Insurance executive Brian Piccolo is a self-proclaimed “geek” who found true love when he met “Alexa.”
The artificial intelligence platform is an internet “personal assistant” and lives on Amazon’s (AMZN) Echo device. She has come a long way from the age of the TV show “Madmen,” when she was known as a “secretary.” And Piccolo is the matchmaker who last year put her together with his employer, insurer Liberty Mutual, where he’s the manager of e-business.
Where Piccolo and Liberty Mutual have gone, other companies are following. The list of companies that will put their “skills” on Alexa continues to grow. They already include ADT, Capital One (COF), Domino’s (DPZ), Fitbit (FIT) and Uber, as well as horoscopes from Elle magazine. In total, Alexa now has over 10,000 apps or “skills” (as Amazon refers to them) on it.
Talk to your spouse over breakfast, and you might get the occasional “Yes, dear.” Talk to Alexa -- Amazon’s voice-activated, hands-free personal assistant with seven multidirectional microphones -- and you get heard every time. Alexa is searingly smart, “the brains behind Echo,” according to Allstate (ALL), which put its skill on Alexa in February. With the help of Alexa’s connection to your home Wi-Fi, your message then goes to the cloud, where it’s nearly always answered.
“The original inspiration for the Amazon Echo was the Star Trek computer,” said Amazon spokesperson Daniel Gabis. “We wanted to create a computer in the cloud that’s controlled entirely by your voice. You could ask it things, ask it to do things for you, and it’s easy to converse with in a natural way.”
After Alexa hears you, it tries to obey your every command, making what Gabis describes as “the best choice and delivering it back to the customer.” So it’s no wonder 4 million people have already purchased an Echo, impolitely described as “two Campbell’s Chunky soup cans stacked atop of each other.” Amazon will see 10 million more buyers this year, according to analysts.
Similar products are on the market, most with female-sounding names, waiting to serve you in a similar way, such as Apple’s (AAPL) Siri, Google (GOOG) Assistant and Microsoft’s (MSFT) Cortana. But as one observer of the recent Consumer Electronics Show in Las Vegas said, “Voice recognition was the star … and Alexa was the clear winner” in terms of integration with insurance and other industries. One analyst even compared it to the launch of Apple’s iPhone.
“I’ve had Alexa for a little over a year,” said Piccolo, “and it has changed the dynamic of our household. The kids use it all the time for the weather. We play the “Jeopardy” skill, and we ask it to turn on the light in the kitchen when we’re in the living room.”
Piccolo transitioned last summer from using Alexa for personal use to adapting it for Liberty Mutual. Since Alexa was getting close to his family, why not help it get close to Liberty Mutual’s customers? The process was easy because Amazon welcomes companies that want to put their “skills” on Alexa and doesn’t charge them to do it.
For good reason: The more content on Alexa, the more answers it can give. And more answers create more value for the customer, thereby helping to sell more Echos for Amazon.
“Installing our app on Alexa was frictionless,” said Piccolo. So far, it has worked, making Piccolo and Liberty Mutual very happy. He believes it gives the fourth-largest home and auto insurer a significant edge over companies that don’t have a voice-activated presence in the home. “By 2018, we’ll see 30 percent of our conversations through devices like this,” Piccolo claimed.
In theory, Alexa is neutral -- she doesn’t “steer” the user toward any particular company. For example, when you ask Alexa where to find a mechanic or car service, she’ll compile a list of local dealers, since, like any good assistant, she knows where you live. But ask her a question about a national company and you might get a generic answer such as “X-mart is a major retailer with $20 billion in annual sales specializing in home appliances.”
But that merchandising landscape changes when you “enable” her to tell you about a specific company that has put its skills on Alexa. This allows the company to present a whole array of goods and services, from which you can pick and choose easily. In other words, Alexa will tell you her preferences -- if you let her.
You can probably get much of the same information from your computer, minus the ease provided by your personal assistant since you can talk to Alexa hands-free, and you don’t need a search engine.
Here are a few examples specific to the much-maligned insurance industry, which most people contact only a few times a year, such as when you get a bill, and generally for services you hope you never need. Through Alexa, Liberty Mutual can give you an auto insurance estimate or information on how to repair, secure and make your home safer from fire and other disasters.
According to Piccolo, by using Alexa you’ll soon experience a new hub on car maintenance, and you’ll be able to open a claim if you’ve had an accident. Liberty Mutual affiliate Safeco can already provide you with a tutorial on questions like “what does liability mean?”
Through Alexa, Allstate can tell you when your next bill is due and the minimum amount you can pay. You never have to call the company -- and probably get put on hold.
According to the website Clearsearch, which tracks consumer reviews of insurance companies, “Customers want a relationship,” and they expect an “immediate response.” Alexa provides both, even if it’s done through a machine. Clients of another Alexa company, Grange Insurance, agree. One described the service as “very cutting edge. So cool to get valuable information.”
Alexa makes insurers seem warm and friendly, and a lot more. It’s the gateway into the “connected home,” having already taken baby steps like turning lights on and off at your command. But the home of the future will have a lot more cameras, sensors and other technology that will be voice-activated, even remotely, for security and family protection. They’re even capable of turning the washing machine on at 4 p.m. from outside the home with a simple verbal command.
Piccolo wants to enter this connected home by installing fire and safety devices to make insurance less costly. “We’re looking at the possibilities of partnerships with Nest and others in this emerging space,” he said. Nest is a home-automation company that makes programmable, self-learning, sensor-driven Wi-Fi thermostats, smoke detectors and other security systems.
“I take control of Nest and other devices through Alexa,” said Piccolo. In other words, the links between industries are waiting to be forged through Alexa.
Other devices should, and probably are, scrambling to catch up. Nearly perfected voice-recognition software can appeal to everyone. And it’s very clear from the oversold initial public stock offering of Snapchat parent Snap that millennials are in constant contact with electronic communications devices. But mom and dad may also like it because they don’t have to play around with their cell phones. All they need to do is talk -- from almost anywhere in the house -- and Alexa will listen to them.
So, what are the drawbacks? Remember that you’re having a conversation with a machine, not a human. Some critics complain about “disintermediation,” an elaborate way of saying “Cut out the middleman” -- something Amazon has been doing for years, leaving the empty shells of once-successful department stores in its wake.
The counterargument is that this puts control squarely where it belongs -- in the hands of the consumer. A 2013 study by comScore, which measures and ranks companies and industries, estimated that 3.1 million auto insurance policies were sold online as early as 2012 and indicated that the market is growing by at least 3 percent a year.
“Alexa is a creative way to reach younger consumers. Call centers, the internet and mobile devices are increasingly gaining momentum,” said spokeswoman and Vice President Loretta Worters of the Insurance Information Institute.
So it appears that every industry, especially insurance, will have to adjust and learn to live with Alexa and her counterparts. Case in point: Many of the skills insurers offer through Alexa focus on putting consumers in touch with agents who can explain the legal aspects of their extremely complicated policies.
Then there’s the security aspect. “Alexa is always listening,” said a Time magazine article, although you can tell her to sleep and wake up. And like a good personal assistant, Alexa knows virtually everything about you, including how often you go to “Bartender’s Skill” for tips on alcoholic beverages. You could even say that she knows too much.
But take heart, no data is kept locally on the device. So unlike your laptop, it makes little sense for someone to steal it.
Companies that position their skills on Alexa should only be able to learn what you tell them, although filling out an insurance policy will tell them a lot, such as your credit rating. According to Piccolo, they go through a “thorough process to protect security.”
Amazon itself protects clients’ privacy. “This data is not sold and is only used to improve the Alexa service,” said Amazon’s Gabis.
But while companies have only a piece of the puzzle, Amazon pretty much knows what its clients like and don’t like, when they sleep and wake up, and what they eat. This vast amount of knowledge about individuals isn’t divulged, but “big data,” as it’s called, is hugely valuable for any company -- such as Amazon -- that wants to market to the public.
“Mining this data will enable vendors to anticipate and sometimes create more demand for their goods and services,” said insurance analyst Donald Light of Celent. “As the value propositions of connected cars and homes increase, so does the imperative for insurers to enter these ecosystems through alliances and stand-alone offers.”
So think of Alexa as a very competent personal assistant who’s always on duty. But never forget that she also has her own agenda.