Are insurance chatbots reliable?

By Jacques Wong | Last updated: May 20, 2018

Insurance is an industry with hundreds of years behind it and tons and tons of financial and strict regulatory restrictions. Because of this, it's notoriously risk-averse and slow to adopt new trends, especially when it comes to technology.

But we now live in a world where everyone is used to ordering everything from takeout and groceries to car rides with a touch of a button. Consumers are starting to expect that kind of convenience and seamless experience from every business they deal with, including their insurance companies. So, even the insurance industry is starting to use AI-enabled conversational robots (chatbots) to give advice, generate quotes, process applications, and even handle insurance claims. These chatbots are available 24/7 and will engage with customers in real-time.

One of the huge concerns for consumers is whether they can trust the information they're getting from these chatbots. Just how reliable are they and should we trust them with something as important as our insurance?

These worries are understandable, but rest assured that you're still dealing with a well-regulated industry set up to protect consumers, even if you're interacting with a company through its online interface. In fact, if anyone needs to worry about this, it's not you as a consumer – it's the insurance company offering you the service. If their chatbot recommends the wrong products or makes a mistake when generating a quote, they're the ones held responsible for the error.

Insurance Quotes

Let's take quoting as an example. When you call a broker for an insurance quote for your car, they ask you a bunch of questions and fill in an application form based on your answers. The broker then uses your information to generate a quote using a piece of quoting software. As you can imagine, this process can be automated pretty easily. In this case, the broker functions as a middle man whose task is to collect your information and enter it into the system. The way chatbots are currently used, they generally operate off of a playbook of pre-determined questions and options. They gather the same information the broker would and run it through the same software (see What Is an Insurance Broker? to find out what else these professionals can do for you).

When it comes to quoting, then, the chatbot is performing a fairly routine task, so there's little to worry about. In fact, they might eliminate some of the human error that can creep in when an agent or a broker collects and enters your information.

Insurance Advice

So, we know that chatbots are good at asking questions. But what about answer them?

Chatbots can handle simple questions like "When does my policy expire?" But if you have a more complex request that the AI can't handle or comprehend, it generally won't supply you with a useless or irrelevant answer (the way the digital assistant on your smartphone sometimes does). Instead, it will transfer you to a human operator. The more advanced chatbots can even analyze the tone of your answer to determine whether they should send you an automated response or forward you to the appropriate department (learn more in Insurance Advice from a Robot? It's Already Happening).

Enjoy the Convenience

The bottom line is that you can enjoy the convenience of using the chatbot your local brokerage has installed on their website and still sleep well at night.

If the chatbot is unable to accurately fulfill your request, it will err on the side of caution and pass you onto an experienced human operator.

Insurance businesses take huge precautions before adopting new technology to use internally, and they're even more careful when the new technology is client-facing. That's part of the reason it takes so long for your insurer to adopt new technology, even when other businesses have already come on board. But it's also why you can be confident that the technology they're using has been tested and implemented very carefully.

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Written by Jacques Wong

Profile Picture of Jacques Wong

Jacques grew up around the insurance industry and began actively participating in 2013. Since then, he has gotten a Level 2 license, won Insurance Council of BC awards in 2015 and 2020 for academic excellence in the insurance licensing courses. He educates insurance professionals through PNC Learning and as a Thought Leader at ReFrame Insurance.

In his day job as an insurance broker, he helps businesses with creative risk management solutions and strategic advice when it comes to insurance.

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