Ok, so ever since Hal 9000 wiped out all the astronauts in the 1968 Kubrick movie 2001, intelligent bots have had a bad rep. However, following the recent announcement that Carphone Warehouse Plc has been fined £29.1 million by the Financial Conduct Authority, and other recent UK fines such as that for Liberty Mutual, perhaps now is the time for retailers to have a serious look at chatbots to handle distribution and management of mobile device insurance products on a fully digitised platform.
Carphone, Liberty and others have since changed the way that they operate as a result of the breaches, but human nature being what it is, especially in a pressure sales environment where incentives to sell financial products are common, it is almost impossible to ensure total consistency of messaging, at all times, to all buyers across a large retail estate. Standards can be set and trained and reinforced and monitored, but at the end of the day we are still dealing with wonderfully imperfect, and inherently fallible, human beings. From time to time, corners will be cut. Messaging will be compromised and individuals will fall short of the exacting standards expected. The real danger is when ‘from time to time’ becomes ‘accepted practice’.
The benefits of digitisation are clear. Firstly, at the distribution end, the customer generally has more time available online than at a retail point of sale, allowing more pertinent information to be collected on a much more consistent basis. This information can be collected in a ‘soft’ way by using an intelligent chatbot to elicit key details. Greater detail allows greater tailoring of products and prices to the customer’s needs. Importantly, complex regulatory and product information can be provided to the buyer on a consistent, ordered and fully auditable basis before they opt to purchase the product, and real time automated checks can even be carried out to validate that the product offered is the right one for the customer and offer comparisons.
With native mobile applications, options and quotations can be provided directly to the mobile device, and, importantly, be-spoked to that unique customer. And, if more time is taken in the sales process, and the customer has greater confidence of full disclosure then the tendency to resile during the cooling off period is reduced.
For claims handling (one of the issues in the Liberty Mutual fine), there is a similar benefit to digitisation. By automating most of the routine processes, the approach to claims decisions can be guaranteed completely consistent, and again, auditable. Claims handling times can be cut dramatically to less than 90 seconds while still collecting and delivering all key information required to protect both the customer and the insurer. No more listening to dodgy elevator music on a call-centre IVR for ages just to be told every five minutes that ‘your call is important’. Paradise.
Initial reaction to fully automated online claims handling versus speaking to a human in a contact centre might not be universally warm, but it makes complete sense for these types of products. A contact centre generally works off a mapped script. The claims process for device insurance is relatively simple and linear, and settlement (repair or replacement) is straightforward and usually without adjustment. Identifying fraud, where possible, can be built into the decision algorithms and machine learning used to refine decisions over time.
As a result, the customer gets a much faster, more efficient and completely legally compliant service with a guarantee of full information, and the retailer not only has a much cheaper distribution channel but can sleep soundly in the knowledge that there are no chinks in the regulatory armour.
Open the pod bay doors Hal!
The above article was an opinion piece written by Ross Sinclair, CEO of EIP. The views expressed within the piece are not necessarily reflective of those of Insurance Business.