(Screenshot from Next’s chatbot partner SmallTalk.)
News about direct insurance capabilities has typically been accompanied by apologetic deference to the role that agents still play in the insurance value chain. That’s not the case with Next Insurance’s (Palo Alto, Calif.) announcement of its chatbot for Facebook Messenger, which the online MGA explicitly says is intended to replace the insurance agent. In its debut, the chatbot is designed to enable personal trainers to quote and buy insurance via Facebook Messenger.
Next partnered with chatbot developer SmallTalk (Palo Alto), to provide what the company describes as full-service insurance via a social channel. Next pitches the new offering as further expanding the its digital offering for small businesses with the aim of empowering customers to access the most tailored insurance policies with unprecedented speed and ease. Next’s insurance carrier partners include Hiscox (Hamilton, Bermuda), Liberty Mutual (Boston), and Markel (Glen Allen, Va.).
Next identified the small business sector as a “digitally underserved” industry, monopolized by agents who are often optimized for selling policies not suited to the policyholder’s particular needs. The company sought to create a direct link with small businesses to enable them to effectively create uniquely tailored insurance programs. Next achieves direct access with its customers via an online platform that it asserts accomplishes in minutes what typically takes days or even weeks. The company aspires to leading a paradigm shift in small business insurance, with pipeline creating the data pool necessary to identify the ideal policies, correct prices, and to perfect processes that lead to happier customers and a higher bottom line for insurance companies.
CEO: Agents Lack the Power to Help Customers
“New technology can dramatically improve the way businesses interact with insurance, giving them products that are better suited to their needs, which in turn creates more sustainable businesses, stronger relationships with insurance companies, and provides the tools for future improvements,” Next Insurance CEO Guy Goldstein told IIR. “Transforming the role of the agent is an essential part of this process as unfortunately, because of the way the system has evolved, they do not have the power to help the customers or the insurance providers.”
Small business insurance currently exists in a system that is both decentralized and fragmented, Goldstein insists. “It prevents agents from having any impact on shaping the insurance product, which impacts poorly on both the insurance company and the customer,” he says. “It means insurance companies feel mistrust for customers and customers feel frustrated by their insurance.
Putting Data and Artificial Intelligence to Work
Agents typically operate very locally, working with one restaurant owner, one lawyer, one electrician, and so on, Goldstein elaborates. “That leads to a situation where agents do not specialize in the unique needs of each type of business—specializing in many different sectors is a very difficult feat for one human being,” he says. “With technology, data and AI we can have the deep knowledge of each profession in order to tailor the right product to a business.”
Small business owners are also especially vulnerable to litigation, yet the insurance services on offer are shockingly inadequate, Goldstein asserts. “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,” he says. “Seventy percent of our customers are buying insurance on their phones. Enabling customers to buy insurance through a chatbot on Facebook Messenger brings simplicity, transparency and easy access. We’re making sure that insurance is working for the small business owner and not the reverse.”
Bots: The Future of Customer Experience
Next’s partner SmallTalk works with enterprise customers to help them identify where bots can drive new revenue or bring efficiencies to business processes. SmallTalk describes itself is a full-service builder of enterprise-focused chatbots that supports the entire bot process from strategy to design to development and maintenance.
“Bots are the future of communication for businesses that prioritize the customer experience and we’re excited to see the impact this technology can have in the insurance sector,” comments Alex Kaplinsky, co-founder, SmallTalk. “Next is bringing a powerful digital approach to an industry that desperately needs it, and it is an incredible testament to the power of bot technology to redefine.”
Using a chatbot on Facebook messenger to sell commercial insurance to a targeted type of small business is an idea whose time has come, according to Donald Light, a Director in Celent’s (Boston) North America Property/Casualty Practice. “That said, there are questions: executing a transaction is easy, but providing information and correct, credible advice about coverages, limits, and deductibles is maybe not so easy,” Light cautions. “The value proposition for human agents rests precisely in these softer ‘trusted advisor’ types of service.”
“We’ll see if a bot can do it better, faster, and more economically,” Celent’s Light concludes.