Race with the machine: Insurance goes digital

Can voice-activated virtual assistants like Alexa conquer the insurance industry?

An unusual guest joined the throng at Allianz Life’s third innovation workshop recently. Intelligent, striking and very vocal, she was the main attraction. Her name: Alexa. Her function: an intelligent personal assistant developed by Amazon and made popular by Amazon Echo, the voice-guided loudspeaker.

The workshop, held in Stuttgart, focused on artificial intelligence, messenger services and digital assistants and looked at just what artificial intelligence can do. The answer it seems is, a lot. Alexa, which resides inside Amazon’s Echo smart speaker and Fire TV, can already be used to play music, order food, dim the light or provide directions, among other things. For her next challenge, those at the workshop were asked to devise ways that Alexa and her digital assistant and Chatbot friends could work with their insurance customers.

The general idea is that a customer could report a claim via Alexa, provide all the details via a friendly chat and upload documents via the photo function. Then Alexa sorts it out or passes the case on to an administrator, if it’s beyond her remit.

Ironically, participants found that the most important thing is not to lose the human touch; robots need to answer customer queries in an empathetic and friendly manner. Robots can learn something from us humans after all.

DIGITAL FUTURE

Alexa and co are becoming increasingly appealing as digital technology transforms the way insurers operate. According to a survey of 141 insurers based in 21 countries by technology consultancy Accenture, 43% of 141 insurers based in 21 countries had already acquired a digital insurance start-up or were planning to; 68% had invested in mobile communications and apps and 54% in social media monitoring.

Millennials, born from to, have grown up with Amazon, Google and near-constant access to a mobile device or computer. They want instant and 24-hour constant customer interaction, also for their insurance needs. A Bain survey of insurance companies found that 20%-40% of physical activities in insurance will transition to digital in the next three to five years, specifically pre-purchase, purchase, servicing, renewals, claims handling and management, payments and customer feedback and regulations.

The switch to digital innovation comes amid sharpening competition for customers, as Bernardo Nicoletti, professor of IT procurement at the University of TorVergata (Rome) writes in “The Digital Insurance Basic Solutions”, a chapter in Digital Insurance. Business Innovation in the Post-Crisis Era.

In order to reduce operating costs, successful insurance companies must pursue integration and the streamlining of processes. This can help eliminate waste and get the right information to the right persons at the right time, says Nicoletti. “To run better, an insurance company must deliver superior customer service by better connecting with its customers. This approach helps ensure that a company does not lose hard-won customers to a more appealing competitor. Insurance companies need to take into account that more and more customers will be able to change their insurance company more easily. To succeed, insurance companies must provide ‘customer delights’ in the user experience and not just financial services.”

One concern is that more automation equals less need for human employees. Take the Japanese Fukoku Mutual Life Insurance, for instance, which in January made 34 employees redundant and replaced them with IBM’s Watson Explorer AI, an artificial intelligence system that can calculate payouts to policyholders after reading medical certificates and medical histories. Fukoku expects the move to raise productivity by 30% and savings of some 140 million yen per year following the 200 million yen installation. While this may be little immediate comfort to those laid off, it carries the promise that greater efficiency will eventually increase overall wealth.

Or does it? Erik Brynjolfsson disagrees

Race with the machine: Insurance goes digital

Can voice-activated virtual assistants like Alexa conquer the insurance industry?

Race with the machine: Insurance goes digital

Can voice-activated virtual assistants like Alexa conquer the insurance industry?

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