AI has been making waves in the insurance industry for years now as advancements in computing expedite processing claims-related information - a huge win for insurers. Now with advancements in AI-powered customer experience, insurance companies can see the through line and enable policyholders to benefit from these earlier AI-powered gains.
And it will pay off: McKinsey reports that in the U.S., the auto insurance carriers with the best-in-class experiences have generated 2-4x more growth in new business and about 30% higher profitability than others, because satisfied customers are 80% more likely to renew their policies than unsatisfied customers.
AI is the key for insurers to be competitive. If they can use AI to deliver a better customer experience at fairer rates, they’ll be able to build valuable customer loyalty.
Keep reading as we dig into some of the ways that AI-powered advancements can improve the customer experience in insurance.
AI-powered customer support
Any insurance company’s frontline customer service agents must have the tools to deliver information and service in a timely manner. If your team members are still using clunky customer support software, that’s a bottleneck to communicating with customers and claimants.
Here are three specific ways AI can facilitate better customer support in insurance:
Centralized support
More so than in other industries, in insurance, customer needs and interactions can be complex and nuanced. Having an all-in-one customer support and CRM tool can help customer support and insurance agents have the information they need to serve policyholders much more effectively than gathering information from multiple tabs.
Kin Insurance centralized their operations with Kustomer and reduced response times by giving agents a complete history of each customer. The omnichannel view reduced communication gaps with customers, and setting up workflows reduced manual work - freeing agent time.
Comprehensive systems are also more likely to facilitate success with AI as more of the information it needs lives in one place.
How to deflect WISMO (without sacrificing the customer experience)
Generative AI tools are helping draft work communications across all industries, and customer-facing insurance agents are posed to see the benefits. Allstate implemented generative AI for their insurance agents’ email communication and found it:
- produced more empathetic messages
- delivered news with a softer touch
- used less jargon with customers
- included offers to answer further questions
- gave customers the benefit of the doubt
All of these softened the communication and prevented conversations from derailing. This delivered a better customer experience while saving the employees time too.
AI (customer service) Agents
Not to be confused with insurance agents, insurers have already been deploying AI-powered chatbots and voice assistants to deliver instant, 24/7 service. For example, in 2018, Zurich Insurance introduced a claims chatbot that operates around the clock; it now handles 35% of claim requests and cut average processing time by 30%, while achieving an impressive 80% Net Promoter Score.
But in 2025, we have the next iteration of this technology in the form of AI Agents. AI Agents can handle routine inquiries, provide quotes, and even guide customers through claims – all in natural language. With bidirectional handoff, humans can jump in if the situation gets complex, then hand the conversation back to the AI Agent to tackle followup work.
AI tech advancements
Thanks to advancements in computing, AI has been improving the efficiency of the insurance industry for years now in various ways. Much of these efficiency gains have enhanced core operations, like underwriting.
Here, we’ll break down how insurers can take these advancements a step further and tie these wins back to the customer experience:
Policy issuance
Customers don’t like thinking about their insurance needs or spending time shopping for them. Anyone who has taken out an insurance policy or comparison shopped to find better rates knows it can be time consuming. Thus, consumers stick with their insurers not because of true loyalty, but because switching is such a pain.
AI advancements in processing can flip that on its head. One study examining complex commercial policies found that AI-powered underwriting has reduced the time to issue a policy from over 3 weeks to under 48 hours, without sacrificing accuracy - it also led to “a 37% reduction in policy amendments…. and a 45% decrease in customer complaints related to underwriting decisions.”
Claims processing
As a natural next step, AI has made big strides in processing claims related information. One study found that AI in underwriting brought about a 31% reduction in processing time for complex policies.
AI streamlines labor-intensive insurance processes, speeding up service delivery. Routine tasks like data entry and claims handling can be handled by AI with minimal human intervention. McKinsey estimates that half of claims will be resolved by automation rather than human adjusters by 2030. This can free up agents to spend more time with customers solving problems and meeting their needs rather than on administrative tasks.
Personalization
AI enables insurers to tailor policies and pricing to individual customer profiles. Rather than one-size-fits-all policies, customers can more easily get coverage aligned to their behavior and needs. For example, safe drivers now enjoy personalized auto premiums based on driving habits (usage-based insurance), replacing generic risk models.
For property insurance, AI can make use of richer data for underwriting. Instead of relying on infrequent inspections or limited credit scores, underwriters can use AI to analyze data like crime rates, prior claims, property records, and even aerial imagery of the home. For example, an insurer can leverage geospatial analytics with AI to assess a property’s condition (roof quality, presence of a pool, nearby brush fire risk, etc.) from high-resolution photos. Hundreds of factors are processed in moments to produce an accurate risk score and tailor coverage to that specific property.
This leads to more precise pricing and faster quotes for customers (often instantly online), improving the buying experience and ensuring the insurer isn’t flying blind on risk. Ultimately, customers are more satisfied when they can get more relevant coverage for fairer rates.
Fraud detection
Fraud takes up a massive amount of resources in the insurance industry. A 2022 study conducted by the Colorado State University Global White Collar Crime Task Force found that insurance fraud costs U.S. consumers $308.6 billion yearly - a huge jump from the previously accepted estimate of $80 (because it hadn’t been updated since the 1990s).
Using machine learning models and AI’s enhanced accuracy in processing can help insurance companies squash this number by identifying fraud faster and more reliably than manual methods. The improvement to the insurance company’s bottom line could translate to savings or improved experiences for honest policyholders.
Final thoughts
The question isn’t if insurance companies will adopt AI to enhance their customer experience - it’s when.
Embracing AI is becoming essential to competitive strategy across most industries, and insurance is no exception. The insurance market is massive and is seeing new tech-driven entrants who want a piece of the pie. Industry analysis suggests that the insurer who best harnesses AI’s power in this market will win terms of market share and customer growth.
The biggest gains come when all the systems seamlessly integrate - or better yet, are one and the same system. Check out our guide on what to look for in a customer experience CRM platform to help you evaluate which platforms will help set your organization up for success when integrating AI into your customer experience.
Ready to get started? Talk to our team today about how Kustomer can supercharge your brand’s customer support!
