Ai.ia: Redesigning homeowners’ relationship with insurance
By Savannah Ardrey, Shota Daido, Siddharth Gehlaut, Shilpa Kannan
Executive Summary
Natural disasters are becoming an increasingly frequent phenomenon. The human impact of these disasters is substantial, but the rebuilding process is not catered to supporting homeowners. Through our conversations with residents impacted by the Paradise wildfires, we learned about the challenges residents faced in rebuilding their homes and lives after the fire.
The Problem
From Paradise residents, we heard a consistent theme of stress and trauma associated with insurance. The first stressful interaction came when purchasing a home. One homeowner shared that insurance was “buried” among the many forms required. As a result, insurance seemed unimportant and new homeowners didn’t take time to understand their policy until it was too late (after the wildfires).
The negative feelings continued as homeowners tried to change their policy. One homeowner shared their experience trying to adjust their policy post renovations. This homeowner was aware of the fire risks and knew that they should increase their insurance, but their agent talked them out of it. The homeowner ended up being underinsured and could not fully recover their home's value after the fire, causing substantial distress.
The final pain point with insurance was the claims process. After losing their homes, homeowners begin the arduous and traumatic process of itemizing all of their belongings. The process was not only emotionally draining but also time-consuming. Some homeowners even chose to take a lower percentage of the claim amount so that they wouldn’t have to relive the memory of losing their homes and belongings.
For natural disaster victims, insurance is their most important relationship to rebuild their life, but it ends up becoming one of their least reliable.
Why insurance companies should care
As described above, residents’ perception of insurance was often tethered to financial stress and frustration, which resulted in ambivalence and lack of well-informed decision-making. Taking this forward, we can imagine a rapidly approaching world where homeowners will not want to engage with insurance at all. This will mean homeowners are less prepared for disasters, and in the long run, will face more stress and trauma.
As a result, insurance companies will see unhappier users, reduced customer loyalty, and potentially churn as customers explore other options or insurers. This can be particularly harmful to insurance companies’ profitability when “lower risk” customers start jumping ship. It is in the insurer’s interests to counteract these connotations of stressfulness and unreliability.
Our Proposal
What if homeowners’ relationship with an insurance company is their most reliable relationship?
Our proposed solution is Ai.ia (AI Insurance Agent), an AI-based holographic insurance agent that will be there for homeowners throughout the lifetime of the insurance policy. Ai.ia can be built by collecting data on existing policyholders, their questions, home value, and policy coverage. Ai.ia can serve homeowner needs and will be able to provide empathetic support.
There are three key moments for a homeowner where Ai.ia would provide support:
At sign up:
When buying a home, homeowners would set up a time to meet and program Ai.ia to walk them through the costs and benefits of insurance coverage options. Rather than signing onto an insurance policy in a stack of hundred papers, homeowners have a personalized assistant to answer all of their questions. This will begin their relationship with Ai.ia & the insurance provider in a way that engenders trust.
For changes:
As homeowners buy new items or do construction on their homes, Ai.ia can track the changes and proactively suggest changes to the insurance policy through aerial scans and credit card tracking.
Rather than having to manually track and report policy changes, homeowners can rest assured that Ai.ia is updating their policy and that they are covered in case of disaster.
In case of loss:
In the case that a disaster affects homeowners’ homes, Ai.ia will act first. With the scans and item tracking done by Ai.ia, homeowners would automatically receive payouts at the time of a disaster. If it is not a complete loss, insurance companies can make partial payments first based on the aerial scan. Whereas today homeowners spend significant time post-disaster fighting for claim payouts, with Ai.ia, they can focus on rebuilding their life.
Conclusion
We hope that with Ai.ia, insurance can go from an unreliable acquaintance to homeowners’ most trusted partner. Like Paradise residents, homeowners may undergo a traumatic event. We hope that Ai.ia will provide the support that is so lacking from today’s experience, showing every homeowner that they are not alone.
On June 3rd, 2021 the Redesigning Finance students presented their work via Zoom to a panel of experts working in the finance sector.
