Voice AI in Insurance: Automating Renewals!

With the rise in insurance penetration and demand, businesses are looking to artificial intelligence (AI) and automation to help them scale.

The development of the coronavirus disease has triggered a global health crisis that has thrown healthcare systems and economy into disarray. In India, the virus has infected over 3.45 crore individuals and claimed the lives of over 4.65 lakh people. A health insurance plan is becoming increasingly important to a growing number of people. According to the latest data from the Swiss Re sigma world insurance report, India’s insurance penetration improved somewhat in FY21. According to the report, insurance penetration (premiums as a % of GDP) was 4.2 percent in FY21, up from 3.76 percent the previous year.

Companies are looking to AI and automation to help organisations scale in an efficient and cost-effective manner as insurance penetration rises and demand rises. Renewal of policies and repeat purchases, on the other hand, are required to maintain growth.

Persistency ratio – An important metric for insurance companies

The percentage of policyholders that choose to pay their renewal premium is known as the consistency rate. In order to be profitable from both a customer retention and acquisition standpoint, insurance companies must maintain a high persistency ratio. A high persistency ratio also establishes credibility and builds client confidence. Customer retention is one of the most important and difficult components of today’s business, and unlike most things in life, there is no easy answer for the problem. Simple policy renewal reminders have proven ineffectual, and a long-term solution requires a holistic strategy to client interaction over the whole lifecycle.

Factors affecting persistency ratio

1. Mis-selling the policy: Every day, a big number of clients are victims of mis-selling. The main issue is front-loading of agent commissions, which occurs when insurance salespeople make unrealistic promises to sell insurance products in order to maximise profits rather than selecting the best policy for each customer’s needs. There is also a dearth of need-based selling and segmentation, which causes policyholder unhappiness and inhibits renewals. Customers are also financially illiterate and rely largely on their representatives.

2. Customer involvement and communications strategies are lacking: Insurance Industry leaders must reconsider how they view persistence, and in order to do so, they must alter how their clients perceive and experience the benefits of insurance policies. Customers must grasp the importance of insurance in their financial stability, which can only be accomplished through engaging with them throughout their lives.

3. Inability to recognize high-risk customers early on: Insurance firms have traditionally used channels such as emails and SMS to remind clients about forthcoming renewals. While they may be effective to some level, they are unidirectional and do not capture the customer’s intent and tendency for renewal, overall contentment, complaints, or worries. And, because most insurance firms only contact consumers a few days before their renewal date, there isn’t enough time for them to grasp and rectify any concerns or gaps in their comprehension, which has a huge impact on conversions.

The Alternative

Here are some techniques that insurance firms can use to address the issues mentioned above:

  • Misselling should be avoided at all costs: Insurance firms can reward agents with commissions based on renewals only. They can also use AI to perform customer education campaigns so that customers have a better knowledge of the insurance they’ve purchased. Once a consumer has chosen an insurance policy, an automated verification call (PIVC/PCVC) can be made to each customer to explain the advantages as well as the policy’s terms and conditions. This process is enriched by voice AI since it streamlines it, allowing huge groups of customers to be engaged in a proactive and efficient manner while being cost-effective.
  • Customer engagement and communication that works: Insurance firms can implement initiatives to ensure that policyholders are constantly safe and involved. For example, during a global epidemic, insurance firms may contact their consumers to warn them of precautions to take, complimentary mindfulness training, nearby containment zones, and so on. To contact and engage with their customers, insurance companies can use a speech AI-powered bot to place attribute- and event-based automated calls.
  • Early on, identify and segment your customer: There are numerous advantages to identifying and segmenting clients based on their proclivity to renew insurance policies before the expiration date. Instead of depending on voice channels late in the renewal process, insurers could make calls based on the propensity model early in the lifecycle. For propensity-based client segmentation, personalised communication, human agent calling, and customised offers should be devised and implemented. For several of India’s biggest insurance companies, implementing this technology has already resulted in shorter renewal campaign cycles and higher persistency ratios. Insurers can benefit from multilingual speech bots by giving them the ability to make these calls at scale and automate the entire renewal communication process.

Insurance firms all around the world have realised that the only way to stay up with customer expectations is to adopt technology, and they will progressively employ voice AI to enhance persistency ratios, better engage customers, and increase profitability. Insurance businesses must include voice AI in their digitalization plan because of the benefits it provides in terms of operational efficiency and cost savings, which benefit both the firm and the customers.

Written by IOI

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