Insurers accelerating use of digital in customer journey

04 June 2024 Consultancy.uk 4 min. read
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While digital processes have increasingly been integrated into the customer journey of insurance businesses, uptake remains slower for AI technologies. A new study suggests that while almost all insurers now offer consumers the chance to sign up to their services digitally, less than half have implemented chatbots to streamline customer engagement processes.

Even as many of the businesses sinking funds into AI out of a sense of FOMO scramble to find what it can actually do for their firm, it seems that the jury is still very much out on one of its most foundational promises. While many think-pieces have claimed that the technology will lead to job losses in administerial roles, many service providers are reluctant to put it to work in a customer experience capacity.

AI has long been championed as the future of customer services work. In particular, AI-powered chatbots were once broadly sought after by large companies, as a means to quickly deal with customer feedback and take care of simple tasks – while allowing companies to downsize headcounts, and undercut the pay of remaining call-centre staff. But polls of consumers about the technology have been overwhelmingly negative, putting paid to many of these plans. For example, in 2022, one survey found that a third felt customer service has worsened in the years since the introduction of AI to the process, while more than half adding chatbots and AI-powered customer services tools “never understand” requests or problems.

Insurers accelerating use of digital in customer journey

Source: Altus Consulting, Insurance Digital Experience 2024

A new study from Altus Consulting has shown how this is currently impacting the use of technology for customer services in the insurance sector. Over the last decade, there has been a rush to adopt ‘digital’ processes throughout every line of sales and engagement – and this has led to a number of companies to enable online forms to complete all kinds of processes.

Reflecting this, a majority of 98% of insurers subsequently offer consumers the option to obtain quotes and purchase insurance policies digitally. Perhaps more importantly, a 73% majority also allow for the first notice of loss (FNOL) customers make following the loss to an asset covered by a policy via digital forms or apps.

At the same time, more than half of all insurers presented digital options to customers when it came to mid-term adjustments (MTAs) – a change to an insurance policy prior to the end of the policy period – and renewals. But tellingly, despite the hype of AI technologies, only 44% of insurers used automated chatbots to help expedite customer interactions.

Insurers accelerating use of digital in customer journey

Source: Altus Consulting, Insurance Digital Experience 2024

Uptake has been higher among insurers specifically in the home and car space. There, the number of firms utilising AI in customer experience has risen from 34% in 2019 to 52% in 2024. But when it comes to higher-risk offerings such as life policies, it seems that the propensity of chatbots to irk customers or make mistakes has been largely adjudged to be something that is currently not worth the hassle.

According to the researchers, there is still potential for AI to change insurers’ interactions with customers for the better. The experts contend this is necessary, because while Altus has been running this survey for a decade now, there has “not been a substantially noticeable difference in the digital experiences customers had five years ago compared to now”. Deploying AI beyond the realm of chatbots may be the key to that, the firm claims.

Mark McDonald, general insurance practice director at Altus Consulting, concluded, “The challenge is to embrace AI, use it as a tool across the insurance industry, and reinvent the value chains that underpin our organisations. At its most basic, insurers should use it to augment existing processes, driving efficiencies, crunch large volumes of data and provide customers’ immediate support needs. This would see immediate benefits to the customer journey, whilst building a longer-term ROI through improvements across the insurer operating model.”