If you ever want to see a room full of people go crazy, run in, yell — “ChatGPT!” — and run out. And if you ever want to see a roomful of insurance people go deathly quiet, walk in, sit down, and ask — “ChatGPT?” — as a sincere question, and listen for pins dropping.

The excitement and trepidation about ChatGPT are equally understandable and justifiable. And there are likely as many opinions about ChatGPT’s usefulness in the insurance industry as there are people to hold those opinions. A quick internet search will prove that point. But here are just two of the differing opinions we found.

Convinced

The brokerage firm, Newfront, published this — “ChatGPT Can Superpower the Insurance-Buying Experience” — which offers this hearty endorsement:

By translating complicated compliance rules into plain English and by freeing humans to do higher-level, mission-critical work … AI will be a valuable tool for insurance buyers and sellers.

Well … yes, but. ChatGPT depends on AI. But not all AI is ChatGPT. GPT stands for Generative, Pre-trained Transformer. It can use whatever information to which it has access — whatever information it’s programmed to aggregate and amalgamate — to render things in plain English, leaving some wiggle room for a definition of plain. The value of AI is more accurately represented in another post, even though that post is more skeptical than the Newfront post about the broad applicability of ChatGPT.

Not So Much

InsuranceBUSINESS published this post — “Will ChatGPT disrupt insurance? Insurtechs weigh in” — which offers this more skeptical and accurate take on ChatGPT and AI:

Here’s the money sentence: The value in generative AI lies in its potential to automate non-core but essential tasks. We’d argue it’s significantly more regurgitative than it is generative (nothing in, nothing out). The ability of AI to automate core and essential tasks isn’t far off. But ChatGPT won’t capture nuance or subtlety, at least not yet.

In writing the promises constituted by insurance policies, nuance and subtlety can be everything.

The first single from Robert Cray’s 1990 album, Midnight Stroll, was “The Forecast Calls for Pain“. We couldn’t help thinking of that song when we read a couple of recent forecasts about the insurance industry for 2023.

In its report, Property and Casualty-Insurance Top Trends 2023, Capgemini wrote this, in part:

Personalized value-added services can meet new and evolving customer preferences. Yet to monetize the latest offerings, insurers must innovate and develop products beyond their current portfolio.

Similarly, Deloitte, in its 2023 insurance outlook, offered this:

The goal for 2023 and beyond should be to more fully realize the benefits of technology infrastructure investments to make insurers increasingly agile, innovative, and customer-centric.  Carriers have frequently taken a piecemeal approach to technology modernization, transforming system by system, function by function, and app by app. Investment decisions have been mainly driven by shorter-term budget and feasibility considerations rather than achieving longer-term competitiveness through improved customer experience.

What do those things mean in practical, operational terms? Here’s our perspective.

Don’t Leave Change to Chance

The two things insurance companies will need most in 2023 are flexibility and adaptability. Since digital transformation remains one of the most popular buzz-phrases in every industry, that means two related things:

1. Insurers must be flexible enough to adopt the insurtechs that best suit their businesses and will help them achieve the operational improvements they need most.
2. Insurers must be using modern flexible core systems that will optimize their abilities to adapt to new technologies and to operationalize new capabilities.

And since Capgemini mentioned the need to innovate, we have some thoughts on that, too:

Innovation isn’t about random change. It isn’t about leaving change to chance. It isn’t about finding things that work. It’s about creating them. It’s about encouraging people to contribute ideas for new products and services. And it’s about having the technical capabilities to design them, to configure them, to test them, to approve the ones that work and bring them to market, to reject the ones that don’t, and to sustain those processes with purpose and discipline.

If you know the forecast calls for change, prepare for it. Embrace it. Experiment with it. Create it. Master it.

If you do, the forecast won’t have to call for pain.

A recent post from Insurance Thought Leadership — “A Wake-Up Call for Insurers” — says this, in part:

Insurers have been talking about going digital for a good decade now, and seemingly everyone says the pandemic greatly accelerated the trend over the past three years by forcing us all to interact remotely. Yet ACORD says it found in a recent survey of the 200 largest insurers worldwide that “fewer than 25% have truly digitized the value chain, while more than 10% are not appreciably leveraging digital technologies within their current business processes. Further, more than half of the insurers in the study are still exploring how digitization can be applied against their business model.”

This is like saying you can build a skyscraper from the lightning rod down. No, you can’t. Likewise, you can’t take insurers to task for having failed to adopt a technological capability — digitalization — for which no foundation had been constructed. Here’s why we think that:

Let’s Go To the Replay

The working environments seeming to be promised by digital transformation would have been more fairly and constructively undertaken if:

1. The modern core system with which attendant digital capabilities have to interact had been in place first.
2. Carriers hadn’t attempted to put the digital cart before functional horse (see #1).
3. Startups and insurtechs had paid more attention to the intricacies and peculiarities of insurance than they paid to the proverbial customer journey.

Instead, the industry allowed itself to fall for calls for AI preparedness that were grossly premature. So, it hired data scientists on staff to optimize AI and data strategies. It got way ahead of itself with driverless vehicles without paying due heed to how to insure them, whether to insure the the driver, the passenger, or the automaker, along with the related, litigation concerns. And it fell head over heels in infatuation with blockchain and cryptocurrency.

What’s the Price?

There are several lessons to be learned here. Chief among them is this: Choose your experts wisely. It may not be fair to say all the ostensible experts were wrong, per se. But they were misleadingly, enthusiastically premature. Had they known a bit more about the business of insurance, insurance companies could have made significantly more progress in fulfilling the digital promise. And had insurance companies chosen their experts more wisely, they likely would have saved significant amounts of time and money.

With any luck, we’ll be smarter next time.

P&C Specialist recently published an article that gave us pause. The title of the article is “Insurers Struggle to Keep Staff Connected, Engaged“. In case you haven’t yet subscribed to P&C Specialist, this is the part that caught our attention:

With the new world of remote and hybrid work, many employers are struggling to boost employee connections and engagement as they strive to attract and retain talent … Judy Busby, senior vice president of executive search and corporate strategy at Chicago-based insurance recruiting firm The Jacobson Group, [said] “It’s harder for all of us to know how to engage our team” because most employees aren’t working from the office five days a week … “People want to work for companies where they have friends” … That triggered the great realization, great reassessment and great restlessness, leading up to the great resignation … It also has fueled “quiet quitting,” where employees do the minimum amount of work required and are psychologically detached from their jobs.

A number of things warrant comment here. We’ll take them in order.

From the Top

First, since we’re headed into the third year of COVID-19’s influence (actually, the fourth, if you count the fact that the novel coronavirus originated in 2019), we’re not sure remote and hybrid work any longer constitute a new world. While opinions about and preferences for remote, hybrid, and return-to-office work will remain forever divided, most organizations have figured it out by now. And if it’s harder for all of us to know how to engage our team, that means there’s a little more figuring out to do.

Second, people want to work for companies where they have friends. Well, yes. But there are a couple of other things to consider: (1) If you work remotely, you can still have friends, work with them, and communicate with them in any number of ways about work or anything else. (2) The larger the company in which you work, the more likely you are to meet folks with whom you become friends. Others? Not so much.

Third, the great realization and the great reassessment were inevitable. The great restlessness was already upon us. COVID just shortened the fuse. And the great resignation is more like the great realignment or The Great Awakening. Given how many people were likely less than satisfied with their jobs, the COVID lockdown was an overdue opportunity to take stock, to re-assess, to place different values on our lives and our time, and to make different choices. And that brings us to …

Fourth, quiet quitting is just a new name for an old phenomenon. Slacking off. Dragging your feet. Sleepwalking. Going through the motions. Phoning it in. Call it what you like. Operating at less than peak performance and psychological detachment are as old as humanity.

The New Normals

No. There isn’t a typo in that subhead. There are two new normals. They’ve actually been around forever, too, like operating at less than peak performance and psychological detachment. But thanks to COVID, we’re now more aware of them and painfully so. The new normals are change and uncertainty. That means The Great Awakening isn’t a one-time event. It’s necessarily ongoing, evolving, and unpredictable. We can evolve with it — embrace it, roll with it, and learn to make the most of it — or not.

The choice is ours … and yours.

We don’t consider the insurance industry or insurance technology to be particularly militant. But we suppose it’s possible for martial metaphors to sneak in almost anywhere. At least that’s what we thought when we saw this headline in Carrier Management: “Tech Arms Race Favors Giant Commercial Carriers“.

In an interview cited in the article, Mo Tooker, head of Middle Market and Large Commercial business at The Hartford said this:

You get to a place of scale that really allows [larger insurers] to outperform—to take advantage of data and data science and help your underwriters and claims adjusters in a way that changes the game altogether in the future. This is a place where we will feel a bifurcation in the marketplace. There are only a handful of carriers that can make the investments that we’re describing here … There aren’t many that can keep up that level of investment year after year after year—and that creates a gap that grows larger year after year after year … a “nuclear arms race” in the industry.

Call us sensitive, but that seems like an alarmist characterization in any context. And in the context of escalating geopolitical conflict, it’s some combination of inappropriate and overkill. Most important, it’s inaccurate.

Let’s Take a Deep Breath

Yes. Insurance companies can spend millions of dollars on technology. Yes. They can throw good money after bad in efforts to remediate failing implementations. Yes. The larger the company, the more expenses — foreseen and unforeseen — they can absorb without going out of business. But that doesn’t mean they have to.

The fact is technology is one of the few things that gets less expensive as it gets better. Modern core-processing technology is much less expensive — and much more sophisticatedly capable — than it was 20, 10, or even five years ago. And with numerous well-funded insurtechs entering the market, smaller carriers with modern systems will have the option to choose the proven winners without risking large capital expenditures.

Are we biased? Sure, we are. But we’ve earned the right to be. We’ve demonstrated the truth of our convictions with more than 30 insurance companies of varying sizes.

Large insurance companies don’t need to be in an arms race.

And they don’t have to shoot themselves in the foot.