AI Will Lower Costs for Insurance Call Centers; Will it Also Lower Head Count?
When a company handles 30 million customer calls per year, it is totally understandable that leaders of that company get really excited with every new opportunity to reduce costs. With numbers like 30 million inbound customer calls, you only have to shave off a few pennies off the cost of handling each call to realize significant savings. Every business student probably remembers conversations about those mighty case examples such as when an airline removed one olive from a salad to save millions on aviation fuel or a transportation company shaved off pennies per mile through logistical efficiencies, to save their companies millions. Well those kinds of stories about radical disruption of operations due to automation are now everywhere.
Since 2017, insurance giant, MetLife, has been experimenting with using artificial intelligence to handle customer calls in their auto and home business units. The leadership has been so satisfied with the results that they expect to be handling all 30 million of their customer calls with artificial intelligence technology by mid-2020. In a WSJ article, MetLife Vice President in charge of call center transformations confirmed that using voice recognition software has enabled customers to get quick answers for routine calls. The VP shared that this additional help from AI now leaves client service representatives free to handle what he called those “moments of truth” when customers needed a greater depth of care from customer support such as after the loss of a loved one, a car crash or a house fire.
Having worked and supervised staff in call center environments, I understand the operational struggles to manage them. From my own experience, call centers have high employee turnover rates. Some of the common reasons for the high turnover rates included employee boredom from doing repetitive work, high stress due to business pressures to maintain low talk-times in very fast paced environments, inflexibility with scheduling and less than adequate staffing. This often resulted in high absenteeism rates and ultimately agents would disappear as soon as they found other work. In the corporate travel call center where I worked, employees handled abusive and irate callers when flights were delayed, passengers arrived at destinations without luggage or any of the other million things that could go wrong even with a carefully planned trip. Employees burned out, staff became disengaged and quit as soon as they had other options. Despite some efforts to retain employees the turnover rate in call centers remained high, ranging from 30 to 40% which is more than double the average for all occupations in the US. Additionally, unless you were in some high specialty area, the salaries were not that great.
With the high turnover, some HR offices resigned themselves to what they called “the sacrificial HR strategy which involved the deliberate, frequent replacement of employees in order to provide enthusiastic, motivated customer service at low cost to the organization” (Wallace, 2000). In other words, it didn’t matter why people left, HR just found others to fill the empty seats.
With those realities in the background, you can understand why companies like MetLife would relish the chance to shift this paradigm and move the routine work to robots run by algorithms that never get tired or burnt out.
MetLife realized the potential for artificial intelligence, data analytics and automation to bring value to their clients and company by personalizing customer experiences, understanding customer behavior, streamlining the claims process, preventing fraud and improving underwriting. If you see this type of opportunity, the bet is always going to be on the company that goes for the efficiencies and lower costs.
Although Metlife has not said they expect to reduce the number of human agents in their employ, they are predicting that AI will be able to handle at least one million calls without the need for any human interaction. As Metlife goes, so will go other insurance companies. Whether or not they say it blatantly, these changes will impact workers. Yes, it will eliminate some of the routine tasks from jobs, hopefully making human work much more engaging and empathetic. However, it is feasible that this change will also reduce the need for human workers or possibly devalue human skills thereby reducing wages.
I know this is a possibility from personal experience. As a staff supervisor in the last call center where I worked, I was one of the four employees who tested the new technology that allowed travel agents to work virtually. This was two decades ago when internet technology and a Windows environment, shortened my commute from 60 miles one-way on California freeways to a 60-second walk down the hall to my home office. With that change to work remotely, I was forced to take a reduction in salary.
Remote access technology also allowed the company to recruit and hire nationally. With a larger labor pool to choose from, salaries of the work-from-home agents was reduced. It only makes sense. That’s what businesses leaders do. They seek opportunities to reduce costs and, in many cases, labor is often the most costly part of their investment. You don’t have to look hard to see the attraction of technology that will impact operations this way. The benefits, I should add, not only apply to the companies. Not having to commute to work allowed me to return to a nearby community college to earn a college degree.
So, while AI and automation will necessarily reduce the number of employees doing certain mundane tasks, the jury is out as to the full ramification of these changes. There is no way to say, at this point, whether or not the new job roles created due to automation will equal the number of jobs lost. In fact, the Glassdoor report for May 2019 showed a 56.7% increase in the number of insurance job postings over May 2018. Most of those insurance jobs were in sales and technology. This may be a sign of things to come. Who knows if that trend will shift once AI starts handling one million calls completely without agents?.
There is no doubt that technology and data continues to bring new opportunities, but unfortunately not for everyone and certainly not all at the same time. Changes continue to happen slowly until there is a critical momentum and what appears to be all of a sudden, industries are revolutionized. I saw many people who were surprised when they were replaced by airfare-calculating algorithms in the travel industry; even though the writing was clearly on the wall for a long time.
For those who want to be able to ride the crest of change, constant environmental scanning will be needed as automation gets a bigger and bigger footprint.