Can a chatbot replace a live chat when buying insurance? One specialty insurance company thinks so.
Next Insurance, a digital insurance company that specializes in providing coverage for small businesses and entrepreneurs, has launched a chatbot that lets personal trainers receive a quote and buy insurance entirely through Facebook Messenger. The Palo Alto based company says that they’re first insurer to fully transfer the insurance purchasing process onto a social media platform.
What Next Offers
Next Insurance partnered with developer SmallTalk to bring its chatbot to digital life. Specialty insurer Markel Corp. also came on board to underwrite Next’s general liability coverage for personal trainers, which includes three monthly options: $11 for $500,000 in coverage; $14 for $1 million, and $16 for $2 million.
Policyholders are not charged a deductible, and contracts are available in the continental U.S. and Alaska. The company noted on its blog that prospective clients can bypass Next’s website altogether and simply message the chatbot to sign up for a policy.
Guy Goldstein, co-founder and CEO of Next Insurance, told Insurance Journal that the chatbot not only reduces the transaction time to minutes but provides an insurance product to what he believes is an underserved market as well.
“Small business owners are uniquely vulnerable to litigation, yet the insurance services on offer are shockingly inadequate,” he said. “From being improperly priced to failing to account for fundamental needs, there is something broken in small business insurance, and we’re excited to be utilizing digital channels to solve it.”
Roughly 70% of Next’s customers buy insurance on their smartphones, Goldstein said. And chatbots hold a particular appeal to millennials (the ones most likely to peruse the internet for goods and services). A recent survey of 500 people ages 18 to 34 conducted by Retale — a tech company specializing in mobile-first shopping platforms — found that 58% said they had used a chatbot.
Next’s chatbot, which incorporates voice recognition, text, and speech conversion software to answer prospects’ questions, does not need to be licensed since the company itself is, Goldstein added.
While this is an unprecedented way to engage clients, this isn’t Next’s first foray into the small business insurance world. It also offers equipment and liability policies to commercial photographers and general liability coverage to construction workers such as plumbers and electricians through a partnership with Builders & Tradesmen’s Insurance Services, Inc.
Technology + Agents = Success
Next’s new technology stands as the latest innovation in the insurtech wave that has been sweeping over the traditional insurance industry. By blending cutting-edge technology with social media, these startups bank on attracting customers with swift online purchases and streamlined claim resolutions at the place they’re likely to be — Facebook or other social media channels.
But will chatbots and mobile claim filings ultimately replace flesh and blood agents? Maybe not. Rather than displacing legacy brands through a complete digital transformation of the insurance industry, traditional insurers and insurtech startups are learning to coexist, building upon the unique assets each brings to the table. Standard & Poor’s noted as much in a report last year:
“We do not expect traditional insurance business to be fully replaced by insurtech companies, as the insurance sector is highly regulated and capital-intensive, with barriers to entry,” S&P stated. “Instead, we are seeing larger established insurers actively invest in setting up insurtech joint ventures through which they can take advantage of their proprietary data, rather than outsourcing to pure technology-based entrants.”
For all its tech innovations, insurance remains a person-to-person business. While prospects search for insurance information online, they still prefer to talk to a human when making a purchase. Last year, the Henry J. Kaiser Family Foundation polled over 1,000 adults and learned that 38% finalized their health insurance policy with an agent, up from 33% in 2015 and 17% in 2014.
The upshot for agents is clear: create an engaging, informative, and user-friendly presence on social media to attract prospects. When they are ready to buy or need assistance in filing a claim, be there to provide one-on-one advice. This is especially true when clients and prospects demand outside-the-box insurance solutions, like the ones personal trainers need. In those cases, you as the insurance expert can craft a policy based on their uncommon circumstances, not the standard online form.