ChatBots in InsurTech From Offshoring to Automation to New Experience


This is Day 4 of ChatBot Week on Daily Fintech. You can see the intro and index here.

Unusually we are seeing more adoption from Incumbents than upstarts . This is the reverse of the cycle of innovation in banking (startups show the way and then banks “fast follow” via mix of copy and acquire). This post explains why it is being done differently when it comes to ChatBots in Insurance and then looks at a few early stage startups that may point to the future.

The action is from Incumbents

Look at this list of ChatBots in Insurance compiled by @rickhuckstep who tracks InsurTech very well. You can see a long list of incumbents and one startup.

You can also see what Halifax is doing on which does Service as well as Sales (Service is the key to retention) and is big in Insurance is clearly looking at this.

First, turn humans into robotic workers

Cutting payroll cost has been a favourite enterprise project since the dawn of computing. Insurance has a ton of routine customer support work. The product is complex and critical to the customer. Good customer support is a) essential b) expensive. This is the kind of work that was first offshored and is now being automated. Once a job has been made totally process driven, eliminating individual judgement, it is quite a simple step to automate that job. An offshoring project works by breaking tasks down into repeatable, fungible “units of work” that are given to humans to do as if they are robots. If those humans leave, they are easy to replace. It is a short step from robotic workers to actual robots and that is what AI enables.

This is of course not good news for the $28 billion BPO business because about 5-6% of those jobs are low end as per this report (ie low hanging fruit for automation)

From Hal to Her

When we search for images of AI, the robot appears. The disembodied voice of Hal in Stanley Kubrick’s brilliant 2001 a Space Odyssey (released in 1968) was a bleak  view of our robot infused world.  In another brilliant science fiction film, Her by Spike Jonze (released in 2013), the robot has the gorgeous voice of Scarlett Johansson and so the protagonist naturally falls in love with the robot.

The point is we don’t see the robots who are serving our admin jobs. We see their texts or hear their voice. Maybe holograms will be the next attempt to humanise them.

Humanising robots is just marketing

Robots in factories making stuff for us are invisible to us, so they don’t need to be humanised. Robots taking care of our every day admin needs have to be humanised to be acceptable. It is Marketing 101.

This started in offshoring where the rule was that call center workers working in the Rest imitated the accents, names and behaviour of their customers in the West. Krishna, Pranav and Deepika become Bob, Ted and Alice.

The ChatBots found by Rick Huckstep are called Magda, Allie, Mia, Arbie, Nienke, Marc and Hanna. Pick a name that fits the culture of the market you are serving, it costs nothing.

From makeup to makeover

Mobile Apps followed the usual trajectory of disruptive innovation from talking heads on TV (Radio to TV) to something that is native to the new media. Early Mobile Apps were simply bad web sites on a small screen. ChatBots will follow that new trajectory.

And now for something different

Spixii is not a cute name. OK maybe it is – cuteness is in the eye of the beholder. Apparently it means Blue Parrot. I guess was not available.

This is bleeding edge.  Spixii got €15k funding at the end of 2015 as per Crunchbase.

SPIXII looks like AI with a ChatBot UI – a RoboBroker if you like. As they put it:

“The first development of SPIXII consists in selling insurance using a chatbot.”

Their TLD is .ai They clearly aim to be AI with a ChatBot UI.

You can watch their Demo Day pitch here.

This feels like SimpleBank – changing the User Experience but not as a full stack regulated Bank/Insurance company. SimpleBank was a success – founded in 2009, acquired by BBVA in 2014. SPIXII may follow the same trajectory.

Insurgram from Germany is “Insurance by Chat” and they look a bit more mature than Spixii and have a partnership with Ergo Direct (think Geico if in America).

HeyBrolly is also aiming to change the whole Insurance experience and describe themselves as a concierge rather than a broker (so chat is just a natural UI layer to a reengineered experience).

Early days

Think of the app store in 2008  – that was 8 years ago. Current examples of ChatBots are fairly crude and occasionally embarrassing and funny but this is the usual story with new tech and the economics of admin service job automation using AI + Chat is compelling, so I am sure they will get better.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech & operates the Fintech Genome P2P Knowledge Network. Bernard Lunn is a Fintech thought-leader.

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