parents had always used, rather than today, where customers actively shop for, compare and exchange information with other customers in order to get the best price available.

Today, customers have come to expect seamless interactions with any brand regardless of the channel they choose to utilise. Customers want the ability to communicate instantaneously and with little effort on their part. Any enterprise that wants to make its customers happy and loyal needs to ensure an efficient service. Although efficiency is not the whole package, enterprises must ensure they personalise their services. Customers want to believe they are the focus of a business and failure to do this can have a drastic effect on a company’s success. For instance,Uber’s success is down to the customer believing they are the sole user of the business. This is achieved through the utilisation of Artificial Intelligence (AI), which is vitalin delivering a personalised service.

Until recently, AI was associated with science fiction. However over time, AI has entered the real world and in the process has started to deliver applications and solutions of practical use. Today, AI is demonstrating new capabilities, such as voice recognition, natural language processing, and the ability to deal with complexity, deep learning, pattern recognition and predictive and prescriptive analytics.

Numerous industries have utilised AI to significantly improve their customer relationships and this is no different within the insurance industry. For example, Singapore-based DBS Bank uses forecast analytics to prevent ATMs running out of cash. This has lowered the cash-out rate by 80%, saving customers a total of 30,000 hours wait time. In addition,American Express has begun to utilise AI. The company has installed a platform allowing any customer to use any device or channel anywhere in the world to contact Amex and the service agent is able to have a complete view of the customer’s history. As a result, despite first call resolution rates having increased from 29% to 44% and American Express now handling a service request volume that has grown by 250%, it is able to do so at a lower cost and higher customer satisfaction.

Leveraging AI, insurers are able to predict customer needs and behaviour so they can communicate with the customer at the right time through the right channel and recommend the product or solution that the consumer is most likely to buy. These insights will help insurers differentiate their treatment to individual consumers, provide greater value and improve customer retention.

Until the day when a customer is forced to claim on their insurance policy, there is a level of frustration on paying for something they don’t yet need. However,AI will allow insurers to offer personalised insurance products that are structured to change dynamically and contextually for individual customers. With the help of AI, policies will be monitored on an ongoing basis for behavioural or other pattern changes, so that the coverage, price, and terms and conditions of the contract can be adapted to changing needs based on a better understanding of customers’ risk levels.

AI enables insurers to engage with consumers in a faster and more consistent manner. They can use virtual customer service representatives at contact centres or use Robo-Advisors to provide consistent, rules-based advisory services at an affordable cost. Today, the advice customers receive is heavily dependent on the experience, knowledge, and product preference of the agent or contact centre employee they talk to. This can cause a disparity in advice given, however with the adoption of Robo-Advisors, individuals can be provided with consistent information

The use of natural language processing and contextual intelligence will drive the future of customer interactions. AI systems will guide and automate Customer Relationship Management processes and initiate a dialogue without the need for human intervention. Virtual assistants will become an important touch point for selling insurance and for servicing by enabling insurers to engage with prospects and customers in natural language conversations.At the same time, innovative consumer electronics interfaces like Apple’s “Siri” or Amazon’s “Echo” are beginning to provide the consumer front-end for a seamless interaction experience. Soon Contact centres will use voice analytics to parse human speech and capture the mood and sentiment of the customer, to engage with them in an emotionally appropriate and empathetic manner. Using a combination of sentiment analysis and pattern recognition, customer service staff can manage difficult conversations proactively and in their early stages.

Customers frequently complain about being exposed to too much information. The challenge for insurers is to help customers and prospects to quickly find the information they want and need. When a potential customer navigates an insurer’s website, they may get lost in too much information through multiple links, ultimately becoming frustrated and finally give up their search. Optimising the user interaction experience is one of the key challenges for insurers.

Finally, AI systems can optimise claims processing to improve the user experience. An IBM study has shown that claimants are more satisfied if they receive 80% of the requested compensation after 3 days, than receiving 100% after 3 weeks. AI promises a true and differentiating win-win situation – while it helps to speed up the compensation process, it also protects the insurer through fraud analysis and detection, thus enabling the speedy resolution the claimant expects in the first place.

The insurance industry has started transforming itself with the implementation of breakthrough concepts such as usage-based insurance and health data-based continuous underwriting. Insurance will continue to embrace initially niche and cutting-edge technologies to reshape itself in the future and replicate successes from other industries. In the long run, AI will spearhead this transformation by enabling insurers to completely re-imagine their business and redefine their customers’ experience.