How to maintain empathy when machines are making decisions

Just like every other industry, insurance is facing major disruption. Technological innovations like artificial intelligence, machine learning, and predictive analytics are redefining business processes and introducing new offerings that are better, cheaper, and more flexible, and the insurance industry is poised to take advantage of these capabilities.

As a result, we can expect to see processes become more automated and workflow become more streamlined, thanks to the algorithms that can now handle much of the work originally done by humans.

To be sure, this kind of disruption to our status quo is a good thing. Inconsistencies will level out, and the improved efficiency brought about by these innovations will open doors for insurers to evolve and progress their roles in ways that we may never have thought possible. Think of the possibility of your policyholder getting paid even before she submits her claim, because sensors in the car can send data about the damage in real time.

The machine learning algorithm can then process the claim the second the incident happens and make a settlement decision based on the data from devices and other sources. But as machines start to make more of our decisions, how will the role of the insurer change?

AI changes the game for insurers

As analytics, artificial intelligence, and machine learning become more commonplace for insurers, they’ll begin to see their businesses run more efficiently and profitably. In fact, estimates that the global business value from AI alone is projected to reach $1.2 trillion in 2018 and $3.9 trillion in 2022. Benefits as substantial as these are hard to pass up, but for carriers, one of the first things to change as a result of using these technologies will be the customer’s interaction with the insurer.

On the claims side of things, that may mean that customers won’t be calling in and speaking with a human adjuster to explain what happened when they got into a bad car accident or to explain the necessity behind a certain medical procedure. Instead, they’ll likely be asked to answer a series of questions that will be read by a machine, which will process the responses in very black-and-white terms.

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For all the efficiencies that stand to be gained from new technologies, this is a major problem for an industry whose business is based on trust and human touch–trust between the insurer and the insured, and personal touch with customers, especially when they’re feeling vulnerable, confused, and frustrated.

With machines making suggestions and decisions instead of human workers, the role of the insurer will need to shift to focus on balancing automation with the personal touch that customers have grown used to. This kind of relationship-based business practice that emphasizes empathy and human interaction will be essential to retaining customers.

Why is empathy so important for insurers?

In our personal lives, we all understand the importance of empathy, but empathy is important for businesses as well. It’s what makes customers more likely to stay with a company, and it’s what drives new customers to seek out a company in the first place–and this is especially true for companies doing business in the insurance space. When Hurricane Florence hit, thousands of people lost their homes, and some even lost their loved ones.

When those impacted reach out to their insurance providers, empathy offered by the human employees can make a real impact on one’s perspective on life and result in a stronger, more meaningful relationship between the insurer and the policyholder. And the empathy stemmed from the emotional intelligence in human simply can not be replaced by the machine, at least not in the foreseeable future.

Make no mistake, customers still want a speedy recovery and quick payout–benefits that technology can deliver–when tragedy strikes, but AI and other automated approaches have a long way to go before they can fully take over all the functions humans perform today. Insurers who make empathy part of their core business practice will sustain and win over more customers.

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Balancing technology, efficiency, and empathy

With all the benefits that AI and machine learning can provide, insurers need to weigh the implications–both good and bad–of making AI pervasive in their business. As the CEO from the InsurTech Lemonade pointed out, insurance is in the business of insuring people. People have emotional needs, and those needs are amplified when disaster hits. Ignoring such basic human nature in insurance practice will certainly drive customers away and lead business to suffer.

The more viable approach will be a balancing act. Using AI to streamline processes by automating some of the repetitive, time-consuming tasks, such as data gathering and cleansing, facilitating collaborations, and insights delivery; and instead of replacing human workers, leveraging AI to assist human employees to provide faster and more personalized services, such as offering empathy with a better understanding of the policyholder’s overall situation.

While machines are capable of enhancing critical processes such as claims and underwriting, there are few things capable of replacing human-to-human relationship building, and that relationship can have a material impact for insurers, especially in the aftermath of loss for policyholders.

With an ongoing need for authenticity and connection in the insurance industry as technology begins to handle some of the work that humans have done, insurers who make an effort to maintain that empathy will find themselves instilling a better relationship with their customers, and that relationship will translate into trust and real business for the company.

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Jie Wu is the Director of Marketing Solutions at GoodData. She can be reached at jie.wu@gooddata.com.