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Conversational BOTs in Insurance Industry – Hype or Reality?

Posted on: 08 September '17
Dinesh Kalidoss
Dinesh Kalidoss
General Manager and Head, Insurance Practice

The reaction of Insurers when posed with the question “Where do you think Conversational Technology is headed?” is: “We are observing this area”, “Definitely going to have a role to play in the future” , “We will start with something basic so that we are ready when the industry gears up for this” and so on. So are BOTs the future of the Insurance Industry?

Let’s start with answers to a few basic questions. What is Conversational technology? If it is so attractive, why is it not picking up in terms of industry adoption?

What is Conversational Technology?

All of us are familiar with terms like Chatbot, Voicebot and so on. Now, let us understand what goes behind this technology.

Natural Language understanding – These are algorithms which can understand human conversations by interpreting language. This involves understanding the subject of the conversation, the question asked related to the subject being discussed, key words used in the conversation, sentiments expressed in the course of the conversation and so on.

Conversational understanding – The logic of conversations. In other words, what defines the construct of the conversation. This can be defined as Use Cases that define conversations in a given domain. This is different from a traditional Use Case because it involves a conversation. In conversations, the context can change very quickly and responses cannot be restricted to menu options. Also, natural language interpretations of user questions need not always be accurate. In other words, the user question can be ambiguous.

Channels – This refers to the mechanism through which a user communicates with a BOT. For example, Skype, Facebook messenger, Web chat, Digital assistants like Alexa and so on.

Benefits of Conversational Digital BOTs

Personalized interactions – Imagine logging into a website and having a digital assistant provide the necessary information.

Humanization of engagement – Digitization has reduced engagement in terms of number of Interactions. Conversational BOT is possibly a step towards bringing in the human element in digitization.

24 x 7 availability – How often have we sought assistance during after office hours or holidays, only to discover that the contact center is not operational?

Convenience – Just think of the number of messenger apps we use in our daily communication. For example Skype, WhatsApp, FB messenger and so on. How convenient would it be if some of our queries could be answered from these very Apps just by accessing the BOT from the contact list?

Proactive assistance – Chat operations are becoming common because we want to be assisted when we are doing something on a website or portal. However, this has limitations in terms of operational hours, holidays and so on. Also, not every Insurer undertakes chat operations. How about assistance from a BOT when Chat operations are not available for enhanced Digital customer experience?

Scale – Scale has two dimensions to it in the Insurance industry. Traditional scaling in operations, as well as seasonal and daily fluctuations in operational load. Imagine month-end operations or peaks in queries just after a successful campaign. So, apart from scaling in the traditional sense, there is also a need to address loads that peak due to one reason or the other.

Reasons for slow adoption of Conversational BOTs

Some of the possible reasons for slow adoption are:

  • Perception trap – We believe this is the most important challenge. It is the expectation that BOTs are replacements for human agents and BOTs will do everything, human agents do. If customers are made aware of the fact that they are communicating with a BOT and that it is only a convenience being provided to them in the absence of a human agent, this technology would pick up faster.
  • Maturity of technology – Insurers still have doubts over the maturity of this technology. While we accept that this technology and its application are still maturing, it is also true that business applications like Digital assistants in Insurance, are ripe for adoption. This is because they are much simpler in comparison to general assistants like Siri or Alexa. The simplicity is due to the restricted scope of service that it addresses.
  • Proof of application – Because adoption is slow, it has had a spiral effect. Everyone is waiting for early adopters to show the direction for others to follow. Also, the scope of adoption has been limited because the existing apps are not conversationally comprehensive.
  • Understanding of regional slangs – While some niche players have come up with Natural Language understanding specific to local slangs, this is still an evolving area. We would still consider this as a matter of training the Natural Language Processing (NLP) algorithms.
  • Proof of Concepts (Pock) not good enough – Pocks address only select transactions. The real challenge is when related transactions happen simultaneously leading to difficulty in identifying them, uniquely. For example, let us consider a user asking the following questions: “When is my premium due” versus “What is the premium due”. While both questions are related to Premium due, one is related to Date of issue of premium while the other is related to value of the premium. Just imagine the complexity, if it has to be extended to the entire series of questions that an Insurance customer can ask a BOT.
  • Handling conversations – We have evaluated many BOT applications and one thing we have noticed, is that BOTs don’t handle conversations very well. Perhaps this is also another reason why Industry is still questioning the effectiveness of this technology.

Areas where Conversational BOTs can be deployed in Insurance

  • Customer / Distribution Partner servicing – Think of the convenience of getting some of the common queries answered through messenger — without having to log into portals and installing specific apps (competing in an already crowded space on smart phones). More importantly, the convenience of channel and choice of time, when the customer needs to interact. According to statistics shared by Insurers, 70-75% of calls that land in a call center are related to users seeking information. Does this trigger a thought? Do not forget the voice and e-mail channel. As technology matures, we will find more of these as well.
  • Proactive assistance on brand sites – Websites are overloaded with information. How about a BOT pulling out content that is relevant to what you are looking for?
  • Frequently Asked Questions (FAQs) – BOTs can be used as an Interactive solution to some of the FAQs.
  • Conversational Commerce – Lemonade Insurance is already doing it! At Lemonade, you have a chat interface where a BOT actually helps you buy a Home Owner’s policy. And why not, if the interface is better than mundane form filling! However, applications that take only quotes (and not handle the complete purchase process) will be quite common in the near future.

Way forward for BOTs in the Insurance industry

We strongly feel, conversational digital technology will be an integral part of the Service industry soon since it involves need for human interactions. The Insurance industry is no different. Going forward, BoTs will play a significant role in humanizing digital interactions. The “real” application is moving quickly from FAQs to Enquiries and transactions. For those still wary of using this technology in connection with customers, the starting point could be using BOTs for engaging with employees and gradually moving on to using BOTs for interacting with customers. However, we expect BOTs to become an integral channel of the Insurance industry by next year in terms of digital commerce and customer servicing including co-existing in an Omni channel environment.

One small caveat to the above though. Do not expect BOTs to replace human servicing. Instead, think of complimenting servicing with BOTs. BOTs are here to make self-service more personal and human and hence comparisons can be made only in relation to existing digital channels.

Know more about Mindtree’s Insurance Services and Solutions.

Dinesh Kalidoss has 17+ years experience in the IT industry. He focuses on delivering competitive advantage to Insurers by adopting innovation in technology.