Indian consumers have rapidly integrated conversational AI into financial interactions, with ServiceNow’s Customer Experience Report indicating that 80% of them use AI chatbots for tasks such as checking complaint status, obtaining product recommendations and accessing self‑help guides, and 78% specifically employ chatbots when reviewing investment options. In the motor insurance space, a 2026 study published in the International Journal of Bank Marketing surveyed 245 experienced insurance‑chatbot users and concluded that trust in the chatbot is a primary driver of both first‑time adoption and continued use; ease of use and perceived usefulness also boost adoption intentions, while perceived risk diminishes trust but does not deter usage, reflecting a calculated, risk‑tolerant mindset among Indian customers.
The most common queries directed at insurance chatbots are definitional rather than price‑related, covering topics such as the meaning of Insured Declared Value (IDV) and its setter, the distinction between third‑party and comprehensive cover, inclusion of engine damage caused by water‑logging, the impact of a small claim on a no‑claim bonus, and the justification for specific add‑ons. These questions historically went unasked because insurance terminology in India is dense, agents are typically consulted only at renewal, and policy documents are rarely read in full; chatbots remove the social cost of asking basic questions and can provide answers at any hour.
AI tools excel at decoding jargon—explaining depreciation, IDV or total‑loss thresholds in plain language—but they stop short when a response requires policy‑specific data such as an individual’s no‑claim bonus, claims history, geographic zone classification or the insurer’s current filed rates. Because chatbot answers are derived from publicly available material, the information presented may reflect the most visible insurer’s content rather than the product that best suits the consumer.
Gaurang Thosani, Head – Digital Marketing & eBusiness at Royal Sundaram, observes that customers now approach renewal conversations better informed and with sharper questions, which is beneficial for the industry, but stresses that insurers must ensure that the answers provided by their own digital channels match the actual policy wording. He adds that while an AI tool can explain concepts such as zero depreciation, it cannot confirm whether a specific policy includes that cover, the current value of a no‑claim bonus, or how a claim would be settled; those details reside in the policy schedule and must be verified directly with the insurer.
On the regulatory front, the Insurance Regulatory and Development Authority of India (IRDAI) constituted a seven‑member working group on artificial intelligence on 18 June 2026, chaired by Sandeep K. Shukla, Director of IIIT Hyderabad. The group’s mandate is to assess the extent of AI deployment by regulated entities and to draft the sector’s first formal AI governance framework, emphasizing ethical, transparent and explainable use, with claims processing and fraud detection identified as priority areas. The framework will govern insurers’ internal AI applications but does not extend to third‑party chatbots that consumers may consult independently, leaving verification responsibility with the buyer.
Practically, the release advises consumers to treat AI as a research assistant rather than an underwriter: they should build questions using AI, verify every specific claim against the actual policy wording and schedule, independently check the IDV on any quote because it drives both premium and payout, and confirm any price‑bearing elements such as no‑claim bonus, deductible and add‑on inclusions directly with the insurer before purchase. Insurers like Royal Sundaram that publish policy wordings and add‑on details alongside quotes facilitate this verification step.
In summary, AI chatbots are becoming a standard part of how Indian car‑insurance buyers research policies, offering significant value in demystifying insurance terminology while requiring consumers to perform their own verification for policy‑specific details.