How AI may help agents build better relationships with clients

Automation technologies are transforming industries, ushering in a new era of efficiency and innovation. Most of the buzz is currently centered on chatbots like ChatGPT, which have evolved from rules-based systems into predictive large language models, enabling businesses to interact with customers in more personalized and efficient ways. Additionally, automation has found its way into other areas of business such as CRMs, logistics and predictive modeling which provide new levels of automation and optimization.

What are the effects of this transformation? We’re seeing dual outcomes that are both positive and negative: decreasing customer support costs but also decreasing customer engagement. In other words, a boost to the bottom line but with a growing number of unsatisfied customers. While automation offers significant advantages, it is crucial to strike the right balance and not lose sight of the human touch.

As someone working in one of the world’s oldest industries, I have mixed feelings. Insurance is a unique industry, with a mission to pool risk for the collective benefit when the unexpected happens. On one hand, I am apprehensive about how a 400-year-old business model can adapt to such rapid technological changes. On the other, I am hopeful the insurance industry can finally embrace customer service and trust while exploring new ways of engaging with policyholders.

Unfortunately, the insurance industry has failed to effectively engage with its customers, resulting in low Net Promoter Scores (NPS) and overall customer satisfaction relative to other industries. The industry has been slow to adopt new communication channels and has struggled to meet customers where they are. This has resulted in less-than-stellar messaging and tone-deaf communications.

Consultants, thought leaders, and executives have quickly identified the broad areas where insurance can leverage language models. However, the implementation of these technologies is challenged. Insurance has been a technology laggard for a long time and a one-size-fits-all approach in a multi-trillion-dollar premium business spanning dozens of industries and millions of policyholders may not be a reasonable implementation path. Underwriting, distribution and customer service are three key areas to explore.

Applying AI to underwriting may require the most effort, as it involves contending with established practices, regulatory burdens, and model validation. Regulators are keenly aware of potential bias in underwriting, so applications must prove fairness and transparency, which can be a slow process. AI can also help here by providing data-driven insights to understand the customer., 

Distribution of products, on the other hand, can naturally leverage digital channels, which can provide insurers with a competitive edge.  Personalization can be supercharged through AI, allowing insurers to target the right products and offers to the right customers, using the right channel at the right time. This serves as a force multiplier to agents, allowing them to drop in at the right time with the right context.

Customer service has been overlooked in the insurance industry. It is important to leverage human-in-the-loop processes, rather than automating them away, and to surface relevant information for agents to help contextualize interactions with policyholders. By doing so, insurers can improve customer service and build trust with policyholders.

The insurance industry’s slow adoption of technology has been well-documented, but there are reasons for this cautious approach. Legacy systems, regulatory environments, risk aversion, data privacy concerns, the complexity of products and processes, customer expectations, and a fragmented market all contribute to the industry’s reluctance to adopt new technologies. 

While technology can improve efficiency and reduce costs, we must not overlook the importance of relationships in the insurance industry. Personal relationships between agents and brokers and their clients have historically been valued, and digital-first solutions can’t replace the tailored advice and support provided by human interaction. New market entrants have struggled mightily in attempting to disintermediate relationships and mostly ended up with higher customer acquisition costs going digital thus far.

As technology continues to evolve, insurers must find ways to balance the benefits of technology with the importance of building and nurturing personal relationships. Smart use of technology can free up time to focus on relationship building, ultimately leading to improved customer satisfaction, better problem-solving, and increased trust, transparency, and authenticity. 

It’s not about choosing between technology or relationships, but rather finding the sweet spot where both can thrive. With the right approach, insurers can harness the power of AI and other technologies while strengthening their personal connections with clients. By embracing this balance, insurers can position themselves for success not just in the short term, but for the next 400 years to come. As we move forward, let’s embrace the possibilities that this new era presents and work towards creating a better experience for all.