THE CHATBOTS IN INSURANCE PLAYBOOK: Case studies on how three insurers are using chatbots to boost customer acquisition, slash claims processing times, and increase staff productivity
This is a preview of The Chatbots in Insurance Playbook from Business Insider Intelligence. Purchase this report. Business Insider Intelligence offers even more fintech coverage with Fintech Pro. Subscribe today to receive industry-changing finance news and analysis to your inbox.
Incumbent insurers are using chatbots to transform from passively engaging customers to putting customer engagement at the forefront of their business models. The insurance sector has been far behind other sectors of financial services when it comes to delivering on customer engagement — but today, insurers are tapping advances in chatbot technology to deliver frequent and individualized customer interactions. Advancements in automation, machine learning (ML), and natural language processing (NLP) have enabled conversational assistants to deliver customer engagement that's so on par with live agents that the bots can supplant staff entirely. And within the insurance realm, chatbot tech has the potential to reshape everything from product recommendation to admin to claims processing. In The Chatbots In Insurance Playbook, Business Insider Intelligence's proprietary transformation maturity scale allows firms to measure the maturity of their chatbot deployments, while case studies exploring the chatbot implementations of three insurance players at various stages of their transformation journeys aim to guide firms looking to advance along our maturity scale. Finally, a market forecast of the global chatbot opportunity in insurance highlights the significant cost-savings potential the tech can bring across the industry. Here are a few key takeaways from the report:
Three case studies highlight chatbots' potential to improve customer satisfaction, slash man-hours needed for customer service tasks, and speed up transaction and processing times. Insurtech Lemonade wanted to use bot technology to supplant human customer service processes, but it needed to ensure this wouldn't create a subpar user experience or erode trust. To do this, Lemonade created a chatbot solution that could hold conversations that mirror those with live agents, while speedily solving complex customer problems. Insurer Zurich UK worked with white-label chatbot provider Spixii to expand its initially limited digital capabilities to provide customers with an immediate way of declaring claims. The insurer knew it had to meet customer demand for an "always-on" digital experience around claims, and while Zurich UK identified chatbots as a good solution, it needed to ensure the tech would provide a cohesive experience across online and offline channels. Future Generali India Life Insurance (FGILI) was overwhelmed by a continued hike in calls from existing clients and needed to find a better way to manage communications as it scales its business. To achieve this, it deployed a chatbot solution, dubbed Robotics Enabled Virtual Assistant (REVA) — which includes both basic and complex capabilities — to maintain a strong customer experience while freeing up live employees to grow its business.
In full, the report:
Allows insurers to identify strengths and weaknesses in their chatbot deployments by measuring their capabilities across key categories using Business Insider Intelligence's Chatbots In Insurance Digital Maturity Model. Utilizes three case studies to show how different insurance firms are using chatbots to transform business operations and customer engagement. Provides a market forecast of the global chatbot opportunity in insurance to highlight the significant cost-savings potential the tech can bring across the industry.
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INSURTECH DISRUPTORS: Here's exactly what full-stack insurtechs are doing to beat incumbents on customer acquisition, personalization, and claims processing
Summary List Placement This is a preview of the Insurtech Disruptors research report from Business Insider...Summary List Placement This is a preview of the Insurtech Disruptors research report from Business Insider Intelligence. Purchase this report. Business Insider Intelligence offers even more fintech coverage with Fintech Pro. Subscribe today to receive industry-changing finance news and analysis to your inbox. Insurtechs globally are challenging the status quo of the insurance industry. By using new technologies, including machine learning (ML) and AI, they're overhauling conventional processes of the insurance value chain to increase efficiency and enhance the customer experience. There are two types of customer-facing insurtechs: managing general agents (MGAs) that team up with licensed insurers and leverage their authorization to sell policies, and full-stack insurtechs that operate using their own insurance license. The latter are competing head on with incumbent insurers as they own the whole value chain, including claims management and underwriting, and don't have to share their revenue with an insurance partner. Full-stack insurtechs were able to secure large funding rounds in the past few years and made up over half of the overall insurtech funding total in the US during the first nine months of 2018, per S&P Global. With the help of big capital injections, these companies have been able to grow their businesses and dip into the market share of incumbent insurers. Over time, they will further develop their underwriting abilities and personalize their policies — making them even bigger threats to incumbents. In the Insurtech Disruptor report, Business Insider Intelligence examines why full-stack insurtechs pose the biggest threat to incumbent insurers and how this threat will grow over time. Additionally, we profile five full-stack insurtechs — Metromile, Root, Oscar Health, Lemonade, and Next Insurance — and evaluate their offerings in terms of the onboarding process, underwriting and pricing, and claims management, as well as provide insights into what the future will hold for the insurance industry. The companies mentioned in this report are: Clover Health, Kin Insurance, Lemonade, Metromile, Neos, Next Insurance, Oscar Health, Root, UnitedHealthcare. Here are some of the key takeaways from the report: Full-stack insurtechs are fully licensed insurance companies that are regulated by supervisory authorities such as the Financial Conduct Authority in the UK, making them fully responsible for meeting regulatory requirements, including holding capital reserves. While incumbent insurers have been slow to adopt new technologies and are behind other financial institutions when it comes to digital transformation, full-stack insurtechs offer personalized insurance policies and a smooth customer experience with the help of emerging technology. And even though full-stack insurtechs are still in the early stages of development, they're now looking to scale their businesses, threatening incumbent insurers' market share across geographies. Over time, and as full-stack insurtechs continue to scoop up large funding rounds, we'll likely see more players that previously operated as MGAs turn toward this business model. In full, the report: Explains how full-stack insurtechs are a threat to incumbent insurers, and how this threat will grow over time. Details the business models of five prominent full-stack insurtechs. Outlines how full-stack insurtechs will help shape the insurance industry. Interested in getting the full report? Here's how to get access: Purchase & download the full report from our research store. >> Purchase & Download Now Sign up for Fintech Pro, Business Insider Intelligence's expert product suite tailored for today's (and tomorrow's) decision-makers in the financial services industry, delivered to your inbox 6x a week. >> Get Started Join thousands of top companies worldwide who trust Business Insider Intelligence for their competitive research needs. >> Inquire About Our Enterprise Memberships Current subscribers can read the report here. Join the conversation about this story »
Summary List Placement Table of Contents: Masthead Sticky The best renters insurance companies of 2020 If...Summary List Placement Table of Contents: Masthead Sticky The best renters insurance companies of 2020 If you're currently renting your home, renters insurance is coverage you should probably have — especially considering how little it costs. Business Insider compiled data from different renters insurance companies based on customer service and premium prices where available. From there, we determined the best. For sample quotes we entered data for two people renting a two-bedroom, one-bath, single-family with no pets in Philadelphia. Our top picks for the best renters insurance are below: Sample quote Customer rating* Available in all 50 states? 1. State Farm renters insurance $15.67 8 Yes 2. Lemonade renters insurance $16.84 1 No, available in 28 states 3. Erie renters insurance N/A 2 4. Allstate renters insurance $23.00 4 Yes 5. Farmers renters insurance $21.83 6 Yes Best for military: USAA renters insurance N/A N/A Yes, only to military members and family *J.D. Power Customer satisfaction 2020 Whether you're renting a studio apartment or an entire single-family home, renters insurance picks up where your landlord's insurance policy leaves off. If a fire destroys your rented home, your renters insurance could help to replace your belongings. Similarly, if someone hurts themselves in your rented home and sues you, this coverage could help. The average renters insurance policy costs between $15 and $20 per month, much cheaper than homeowners insurance. Renters insurance policies are available from a variety of insurers, and it might be smart to bundle it with car insurance or other types of insurance to get the best price on both policies. If you're searching for a new company for your renter's insurance policy, know that many factors can change the price you're quoted, including your credit score in some states, characteristics of the home you're renting, and even whether you have a dog. More on the best renters insurance companies of 2020 Here's some more detail on our winners: 1. State Farm renters insurance Pros: The biggest provider of renters insurance in the US Nationwide coverage Lowest monthly rate Ranked in top 10 for customer service State Farm is the biggest provider of private renters insurance in the US. This company had some of the lowest renters insurance rates in Business Insider's sample scenario, with a policy for a typical home in Philadelphia costing less than $16 per month. State Farm's renters insurance is a solid starting plan, covering the basics of the items you own, your expenses if something happens to your rented home, and liability. Learn more about State Farm renters insurance » 2. Lemonade renters insurance Pros: Easy online quoting and purchasing Ranked #1 in customer satisfaction B-corp status with corporate focus on giving back to charities chosen by customers Cons: Only available in 28 states No bundling discounts — Lemonade only offers home and renters insurance Lemonade offers renters insurance policy purchasing and quotes online with a very smooth and easy online experience. If you want to work with an agent, this probably isn't the company for you. But, for an easy and affordable renters insurance policy, Lemonade may be a good option. Learn more about Lemonade renters insurance » 3. Erie Insurance Pros: Ranked No. 2 in customer satisfaction Low-cost Cons: Only available in the Mid-Atlantic, North Central, and Southeast regions of the US Online process includes speaking with an agent If you want quick online quotes, this probably isn't the company for you. But it might be worth a phone call — if you live in one of the states it covers, Erie could offer competitive premiums and great customer service. Learn more about Erie renters insurance » 4. Allstate Pros: Nationwide provider Ranked in top 10 for customer service Multi-policy discounts available Cons: Policies start at $20, which is higher than other companies' starting costs Allstate has been around and offers coverage nationwide. In addition to renters insurance, it offers auto, life, homeowners, and business insurance. You may be eligible for discounts if you have other coverage with them. Learn more about Allstate renters insurance » 5. Farmers renters insurance Pros: Good marks for customer satisfaction Bundling discounts available Cons: Not the cheapest renters insurance Farmers offers relatively affordable renters insurance policies. Though it took the fifth spot, a sample quote of $21.83 still means there are companies that charge more. With many other types of insurance policies, including car insurance, there are plenty of ways to bundle and get a discount. Policy add-ons like identity theft protection could also be helpful. Learn more about Farmers renters insurance » Best for military: USAA renters insurance Pros: High marks for customer satisfaction Rated highly for other types of insurance, like car and homeowners Cons: Quotes not available online Only available to military members and family For military families or anyone eligible, USAA could be a good option as well. While quotes aren't available online, USAA consistently earns top marks for insurance coverage in other categories, including car insurance and homeowners insurance. If it's an option for you, a quote from USAA would be a good place to start your search. Learn more about USAA renters insurance » The best renters insurance based on customer satisfaction How much people like their renters insurance providers may factor into your decision. According to a J.D. Power survey, these are the top renters insurance companies in the US, based on customer rankings: Lemonade Erie Segment Average Allstate American Family Farmers Auto Club of Southern California State Farm ASI Progressive Nationwide Liberty Mutual The Hartford Travelers CSAA Average annual premium for renters insurance by state Like homeowners insurance and car insurance, renters insurance can vary a lot by state. Where you live will play a big role in your quote, and each company will consider that differently. Here's the average annual premium for renters insurance by state, according to the Insurance Information Institute. State Average annual premium Alabama $235 Alaska $166 Arizona $178 Arkansas $212 California $182 Colorado $159 Connecticut $192 Delaware $159 District of Columbia $158 Florida $188 Georgia $219 Hawaii $185 Idaho $153 Illinois $167 Indiana $174 Iowa $144 Kansas $172 Kentucky $168 Louisiana $235 Maine $149 Maryland $161 Massachusetts $194 Michigan $182 Minnesota $140 Mississippi $258 Missouri $173 Montana $146 Nebraska $143 Nevada $178 New Hampshire $149 New Jersey $165 New Mexico $187 New York $194 North Carolina $157 North Dakota $120 Ohio $175 Oklahoma $236 Oregon $163 Pennsylvania $158 Rhode Island $182 South Carolina $188 South Dakota $123 Tennessee $199 Texas $232 Utah $151 Vermont $155 Virginia $152 Washington $163 West Virginia $188 Wisconsin $134 Wyoming $147 Frequently asked questions How were the winners determined? The best renters insurance company is one that offers the most coverage for the least amount of money, and also has a good reputation for customer service. Business Insider compiled data from different renters insurance companies based on customer service and premium prices where available. From there, we determined the top five. To find out how much policies typically cost, Business Insider obtained sample quotes for renters insurance for a two-bedroom, one-bath home with a smoke detector and no pets with two occupants in Philadelphia, Pennsylvania. Customer satisfaction was also considered as a factor, with almost all of the companies taking top spots for customer satisfaction in JD Power's renters insurance satisfaction survey. How much is renters insurance? According to data from the Insurance Information Institute, the average renters insurance policy cost $180 per year in 2017, or about $15 per month. The amount you'll pay for renters insurance can vary based on several factors, including the location, type, and size of home you're renting, your credit score, and the amount of coverage you're looking for. Other things may also play a role in the price of your renters insurance, including whether you have a dog, and how many people live with you. Renters insurance is generally pretty affordable, and can sometimes be bundled with other policies for better rates. If you already have car insurance, it might pay to get a quote from your current insurer including renters insurance to see if it offers a discount. What does renters insurance cover? Sure, your landlord has an insurance policy on your rented home. But, it probably won't cover you or your things if anything happens to your building, or if you're facing a lawsuit from someone hurt on your property. Renters insurance doesn't cover any structural damage that happens to your home, however. There are two main parts of coverage to a renters insurance policy: property coverage, and liability coverage. Property coverage If a fire burns down your rented home, for example, your landlord's insurance policy will help to rebuild it. But, it won't help you, the tenant, replace or repair your items. That's what renters insurance is for. Renters insurance can help to replace or pay for property that you bring into the home if something unexpected happens to it, from fires to theft. If your items are stolen or damaged, you could get help with the cost of replacing those items from your renters insurance policy. Sometimes, renters insurance will also cover property left in vehicles, or other items that could be stolen. Some renters insurance policies also include identity theft protection. Liability protection Liability protection from your renters insurance policy could help protect you if someone sues you over damage or an accident that happens on your property. Depending on your coverage, it could help cover you up to a certain dollar amount. How to find the best cheap renters insurance To be sure that you're getting the best price for your renters insurance coverage, you'll want to shop around and get quotes from several different insurers. Compare the quotes, and look for the most coverage types and limits. Then, look for the lowest premiums that fit your budget. If you don't want to visit renters insurance sites individually, you can use a free tool like the one offered by Policygenius to compare quotes from multiple companies in one place. Related Content Module: More Personal Finance CoverageJoin the conversation about this story »
SoftBank-backed Lemonade wants IPO investors to think of it as a technology company. Here's why it really isn't.
Lemonade, the SoftBank-backed online insurance company that's preparing for a public offering, is trying to pitch...Lemonade, the SoftBank-backed online insurance company that's preparing for a public offering, is trying to pitch itself as a tech company. In its IPO paperwork, it mentions the words "technology" or "technologies" more times than did Casper or WeWork, two startups that also tried to boost their offerings by pretending to be tech companies. The company also touts its use of artificial intelligence, machine learning, and other buzzy technologies. But it has little reason to be considered a tech firm — Nearly all of the company's revenue comes from selling insurance; technology development is only a small portion of its expenses; and it holds no patents. Visit Business Insider's homepage for more stories. Online insurance company Lemonade is pitching itself as a tech company and hoping public investors will value it like one. It's not, and they shouldn't. The SoftBank-backed startup, which is preparing for its initial public offering, certainly uses technology in its business — most notably AI Maya and AI Jim, its chatbots that help customers sign up for service and file claims. But it has few of the markings of a real technology company. Instead, it bears much more of a resemblance to the Allstates and State Farms of the world. "That is the wool they're trying pull over the financial community's eyes, that this is a tech company as opposed to an insurance product," said Hugh Tallents, a senior partner at management consulting firm cg42 who focuses on the insurance industry. Whether Wall Street sees Lemonade as a tech company or an insurance firm will likely make a big difference in its stock price and valuation. Public investors tend to place a premium on tech companies because they typically have high growth rates and, over the long term, they often generate fat profits. So tech companies generally have a higher market capitalization than companies with comparable sales or earnings. At least in the private markets, Lemonade has been given something like a tech premium. Last year, in its more recent funding round, investors gave it a $2.1 billion valuation. That would value the company at more than 24 times its sales over the last 12 months. By contrast, insurance giant Progressive is valued at little more than 1 times its sales from the last year. Already, analysts have expressed skepticism about the company and investors may be indicating they have some doubts. Lemonade this week provided a proposed price range for its offering that would give the company a market capitalization that was at least 25% below its $2 billion private valuation. Lemonade talks a lot about "technology" In its IPO paperwork, Lemonade, which offers renters' policies and homeowners' insurance, tries to make the case that potential investors should consider it a tech company. Its documents are replete with buzzy tech terms including "artificial intelligence," "machine learning," "automation," "platform," and "big data." The latest filing uses the words "technology" or "technologies" 149 times. That's more than Casper or even WeWork, two other startups operating in old-line industries that tried to convince investors they were tech companies. "Lemonade is rebuilding insurance from the ground up on a digital substrate and an innovative business model," the company said in its opening pitch in its IPO paperwork. "By leveraging technology, data, artificial intelligence, contemporary design, and behavioral economics, we believe we are making insurance more delightful, more affordable, more precise, and more socially impactful. To that end, we have built a vertically-integrated company with wholly-owned insurance carriers in the United States and Europe, and the full technology stack to power them." Much of Lemonade's case for being considered a tech company is focused on its use of artificial intelligence. AI powers its two chatbots. The technology also underlies a system it calls CX.AI, which Lemonade uses to automatically answer certain customer inquiries and requests, such as when they need to change their policies because they've moved, according to the company's IPO documents. It also relies on artificial intelligence and related technologies including big data and machine learning to detect fraud, handle repetitive tasks, and automate formerly manual tasks, such as processing paper checks. Lemonade's various chatbots and AI systems are linked to something it calls its Customer Cortex, where it collects and analyzes information about its customers. Those insights are then used by its chatbots and other systems when interacting with its clients. The established insurance industry also depends on technology Viewed in isolation and without context, Lemonade's technology seems very impressive and might persuade some that it was really a tech company. But it's almost certainly not as cutting edge and innovative as it would appear. To an outsider, insurance might seem to be a technological backwater. But it's really not. Insurance companies for years have relied on sophisticated algorithms to determine their risks, for example. "It's not like insurance companies are dumb," said Rob Siegel, a lecturer in management at Stanford Graduate School of Business. "They know how to crunch data." The insurance giants have spent huge sums over the years upgrading their own technologies, some of which are visible to consumers. All the major insurers have smartphone apps. State Farm customers who want to file a claim can get help from the insurance giant's own chatbot. And consumers who visit Progressive's website can use the automated system to sign up there for car insurance without interacting with a live representative. Lemonade's chatbots and use of artificial intelligence may be slightly ahead of the big insurance companies, but it's a difference of degree, not of kind, analysts told Business Insider. Its use of such technology is "a piece of the trend we've been seeing in the industry over last 20 years," said Brett Horn, an equity analyst at Morningstar who focuses on the insurance business. "I don't see anything in the Lemonade materials that suggests they have some secret sauce AI, Skynet that's going to be able to do things that other apps aren't doing," said Robert Hendershott, an associate finance professor at Santa Clara University's Leavey School of Business. "And I don't see how they'll get more data than the existing insurance companies that will allow them to do that." Lemonade's business is built around selling insurance Lemonade's financial details offer even better proof that its core business is insurance, not technology. Nearly all of the company's revenue came from insurance. Last year, for example, Lemonade posted $67.3 million in sales. Of that amount, $63.8 million came from the premiums its customers paid for home and renters' insurance. Another $100,000 came from the commissions it made on offering insurance sold by other companies. The remaining $3.4 million came from investment income. In other words, Lemonade makes its money by selling insurance, not software. But its financials offer more proof beyond the revenue line. Last year, Lemonade had $175 million in operating and insurance-loss related expenses. Of that amount, it spent just $9.8 million, or less than 6% of the total, on technology development. That was less than half what the company spent on general and administrative costs. Its biggest expenses by far were sales and marketing — $89.1 million — and insurance losses and adjustments — $45.8 million. Just by contrast, Zoom, the maker of the now-ubiquitous video conferencing software, spent $67.1 million, or about 13.5% of its total expenses, on research and development last year. That despite the fact that it too had a heavy marketing budget that ate up more than two-thirds of its total expenses. Lemonade holds no patents But perhaps the most glaring reason why Lemonade isn't a tech company is that it hasn't actually created any unique technologies — at least not any that were worthy of patenting. Patents are a time-tested way that of showing that companies are creating technological innovations. True tech companies file for numerous patents to protect their intellectual property, sometimes hundreds or more each year. As of the end of March, though, Lemonade didn't hold any US or foreign patents, according to its IPO paperwork. Not only that, but it didn't even have any patent applications pending in the US or elsewhere. Again, just as a point of contrast, when Zoom filed for its own IPO last year, it had been issued two patents and had seven more applications pending. Lemonade may want investors to put it in the same category as Zoom and other tech companies, but "they look more to me like an insurance company," said C. Gregory Peters, a financial analyst who focuses on the insurance industry for Raymond James. Got a tip about Lemonade or tech investing? Contact Troy Wolverton via email at email@example.com, message him on Twitter @troywolv, or send him a secure message through Signal at 415.515.5594. You can also contact Business Insider securely via SecureDrop. Read more about Lemonade and tech investing: Lemonade's IPO plan will destroy one quarter of its $2 billion valuation. But analysts think the latest SoftBank startup could avoid WeWork's fate. 2 of the most important players in Lemonade's IPO are bots. Here's how the $2 billion startup is pitching investors. Here's why tech IPOs are starting to see a surprising, and sudden, snapback The $2 billion SoftBank-backed insurance startup Lemonade has filed to go public SEE ALSO: SoftBank-backed startups are bleeding, as investors tighten up scrutiny over loss-making business models. Here's a running list of all the Japanese giant's major investments in tech. Join the conversation about this story » NOW WATCH: How waste is dealt with on the world's largest cruise ship