What is generative AI exactly? It refers to AI systems that can generate new content, rather than just classify, match, or modify existing content. Examples include models such as GPT-3 from OpenAI and Claude from Anthropic. They can produce remarkably human-like text, code, images, and more from simple prompts. 

Three key areas where generative AI could benefit life insurers come to mind immediately: 

• Automating policy documents and paperwork: One of the less glamorous but crucial functions in insurance is producing reams of policy documents and paperwork. Generative AI excels at generating text for contracts, reports, regulatory filings, and more. This could significantly reduce the manual effort currently required for documentation. Concise, accurate paperwork helps cut costs and ensures compliance. 

• Speeding up and enhancing underwriting: Underwriting is time and labor intensive, relying on assessing applicant medical records, lab results, and health history. Generative AI can be trained on industry data to automatically summarize and extract insights from medical documents to help underwriters. This saves time and reduces human bias and errors. Fewer back-and-forth delays improves customer experience. 

• Creating personalized customer interactions: Each customer interaction—whether a policy explanation, renewal notice, or claim assistance letter—represents an opportunity to build trust and loyalty. Generative AI can generate customized communications tailored to the customer’s policy, background, and previous interactions with the insurer. This level of personalization promotes higher engagement and satisfaction. Insurers should note that sensitive interactions are still best handled by human customer service agents. AI is best used for personalizing the mundane-yet-necessary interactions that make up the bulk of policy servicing.

Generative AI can be an assistant to many roles and functions. As with any new technology, there are risks to be evaluated regarding data privacy, security, and bias in the AI systems. However, the potential productivity and innovation gains make this an area worth exploring and monitoring closely. 

CIOs have a unique role to play in responsibly piloting generative AI to transform life insurance for the better. If you’re curious on how to get started, you can read our report on the top 5 questions CIOs have about GenAI, or contact me directly.

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The Datos Insights report, Top Five Questions Claims Executives Have About Generative AI, discusses what GenAI can do for claims today and in the future, what it can’t do for claims, the regulatory concerns associated with using GenAI in claims, and how to help your organization adapt to the changing claims landscape. Here are some key takeaways from this report.

GenAI Could Transform Claims Processes and Operations

One key capability of GenAI is the ability to rapidly ingest and summarize large, dense documents like medical records, legal briefs, police reports, and other claims documentation. Rather than requiring adjusters to review hundreds of pages manually, GenAI can provide concise summaries of key information. This can significantly accelerate claims assessment and resolution.

Implementing GenAI can accelerate time to value because GenAI requires less IT lift than other new technologies, especially if carriers leverage knowledgeable vendors. GenAI can integrate with existing tools and processes vs. requiring the development of new platforms or full process redesigns.

Limitations on the Use of GenAI in Claims

As powerful as it is, GenAI does not eliminate the need for human expertise, discretion, and empathy in the claims process. For example, carriers should apply GenAI cautiously, if at all, for life insurance claims involving the death of a policyholder. These claims’ sensitivity and emotional nature require an empathetic, human approach. Virtual assistants or other GenAI interactions could be perceived as impersonal and inappropriate.

More generally, GenAI can provide information to support claims assessment but cannot make final decisions on coverage or payment amounts. Those determinations require a licensed claims professional.

Adopting GenAI Is an Iterative Process

As new technologies like GenAI transform claims processes, insurance leaders play a key role in guiding their organizations through adapting to new practices. Insurers must balance enabling cutting-edge capabilities while ensuring that claim outcomes, especially loss costs, don’t erode.

Adjusters have tremendous expertise, which, when coupled with a thoughtful change management strategy, claims organizations can use to improve continuously and extend how AI makes experts more effective and the process more customer-centric. Insurers should modify legacy claims workflows and organization to maximize benefits from AI augmentation. This adaptive approach enables people and AI systems to work synergistically.

GenAI Is Powerful but Will Require Considered Action in Claims

GenAI has the potential to improve claims processes and increase efficiencies, especially for adjusters. However, claims is a domain where many tasks are not appropriate for GenAI, so careful governance and change management will be especially important to ensure the thoughtful integration of GenAI into appropriate tasks.

To read the full report on this topic, see Datos Insights’ report Top Five Questions Claims Executives Have About Generative AI.

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Despite significant investments in digitization, unstructured documents are a key part of an insurer’s operational processes. Repetitive, manual tasks such as data entry are perfect candidates for increasing operational efficiency by introducing artificial intelligence (AI).

Applications of AI in the insurance space are continually evolving with the release of new technologies, new solutions, and increased efficiency. When it comes to processing physical documents, this has led to an evolution from optical character recognition-based text ingestion to broader processing of unstructured data. Intelligent document processing (IDP) now covers the ingestion of a broad range of structured, unstructured, and semi-structured documents. IDP solutions have evolved into three broad categories: general-purpose solutions, insurance-vertical solutions, and fit-for-purpose solutions.

Often offered by big-tech companies such as Microsoft, AWS, and Google, general-purpose solutions are the most broadly applicable. They are trained to process documents of any sort from any industry. General-purpose solutions will be widely applicable across the enterprise but will take significantly longer to achieve value than other solution types.

Insurance-vertical solutions are similar to general-purpose solutions but with additional training and design components specifically applicable to the insurance industry. These solutions are applicable to most functions of an insurer, from underwriting to claims, and require only moderate investment in training to achieve results in the short term.

Fit-for-purpose solutions are targeted even more narrowly than insurance-vertical solutions. These solutions will generally be able to achieve accuracy―and value―very quickly when applied to the purpose for which they were designed and trained. However, that accuracy and near-immediate return can be fairly expensive. A subset of fit-for-purpose solutions do not come with pre-trained models. Those solutions will require a substantial time investment to train them with the appropriate data and consequently take longer to reach their potentially higher accuracy.

Insurers should carefully evaluate fit-for-purpose solutions for specific use cases and explore horizontal solutions to address a wider range of enterprise needs. No matter what kind of solution an insurer pursues, exciting new technology shouldn’t be an excuse to skip a cost-benefit analysis while being mindful of potential delays in achieving accuracy.

For a more comprehensive understanding of the IDP space, read our report, Intelligent Document Processing: Ingestion Powered by AI, August 2023.

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Women feel they need to work harder to gain equal footing at work.

When women are faced with biases in the workplace, they often feel they need to work twice as hard as their male colleagues to prove themselves. This can look like taking on additional tasks that fall outside their job description or accepting opportunities that do not come with a pay increase. In the insurance industry in particular, the majority of the longest tenured employees are women. However, women remain underrepresented in leadership and tech roles.

During our discussion, one of our panelists noted, “I think about all the times I took an opportunity that came without a pay increase. Looking back, I should have pushed harder. How many men would say they took opportunities without a pay increase?”.

Societal expectations are a barrier to women advancing in the workplace.

In order to advance to leadership in many organizations, there is an expectation that an employee will participate in activities outside of their regular work hours, such as working late, attending dinners, and out-of-town conferences. For women, who are still likely to carry most of the responsibilities of taking care of the home and family, taking on additional work responsibilities and hours is often not an option.

In some households, women may feel uncomfortable being the primary breadwinners or having a higher income than their male partners, which keeps them from seeking better-paying leadership roles. One of our panelists shared that she has had concerns about how men respond to women who earn more than them, stating, “I have found myself worried and not being the first person to bring that up when dating.”

Supporting the next generation of women in the workforce is a priority.

There are many more women in the workplace, including in leadership positions, than in previous generations. Many women in their later careers today did not have female role models to look up to in leadership and tech-focused positions when they started their careers. It’s up to female leaders now to show the next generation what opportunities are out there and to be the best supporters of women in the workplace wherever possible. Women should talk to their younger female colleagues about standing up for themselves and each other, for example by asking for fair compensation when they take on additional tasks and roles.

Our next Datos Insights Women’s Network virtual meeting will take place on September 27th at 2pm ET on the topic of navigating politics, led by Datos Insights Senior Principal Nancy Casbarro.

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Here are the key takeaways from our discussion:

Mentorships Are for More Than Just Career Advancement

When thinking about mentoring relationships, many people think of them as ways to help you on your career path and work toward career advancement. Research supports this as well, particularly when it comes to women in the workplace. Mentorships are proven to give female employees the tools they need to keep their careers on track, and participants in mentoring relationships are also promoted much more frequently than those without mentorships.

However, mentoring can serve a purpose outside of simply career advancement. According to Guider, workplace mentorship can help with several aspects beyond career development, including business success; employee well-being; and diversity, equity, and inclusion. Both mentors and mentees in mentoring relationships experience increased confidence, job satisfaction, and feelings of empowerment.

Mentorship Relationships Should Be Mutually Beneficial

In mentoring relationships, we often think of the benefits to the mentee, but the mentor can also gain positive impact from the relationship. Mentees can get help from mentors in navigating challenges in their personal and professional life, while mentors gain new perspectives that can help them in their own jobs and interactions.

Being a mentor can also help create a better team environment at work and provide an opportunity to learn about different operations in the organization.

Set Goals for Your Mentorship Relationships

Whether your mentorship relationship is through formal or informal means, understand what you want to get out of the relationship. Use your mentoring sessions as an opportunity to work through timely challenges, but setting goals per session, per quarter, or per year can help ensure you will get the most out of your mentorship relationship.

One of our guest panelists stated, “It’s also important to go into your mentoring sessions with a set of objectives as the mentor and mentee, what things you want to talk about, and what you want to get out of it.” Other panelists agreed that this can help mentees get the most benefit from the mentorship.

Our next Aite-Novarica Women’s Network virtual meeting will take place on April 19th at 2pm ET. The discussion, “The Impact of AI in the Workplace,” will be led by Aite-Novarica Group’s Head of Property & Casualty Insurance Martina Conlon and Senior Principal Carey Geaglone. More information is available here.

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Interest in financial transformation is on the rise for many carriers, especially those with complex legal entity structures or those that have recently completed an acquisition. Through our discussions with insurers as well as some informal surveys, we’ve gleaned key insights into best practices for financial transformation.

1. Consolidate as many business segments as possible onto common financial solutions.

Companies are striving for a common GL system for all their businesses, as well as a common billing platform for all entities. GLs are most commonly consolidated to gain enterprise-wide insight into financials for businesses. Consolidated premium billing is also an objective, although it is more difficult to achieve. Billing can be closely integrated with policy administration systems; some carriers find migrating to one solution for different businesses to be ideal but challenging. 

GL and premium billing solutions can handle a range of products, currencies, and geographies successfully. Carriers often cite implementation of SaaS-based GL solutions such as Workday and Guidewire’s BillingCenter for premium billing.

2. Selecting a strong systems integrator (SI) is as important as selecting the right technology solution.

Choosing the right SI is a crucial part of a successful financial transformation journey. Although the solution provider will be a key resource, SIs play a key role on transformation at scale. SIs partner with carriers as well as with the solution provider to provide carriers with a 360-degree view of the initiative. SIs can help carriers modernize business practices and processes in addition to the technology.

Developing an engagement approach with key executives at the solution provider and the SI is also important. We find that executive relationships help to get over pricing hurdles or delivery obstacles. At the same time, carriers should keep escalation to matters that are real and core.

3. Change management must be a key component of the overall program.

Carriers recognize the importance of organizational change management, and it is the item that requires the most attention. Prioritizing change management is key—changes to roles and processes are far more difficult to implement than the technology. Training is another area that should garner attention and focus.  

Financial functions touch many processes inside a carrier as well as with external parties. Employees, agents, and customers need to be part of making the change successful to achieve business goals.

In 2023, Aite-Novarica Group expects a continued interest in financial transformation projects, as well as many other transformation efforts, as carriers look to gain operational efficiencies across the enterprise. For additional information on how insurers are transforming their systems, read Aite-Novarica Group’s report Top 10 Trends in Property & Casualty, 2023: Turning Disruption Into Opportunities, or reach out to me at dzawisza@datos-insights.com.

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Southwest’s employee scheduling system was outdated and not able to scale effectively to meet the chaos created by the weather and the unwillingness of management to preemptively cancel flights. I can imagine the Southwest CIO at some point urging executives to upgrade the system.

Maybe executives didn’t understand how important that system was for all of their customer-facing systems. Maybe they didn’t appreciate that all systems need to be kept current, not just revenue-generating ones. They learned that lesson the hard way, and hopefully it will deter others from making the same mistake.

I’ve been very fortunate in my career to work for insurance carriers who understood the importance of having a healthy technology and business processing environment. Everyone wanted to avoid a “front-page moment.” Insurer CIOs can use the Southwest meltdown as a cautionary tale to secure funding for outdated systems and processes.

Insurers are faced with cataclysmic moments such as weather events, pandemics, financial market volatility, and a host of others which can easily put stress on technology systems. Being prepared to plan for the unexpected is what customers expect of insurers. There is time to get ahead of the disaster and avoid being front-page news.

Now is the time for CIOs to discuss modernization plans for aging systems and infrastructure with the executive team. Whether legacy PAS solutions need to be replaced with modern, cloud-based solutions or manual processes are eliminated with greater automation, the time to act is now. To learn more about how to plan for a core system replacement, read the Insurance practice’s latest reports on PAS implementations: PAS Lessons Learned: Implementation Best Practices for P/C Insurers and PAS Lessons Learned: Implementation Best Practices for Life, Annuities, and Benefits.

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We started by spotlighting emerging trends in the industry, with a focus on how organizations are balancing remote work and return-to-office rules as well as the continued growth of cloud technology. Then we dove into a long discussion about organizations’ challenges and successes with rolling out minimum viable products (MVPs). I’ve compiled key takeaways from these two topics below.

Emerging Trends: Dramatic Shifts Impacting the Insurance Industry

Insurers are facing a great deal of change, including shake-ups in the economy, regulatory chaos, supply chain disruptions, and natural disasters. Organizations also continue to face challenges with resources as turnover rates remain high for the insurance industry. Many organizations are continuing to allow employees to work remotely or have transitioned to a hybrid work model. The feedback we received from Special Interest Group participants was that most organizations are allowing their employees to work from home at least a few days a week. Those with stricter return-to-office rules are finding employee turnover to be a challenge.

The technology environment continues to change, with the growth of third-party data sources and increasing security threats. Cloud technology continues to grow, and migration to the cloud is not slowing down at all. Platforms are becoming predominantly cloud-based; carriers and others continue to transition on-premises platforms to cloud and create new capabilities natively in the cloud. We haven’t heard of any new solutions created on-premises.

What all these shifts mean is that looking in the rearview mirror won’t prepare insurers for the future. These are unprecedented times, and insurance leadership that we have spoken to don’t have all the answers. This points to the need to be more agile, fail quickly and try something else quickly, and explore different strategies.

How to Execute the Minimum Viable Product

The second half of our meeting focused on challenges and successes with the MVP model. The MVP is about speed to value, which is one of the major benefits of Agile, but poor execution of this model has resulted in MVP getting a bad name. Our meeting attendees shared their experiences with the MVP.

One attendee shared, “We struggle with this concept. Our MVP conversations come as we are getting closer to our release date—we can’t get everything done by this date, so what’s our MVP? We should be having that conversation at the beginning, then make the decision if it is good enough to release. Business and IT still think for it to be done it has to be the full product. It’s a mindset shift.”

Introducing the concept of MVP when you’re getting close to release is the wrong time. Introduce it early on. Create an understanding of what an MVP is, with clear guidelines for how it is defined, and make sure the business stakeholders are at the table. The MVP works best when it is guided by the business team itself. However, setting expectations with the business brings about its own challenges.

As one attendee shared, “The MVP the business wants may be too large to deliver, but along the way there is discovery of smaller deliverables that get you to the longer-term product.” Having that open discussion with your stakeholders along the way, acknowledging the things you need to do to get to the final product, and discussing the improvements you can make at each step will result in a much more successful MVP rollout.

We appreciate everyone who joined our Special Interest Group meeting and shared their perspectives. For more information about future Aite-Novarica events, visit our Events page.

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They had a couple pieces of key advice for other aspiring and developing leaders:

Build Relationships in Your Organization

Building relationships in your new role—with supervisors, direct reports, colleagues, and customers—can help you gain expertise. By leaning on your team’s experience, you’ll be able to learn new skills and excel in leadership roles.

Our panelists emphasized the importance of building relationships with your team. By focusing on relationship building early on in your new role, you will learn new aspects of the business more quickly while building credibility with your colleagues.

Prioritize One-on-One Meetings

Holding one-on-one meetings not only with your direct reports, but also with colleagues and customers can help you learn valuable information about the business. Learning where those pain points are and how you can make an impact will help you become an effective leader.

One panelist mentioned that when having one-on-one meetings with colleagues, instead of asking how she could help them, she would instead ask, “What’s your biggest frustration?” This question often led to the best feedback and enabled her to really understand where improvements could be made.

Be Curious and Flexible

Be willing to invest the time and ask questions when learning new competencies and skills. Additionally, being flexible and willing to adapt to situations will help you address challenges as they arise and find solutions.

Our panelists highlighted the need to continually build skills and gain new competencies in order to grow in their roles. While you may have a supervisor to guide you through your new role and be there to help with your growth, there will be times when you will need to get creative and find other avenues for professional development. Our panelists identified online courses, one-on-one meetings with colleagues, and shadowing projects as effective ways to broaden your skill set.

The last Aite-Novarica Women’s Network virtual meeting of the year will take place on November 16, 2022, on the topic of “Innovation: Transition From Novel to Normal,” led by Aite-Novarica Group Senior Principal Nancy Casbarro. More information is available here.

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Why Projects Get Cancelled

Oftentimes, projects get cancelled because of changing business priorities, consistently missed deliverables, and escalating costs and time frames. These issues can become more significant the longer a project extends beyond original date expectations. It is critical to maintain good communication between the project team, sponsors, and any vendors to ensure alignment of both current and future goals.

Projects That Should Have Been Cancelled

A common characteristic of projects that continue too long is the focus on sunk costs vs. value. Money already spent on a project can’t be recouped. Project teams that have established success criteria and standard checkpoints are in a better position to avoid project continuation when the value is no longer there. It is easy to think that just a bit more time or money will get the project back on track, but more often than not these are false hopes.

Implications of Cancelling a Project

When a project gets cancelled, those involved may lose morale when thinking of the hours dedicated to a project that has been shut down. Sponsor communication is key to employees maintaining focus on the business reasons for cancellation rather than feeling like they are to blame for the failure.

It’s important to rapidly reassign impacted resources to other initiatives. Project managers should be transparent by acknowledging the issues that arose during the project, highlighting the lessons learned, and applying them to future projects.

The next virtual meeting of the Aite-Novarica Women’s Network, A View from the Top: Experiences of Women CEOs, will take place on September 28th, led by Aite-Novarica Group’s Head of Property & Casualty Insurance Martina Conlon. More information is available at https://aite-novarica.com/womens-network.

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Coupled with continued weather impacts from floods, wildfires, windstorms, and hurricanes, carriers are responding to the new normal of disruptive change in different ways. Carriers with resilient workforces and flexible technology platforms have begun to accept that product, pricing, and operational changes are required to stay ahead of the pack.  

Flexibility is key in the volatile market, and technology plays a big role in achieving a speed-to-market advantage. Technology platforms that enable frequent releases allow carriers to modify products and processes more easily. Robust API frameworks help carriers integrate with digital capabilities for distribution partners. Third-party analytic insights delivered via APIs are helping underwriting organizations price risk more effectively. Claims organizations are also benefiting from analytics to identify severity and subrogation early on to mitigate loss costs.

Aite-Novarica Group recently announced our annual case study compendium for innovation in core, data, digital, and IT practices. Not surprisingly, cloud computing is the foundation of many carriers’ speed-to-value reality. Carriers who have implemented cloud as a strategic advantage vs. an infrastructure replacement are steps ahead of their competitors.

As an example, Kemper implemented an open-API distribution platform directly integrated with quoting and binding capabilities. Developed in 10 months, the platform has cut integration effort from 2,000 hours/partner to 250, cut maintenance costs, reduced required staffing from 10 to four, and integrated more than 10 partners in a calendar year. It runs on AWS and is built using cloud-native tools.

Another carrier, Risk Placement Services (RPS), implemented a comparative rater for its personal lines business to digitize underwriting and distribution and improve UX. The company onboarded its first insurer in six months. The system increased workflow efficiency by 30% to 35% and is expected to generate 25% to 35% growth over three years. The core technology runs on Azure and leverages API services from Cogitate.

Cloud analytics enabled State Auto to create a machine-learning-enabled, configurable voice analytics solution to increase customer self-service and to reduce adjuster workload. The new solution diverted 10% of the call volume to an IVR system, while the adjuster call analysis allowed claims service staff to handle 3% to 5% of calls. The cloud-native, serverless call insights solution was deployed on AWS.

These are all great example of carriers leveraging cloud to achieve speed to value while navigating the turbulent waters of personal lines insurance. I’d be happy to share further insights and case studies. To continue the conversation, please reach out to me at dzawisza@datos-insights.com.

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On January 26, I hosted the latest meeting of the Aite-Novarica Women’s Network on Agile Lessons Learned alongside my colleague, Senior Principal Nancy Casbarro. Panelists Traci Ducceschi, Director of Project Management at Penn National Insurance; Cindy St. Onge, Scrum Master at Intact Insurance; and Kimberly Wilson, Director of Software Development Engineering at MetLife shared thoughts and stories about Agile successes, challenges, and best practices.

Clarify Roles and Responsibilities Early

Our panelists agreed that clearly defining roles and responsibilities from the get-go is the foundation of a truly Agile culture. Start by determining who in your organization has the skill sets to become a successful tech lead, scrum master, or project leader, one panelist suggested. Harnessing existing skill sets is only one piece of the puzzle. Coaches will need to “build up the muscles of coaching,” and new product owners may not have had previous experience prioritizing to the level that Agile demands. Scrum masters need to moderate team discussions, ensuring that everyone has a chance to be heard. Trainings on LinkedIn can be useful to help envision a clear picture of specific functions and duties.

One panelist has been working with her Agile team for the past three years. Over time, she shared, the members of her team have learned to anticipate each other’s needs due to working together closely as part of the Agile process. Although the high visibility of an Agile framework can generate individual worries or concerns, individuals will often feel empowered when they experience enhanced ability to collaborate and produce results.

 Make Agile Work for Your Team’s Culture

A panelist shared the following anecdote about the start of her team’s experience with Agile, “I asked my scrum team their thoughts, and when we went from Waterfall to Agile, what we learned and agreed on was that we are not perfect and Agile is not perfect.” Following methodology rigidly will only get you so far and may cause problems down the line if you are pushing for changes and results too quickly. Bringing in an Agile coach can help smooth out the transition and make the training period one of teamwork.

Take your organization’s existing culture and processes into account, and remember to evaluate whether Agile methodology is right for your particular project. “The beauty of Agile is that it can work the way you need.” One panelist’s team felt they could not do requirements in an Agile form, so they established requirements first before continuing with an Agile process. A gradual transition, as opposed to a drastic change, can help along the processes of gaining support and eroding skepticism from the business side of your organization.

Agile and the Post-Pandemic Future

Communication has always been the cornerstone of Agile teamwork. Anecdotally, remote work’s impact on Agile at various organizations has ranged from negative to positive to none at all—it all depends on the existing conditions within your organization and how you adapt to the changing world. As many organizations continue to work remotely, or increasingly move toward hybrid arrangements, frequent communication remains critical to achieving Agile success. It’s tempting to use instant messaging for workplace communications due to its convenience, but it’s important to establish a routine of regular video calls in order to mimic in-person brainstorming sessions.

The next Virtual Meeting of the Aite-Novarica Women’s Network will take place on February 23, 2022 on the topic of “Taking Back Control of Your Time.” Speakers will include Aite-Novarica Head of Property and Casualty Insurance, Martina Conlon. More information is available at https://aite-novarica.com/womens-network.

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