How chatbots are driving insurtech

By Matt High
Several key technologies are driving insurtech growth. Here, we take a closer look at the rise of chatbots and their leading proponent, Lemonade In a r...

Several key technologies are driving insurtech growth. Here, we take a closer look at the rise of chatbots and their leading proponent, Lemonade

In a recent article in the latest edition of FinTech magazine, we took a closer look at those key technologies and trends driving digital transformation in the insurance industry. 

The piece - 2020: The Year of Insurtech - found the technological transformation of the global business landscape changing at pace.

The insurance sector in particular is developing rapidly as innovative insurtechs apply leading-edge technologies across the board, such as advanced data analytics, AI and machine learning.

Chatbots and customer experience

The first chatbot, called ELIZA, was built in 1966 by MIT professor Joseph Weizenbaum. It used a pattern matching system to simulate a human conversation and gave a series of scripted responses designed to have it play the role of a therapist.

Today, chatbot technology is a vital part of the way that companies across a myriad of sectors interact with their customers, with applications covering everything from content delivery to conversational ecommerce. By 2025, the global chatbot market is expected to reach $1.25bn.

A report released last year by IT services company Cognizant considered chatbots to be at the core of a digitally transformed insurance sector. They are, it said "integral to many enterprise initiatives focused on business modernisation and digital customer experience.” 

Chatbots’ ability to offer a customised experience 24/7 with lower processing time and faster resolution is expected to generate over $8bn in savings globally by 2022. In the new generation of insurtech firms, chatbots are even part of the core value proposition. 

Lemonade

Lemonade is a $2bn startup based in New York that has exploded across the US market, becoming the top rated provider of renter’s insurance in the country. 

“In less than three years, Lemonade has expanded across the US, given back to dozens of charities chosen by our community, and fundamentally changed how a new generation of consumers interacts with insurance,” says Daniel Schreiber, CEO and co-founder, Lemonade.

“Looking forward, we aspire to create the 21st century incarnation of the successful insurance company: a loved global brand that can endure for generations; an organisation built on a digital substrate, enabling ever faster and more efficient operations, and ever more delighted consumers.”

Lemonade’s selling point is the level of personalisation and flexibility it can offer its customers. To achieve this, it heavily relies on its app-based chatbots. Powered by AI, these bots can craft personalised insurance policies and quotes for customers right in the Lemonade app, and respond quickly to a variety of customer queries and process claims.

These claims bots are so good that, on December 23, 2016, it set a world record for the fastest processed insurance claim in history, receiving a claim for a $979 coat, checking the claim against the policy, running 18 anti-fraud algorithms and making the payment - all in just three seconds. 

We'll pick up on another key trend shaping insurtech in a follow-up piece. Read the full article here

SEE MORE: 

For more information on all topics for FinTech, please take a look at the latest edition of FinTech magazine.

Follow us on LinkedIn and Twitter.

 

 

Share

Featured Articles

First Citizens Bank in rescue deal for Silicon Valley Bank

First Citizens Bank, which has completed more than 15 acquisitions of stricken US banks since 2009, has stepped in to take over SVB

Banks are capping crypto spending, but are they right to?

Several banks in the UK are limiting the amount of money that account holders can transfer to crypto exchanges. Is the move justified, or an overreach?

UBS agrees to rescue troubled Swiss bank Credit Suisse

UBS has agreed to rescue its troubled Swiss banking peer Credit Suisse, a move that has been welcomed by the Swiss National Bank and ECB alike

Credit Suisse gets $50bn emergency finance from central bank

Banking

Regulators race to salvage collapsed Silicon Valley Bank

Banking

Stripe's UK Head of Engineering talks 'women in fintech'

Digital Payments