‘Dawn of a new era’: Insurance chatbot industry to hit $4.5B by 2032

The global insurance chatbot market has experienced such enormous growth since the advent of the COVID-19 pandemic that it’s expected to hit nearly $4.5 billion by 2032, according to a report by Allied Market Research.

While this kind of technology was already in the works before, the pandemic accelerated its development and adoption in sectors such as insurance with increasing demand for digital-first solutions.

According to AMR’s research, the global insurance chatbot market was valued at around $468 million as of 2023. It’s expected to achieve a compound annual growth rate of 25.6% over the next decade due to its rapid pace of growth.

Bryan Adams, co-founder and CEO of Integrity Marketing Group, believes it’s the “dawn of a new era” in technological advancement in the American insurance space.

“We are excited about carriers leveraging technology, starting to leverage artificial intelligence, to better serve individuals and to leverage basic technology platforms that are available out in the marketplace,” he told InsuranceNews Net. “We think that this is kind of a dawn of a new era, and we’re excited for everyone in every part of the channel to start really investing more in technology and really serving more people as part of that.”

The rise of chatbots

A chatbot is a form of AI that uses natural language processing to analyze input such as questions and produce responses in a way that stimulates human conversation. The simple yet catchy term incorporates its “chat” capabilities with the fact that it involves a “robot” or bot.

Chatbots have become even more popular in recent years thanks to programs such as ChatGPT, Gemini, Claude and countless others. Insurance companies use this technology in a wide variety of ways, including for customer service needs, to expedite claims processing and more.

What’s driving AI advancement?

AMR suggested the rapid development of industry-specific chatbots is being driven by a combination of two factors:

● The increasing use of AI, language models and natural language processing in banking, financial services and insurance sectors
● A growing need for cost savings, operational efficiency and enhanced customer experience

AMR expects technological advancements and rising adoption of chatbots by insurance companies to “provide lucrative opportunities for market growth” in coming years.

That aligns with industry trends, which have seen well-known brands such as Allstate, IBM Watson and dozens of others launch insurance-specific AI chatbots over the past few years alone.

For instance, Integrity just recently released an upgraded version of its digital assistant, Ask Integrity. However, Adams said their software does not stop at chatbot capabilities but expands even further.

Beyond chatbots

Integrity’s Ask Integrity platform is a full-blown digital assistant that incorporates AI to support agents and enable them to serve clients more effectively. Launched last year, the AI is activated by voice or text.

“If you think about chatbots, it’s more about I ask the question and the chatbot will return an answer. But our Ask Integrity digital assistant is not just a chatbot; it works behind the scenes, gets insights out of the data that an advisor has collected and prompts back with advice,” Harsh Singla, Integrity chief technology officer, explained.

Adams noted that many insurance carriers are still using outdated methods, and he’s excited to see more of them start to adopt AI.

“I think financial services for sure, and insurance is kind of the subset of that, has been very, very slow to adopt new technology and very, very behind in a lot of the opportunities that we see that are table stakes into the future,” he said. “You may have some chatbots that may be out there, and that’s really the most elementary level of technology available at this level, and we love the fact that people are using technology to innovate.”

Immense market growth projected

Chatbots may be just the tip of the iceberg in technological advancement, but AMR’s report nonetheless noted its immense potential for market growth.

It broke down future growth potential based on type of chatbot:

● Customer service
● Sales
● Claims processing
● Underwriting

Customer service chatbots held the lion’s share of market growth in 2022, accounting for more than two-fifths of global insurance chatbot market revenue. AMR expects that trend to continue over the next decade.

However, underwriting insurance chatbots are expected to see the most growth, reaching an estimated 30.6% CAGR as uptake increases.

Text-based rather than voice-based has also been the most popular type of chatbot so far, and AMR projects that will continue to be the case. Text-based chatbots accounted for more than three-fourths of global market revenue in the insurance industry specifically.

However, AMR again expects more uptake of voice-based insurance chatbots over the next decade, with a projected CAGR of 28.8%.

Allied Market Research is the full-service market research and business consulting branch of Delaware-based Allied Analytics LLP, founded in 2013. Its Insurance Market Chatbot report is a paid report. It assessed market growth by type of chatbot, interface and region. It also provided industry forecasts for the 2023 to 2032 period.

Integrity Marketing Group, founded in 2006 and based in Dallas, Texas, is one of America’s top distributors of life and health insurance products.

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Rayne Morgan is a journalist, copywriter, and editor with over 10 years' combined experience in digital content and print media. You can reach her at [email protected].