AI Chatbots in Insurance: Benefits, Use Cases and Key Features

chatbots use cases and benefits in the insurance sector

The insurance industry is often associated with legacy processes, hefty paperwork and complex affairs. So how are AI chatbots in insurance changing the business?

You could be forgiven for thinking that there is scarce room for digital transformation in the sector. However, no industry is exempt from the need to innovate. When customer-demands set new market standards, those who fail to ride the wave of innovation can find themselves grasping for survival.

Customer expectations have changed the way businesses work across many sectors. Competition between companies is growing, and there are more options available for customers than ever before.

A study by Accenture shows that 74% of people would be willing to buy insurance from non-insurance companies. Today, an insurance firm’s offering and product aren’t enough to make it stand out. If there is a brand differentiator that mustn’t be overlooked, it’s customer experience.

Generational changes have resulted in new customers who are digitally native and who have high demands when it comes to how a brand treats them. These expectations shouldn’t be taken lightly: one-third of consumers say they would consider switching companies after a single case of poor customer service.

Moreover, Covid-19 has further enhanced the need to provide both proficient customer support to clients who are confined at home and to overcome the challenge of being unable to access employees too.

The usual remedy for tending to customer needs are support centers. These, however, are not only expensive but have become almost obsolete as workers cannot be accessed to answer calls. Also, the sheer mass of customer requests requires a customer service that is scalable and can tend to these needs 24/7, in multiple languages and various digital channels, while guaranteeing personalized interactions.

These demands are not farfetched. The solution to these requests already exists, and it’s conversational AI.

AI Chatbots in Insurance can Transform Businesses

Imagine an insurance customer confined at home and looking for a policy quote on their mobile phone late one evening. Before reaching the in-page search engine a chatbot window appears to ask if the customer needs any help.

Some customers may be reluctant to proceed.

Many chatbots can be frustrating as they can only reply to FAQs and often stall when a conversation veers slightly out of context. The best insurance chatbots would be able to hold a conversation using natural language and help the customer complete the process while providing personalized suggestions to lower the quote and guiding the customer from start-to-finish.

Omnichannel, round-the-clock and multilingual support are just some of the clear benefits advanced conversational AI chatbots for insurance can provide and serve to deliver unique, high-quality customer experiences.

While many insurance firms have mobile apps to assist their customers, these are somewhat limited. These apps can usually only be accessed via one or two channels, and customers have been unable to continue conversations across different channels by switching, for example, from their mobile phone to their smart home device.

Many mobile apps also fail to provide end-to-end assistance. Users inevitably need to access the website, where it can be difficult to find the specific information a customer requires, or a call center to complete their processes, where long queues, time restraints and language obstacles can often be a great inconvenience.

This is why AI chatbots in insurance have established themselves as the best solutions to add value to user experience while reducing operational costs.

Chatbots allow customers to manage their insurance claims quickly and efficiently while serving as a listening channel that provides actionable insights to further understand customer behavior and preferences.

This information allows insurance firms to deliver personalized services and suggest better quotes that adjust to each client’s needs. The more efficient a customer service is, the fewer risks there are for human errors and the bigger the savings in operational costs.

According to a Juniper Study, the use of conversational AI chatbots for insurance will lead to cost savings of almost $1.3 billion by 2023, across motor, life, property and health insurance, up from $300 million in 2019. This can prove to be a differential factor that can allow insurance firms to stay at the forefront of the competition.

Chatbot Use Cases in the Insurance Industry

Enhance Customer Support

Most customers buy insurance because they know they need to, but don’t necessarily want to. However, insurance firms must be prepared to assist clients in conducting end-to-end seamless processes in a conversational and secure manner, so that making any adjustments is not considered an extra burden.

Provide Personalized Advice and Cross-Selling

According to Accenture, 67% of car insurance users are open to sharing data if they can receive adjustments to their insurance costs based on their usage patterns.

The real value of collecting customer insights is that they can be used to provide better deals and advice on quotas and insurance claims. By keeping track of customer behavior and habits, chatbots can make tailor-made recommendations.

Prevent Fraud

Insurance firms must take care of customer data privacy and security. Chatbots are efficient in monitoring and detecting warning signs of fraudulent activity and can alert both the insurer and the customer.

Manage Internal Operations

By using automation and speeding up repetitive tasks, staff can focus on further developing their skills or resolving more complex back-office operations.

Key Features for an Insurance Chatbot

Many companies have deployed chatbots for insurance, but not all of them are up to standard. They have limited capabilities and can be tedious to use. In the end, customers still end up speaking to a live agent.

The most proficient virtual assistants provide advice and go beyond the functions of an FAQ chatbot. To do so, they must know what customers want, fully comprehend the services the business provides, and be able to learn from real data to interact with customers and engage as a human would.

They must have the following characteristics:


Speech is the most natural form of human communication. It can be done in different languages, formally or colloquially, and these factors must be considered when humans and bots interact.

If a damage claim is being made, there should be no reason why a chatbot cannot understand the phrase “my son broke my window”. Virtual assistants must be able to recognize context. If an insurance advisor can understand it, so too should a chatbot.


There is little use for a chatbot that is not able to execute operations. If we talk to an insurance advisor, we don’t just seek information, we expect actions to be made, quotas to be provided, claims to be signed, accounts to be opened.

A virtual assistant must be capable of performing the same operations. They can do so by integrating with the company’s back-office systems through Robotic Process Automation (RPA).

Not all technologies on the market use these complex integrations, so it is important to look for chatbot platforms that can be easily integrated with external and internal systems.


Insurance firms must be reliable to earn the trust of their customers. This transcends to the technologies they use. Errors in interpretation or transactions are unacceptable and can lead to the loss of a client.

Conversational AI chatbots must be able to prove that they can be trusted.


Chatbots can be deployed on multiple channels. With this, customers can choose their preferred channel to carry out processes, be it a phone call, mobile app, smart home device or a messaging platform like WhatsApp or Skype.

The best conversational AI platforms must be capable of porting an app to multiple channels.


Customers value their data and privacy. 40% say state data protection as an integral part in trusting their insurers.

Consequently, conversational data must be integrated into a centralized authentication system and not be accessible to third parties.

Technologies must also comply with regulations such as GDPR, (General Data Protection Regulation), allowing dialogues to be consulted, extracted, anonymized, encrypted or deleted when necessary.

Chatbots can enhance customer loyalty and brand engagement while lowering operational costs and increasing revenues. This can only happen, however, if they engage with customers naturally and in the way the customer wants.

Consequently, choosing the right development bot platform to provide optimal conversational traits that are reliable and scalable is crucial for success in the insurance sector.

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