Insurance

A variety of developments are changing the face of the insurance industry, including competition from web aggregators, fintech companies, and other non-insurance sellers of insurance products; talent shortages; and the emergence of Big Data, artificial intelligence, cloud computing, blockchain, and other technologies. And in the future, the emergence of the “sharing economy” (in which assets like homes and vehicles are shared) and the full-scale adoption of driverless vehicles will require carriers to rethink traditional insurance models.

The Disruptors Have Arrived

For decades, the insurance industry had the market cornered when it came to selling insurance policies. But that has changed in recent years as web aggregators, insurtech and fintech companies, direct sellers, and social brokers have begun selling policies. For example, the fintech Ethos, which sells life insurance online, has received more than $100 million in funding from venture capital firms in recent years. It partners with large insurance carriers such as Banner Life Insurance Company and Assurity Life Insurance Company to issue policies. Other alternative insurance providers include Next Insurance, Zipari, Corvus Insurance, Policygenius, Clearcover, Lemonade, GoHealth, and Oscar Health. Well-known tech companies are also getting into the insurance industry. In 2018, Google purchased a minority stake in Applied Systems, a provider of insurance technology and cloud-based software for independent agencies. Amazon has partnered with Travelers to offer home insurance in some states. In 2022, 55 percent of consumers surveyed by the insurtech Breeze said they would be interested in buying a hypothetical insurance product from Amazon over traditional insurance carriers. Forty-six percent said that they would do so from Google if it offered such a product.

Customers are increasingly looking for both online, 24/7 availability and new, personalized products. Some traditional insurance companies are heeding customer demand and upgrading their technology and offering a wider array of products, while others have been much slower to adapt to new market conditions. According to the professional services firm Deloitte, “many carriers will look to have it both ways—testing the waters of new online distribution systems, while bolstering the value and services offered by their agents to retain more complex accounts that don’t lend themselves to self-service.” It forecasts that “the number of agents will gradually decline as direct sales grow in personal and small commercial lines, and as automated advisory services expand for simple life and annuity coverage, prompting survivors to focus on affluent customers with more complex risk-management portfolios.”

More Companies Insuring Against Risk of Cyber Attacks

One fast-growing insurance product is cyber insurance. In 2023, cyber incidents (data or security breaches; espionage hacker attack, ransomware, denial of service; errors or mistakes by employees) were ranked as the highest global business risk, according to life insurance and annuities provider Allianz’s Risk Barometer. Data was gathered via a survey of risk management experts from more than 100 countries. Data breaches can be very costly to companies. The average cost of a breach in the United States was $4.35 million in 2022, according to the Ponemon Institute, an independent research firm.

Most traditional commercial general liability policies do not provide coverage for cyber attacks. Businesses, nonprofits, and individuals are increasingly seeking stand-alone cyber insurance policies. More than 86 percent of risk managers surveyed by Advisen Ltd. and Zurich North America in 2022 had cyber insurance, with 69 percent holding standalone policies. This was an increase of three percentage points from the previous year’s findings on both fronts and the highest numbers to date since the inception of the survey.

Typical coverages in a stand-alone cyber insurance policy include liability, crisis management, business interruption, cyber extortion, management liability, loss/corruption of data, identity theft, data breach, and criminal rewards.

Although a growing number of businesses surveyed by The Hanover’s Cyber Risk Report (which was conducted in conjunction with Zogby Analytics) had cyber insurance, 42 percent of businesses may not have enough insurance to cover the average cost of an attack. The three most common types of attacks are ransomware, malware, and social engineering. In addition, The Hanover found that many companies are ensured against traditional cyber risks, but are vulnerable to emerging risks like ransomware. “With records, revenues, supply chain, and reputation all on the line, businesses are right to be greatly concerned about cyber risks,” said Bryan Salvatore, executive vice president and president, specialty at The Hanover on the company’s Web site. “As companies focus on digitization and interconnectivity, so will cyber criminals. Businesses will need protection that goes well beyond basic cyber liability insurance.”

In addition, data breaches at health insurers at Anthem and Premera Blue Cross in 2015, and growing industry concern about data security, have prompted demand for data security specialists at insurance companies in order to ensure the safety of proprietary company information and the data of customers.

Talent Shortages Challenge the Insurance Industry

If you ask today’s college students to name their dream employers, insurance companies rarely make the list. More commonly, students cite tech companies such as Google and Apple, investment banks like Goldman Sachs, and consulting firms like Bain & Company and The Boston Consulting Group.

In 2015, only 4 percent of Millennials expressed an interest in working in the insurance industry, according to the Millennial Leadership Survey. At the same time, many Baby Boomers—who comprised 25 percent of employees in the insurance workforce in 2018—are nearing the traditional retirement age of 65. In 2022, the average age of independent insurance agency principals was 54 years old, according to the 2022 Agency Universe Study. And 17 percent were age 66 and older. The study was created by Future One, a collaboration of the Big I and leading independent agency companies. The lack of interest by Millennials and the pending retirements of a significant portion of the insurance workforce have created a challenge for insurance companies. In fact, 55 percent of financial services executives surveyed by PwC in 2022 cited talent acquisition and retention as their biggest risks to meeting their current goals, according to “Insurers can win the war for talent—if they tell their story,” a story at the professional services firm’s Web site. Some companies are offering incentives to Baby Boomers to defer retirement, but this fix will only work for a while.

The real issue is encouraging more young people to enter the field. Studies conducted by insurance industry groups have found that young people are steering clear of the insurance industry because they perceive it as stodgy and conservative, have concerns that current jobs will be replaced by technology, do not understand how the industry functions or the wide variety of career paths it offers, and do not understand the integral role cutting-edge technology (artificial intelligence, data analytics, etc.)—which draws them to other fields such as the tech sector—plays in the industry. “Insurance companies that have embraced the digital world…will have an easier time attracting new talent,” advises AM Best, which provides news, credit ratings, and financial data products and services for the insurance industry. “The reputation of the industry has been paper-filing and transactional in nature with archaic computer systems. That may be still true in some places, but AM Best has watched companies take the onus to raise their game with regard to technology in order to differentiate themselves in the marketplace, as well as institute corporate policies that let employees work remotely with a laptop.”

More than 1,000 insurance industry organizations around the world support the Insurance Careers Movement (https://insurancecareerstrifecta.org), a grassroots initiative that seeks to educate young people about opportunities in the insurance industry and pursue a career in the field. It hosts an annual career month each February and provides resources to educators about the field.

PwC reports that insurance companies are trying to address hiring and retention issues by creating rotation programs that allow employees to obtain more experience within and across more functions to increase their skills and career options, offering more diverse benefits plans (and asking prospective and current employees what they want in a benefits program), redesigning workspaces to help them “not feel like prairie dogs in cubicles,” creating more flexible schedules, and placing greater emphasis on diversity and related issues.

Changing Skill Sets for Insurance Industry Professionals

Technology is changing the way insurance industry employees do their jobs. While lower-level tasks are being automated, the introduction of data analytics, artificial intelligence, and other advanced technologies are fueling a need for workers with higher-level skills. For example, the professional services firm Deloitte reports that actuaries “are seeing their jobs redefined by technology, leveraging the power of AI to move beyond the role of data steward and model builder and become business strategists. The day-to-day work, skill sets, and responsibilities of underwriters, claims managers, and agents are also rapidly evolving exponentially.” Deloitte’s 2019 Global Human Capital Trends survey found that nearly 72 percent of insurance respondents believed that their current employees would need to improve their skills in order to succeed in the increasingly digitized insurance industry. 

The Rise of Telematics

Telematics is the use of information technology (wireless devices, “black boxes,” and even a user’s smartphone) to transmit data over long distances. In the insurance industry, telematics devices are installed in the vehicles of policyholders to gauge their driving behavior (speeding, rapid acceleration, hard breaking, hard cornering, following the speed limit, not driving aggressively, etc.). Policyholders who are safe drivers receive discounts on the cost of their insurance. “Telematics can also provide real-time information on air bag deployments or car crashes and locate stolen vehicles by using GPS technology,” according to the information technology research and advisory company Gartner.

The insurance industry is increasingly using telematic devices to encourage safe driving, reduce insurance payouts (by reducing aggressive driving), and gather information after vehicle accidents and thefts. Gartner reports that “telematics can serve as the platform for usage-based insurance (UBI), pay-per-use insurance, pay as you drive insurance, pay how you drive programs for fleet insurance, or teen driving programs for retail business.”

The adoption of usage-based insurance (via telematics technology) is growing. In February 2013, only 4.5 percent of consumers had a UBI policy in force, according to a survey by Willis Towers Watson. By 2018, that figured had nearly quadrupled to 20 percent, according to McKinsey & Company. The global value of the usage-based insurance market for vehicles is projected to increase from $24 billion in 2019 to $126 billion by 2027, according to Research and Markets.

In more recent years, more consumers have declined offers of discounted insurance rates if they approve the installation of telematics technology in their vehicles, citing concerns about privacy issues, worries about the potential for increased insurance rates after installation, and uncertainty about how these systems operate. In 2022, the number of consumers who accepted a telematics offer was 53 percent according to the TransUnion Insurance Personal Lines Trends and Perspective Q2 2023 report. This was 12 percent lower than the previous year. “While more than half of those offered a telematics program still opt-in, the increased risk and delayed gratification combined have made telematics less attractive to price-sensitive and risk-averse customers,” according to Michelle Jackson, senior director of personal property and casualty insurance in TransUnion’s insurance business, in a story about the report.

Despite this trend and customer concerns, look for the use of telematics to increase in the insurance industry as more firms offer this option. All top 10 firms have UBI programs. “Like Uber, telematics will radically transform the business model of auto insurance, from underwriting to claims management,” says Frederic Bruneteau, founder and managing director of PTOLEMUS Consulting Group. “The days of insurers relying on purely statistical models are numbered.” The global value of the usage-based insurance market for vehicles is projected to increase from $24 billion in 2019 to $126 billion by 2027, according to Research and Markets, a data analytics firm.

After Initial Promise, the Future is Uncertain for Blockchain Applications in the Insurance Industry

Blockchain technology is a type of distributed ledger database that maintain a continuously-growing list of records that cannot be altered, except after agreement by all parties in the chain. (Distributed ledger technology is a database of records that is consensually shared and synchronized among multiple entities. It is used to improve data security, provide a fact-based record of transactions for regulatory purposes, and for other reasons.) “By using blockchain or distributed ledger technology and integrating smart contracts [computer code that is stored on a blockchain that allows certain actions to be executed without human approval under specified circumstances], untrusting competitors within the industry can securely share data with one another on a permissioned basis, abating duplicative efforts, minimizing reconciliation issues and reducing costs," ,according to Pat Schmid, president of The Institutes RiskStream Collaborative (a consortium of property-casualty, risk management, and life insurance and annuity industries that seeks to encourage the use of blockchain technology in the insurance industry). "The ability to use smart contracts extends potential applications and makes automating large chunks of insurance-related processes more practical.”

In 2016, The Blockchain Insurance Industry Initiative (B3i) was formed by five major insurers and reinsurers to explore the potential use of blockchain technology in the insurance industry. It grew to include more than 40 major insurance companies, and there were high hopes that blockchain technology would be adopted by the industry. But in 2022, B3i ceased activities and filed for insolvency. Nearly 21 percent of business executives surveyed for GlobalData’s Q2 2022 Emerging Technology Trends Survey said that blockchain technology was “all hype and no substance.” Approximately 37 percent believed that the "technology was hyped, but I can see a use for it,” and 20.7 percent said that they didn’t know if the technology was overhyped or not—suggesting that the potential uses and benefits of blockchain remain poorly defined or misunderstood. Only 21.8 percent of respondents believed that blockchain “will live up to all its promises.” Another factor that has affected adoption is the fact that many people have a negative or skeptical perception of blockchain because of its association with volatile cryptocurrency assets although it has potential for use in many other sectors.

Although demand for blockchain professionals in the insurance industry is not as strong as it was a few years ago, insurance companies are still using this technology. “Even with B3i’s downfall, use cases of blockchain technology in insurance do persist, most notably within parametric insurance for natural hazards and catastrophes,” according to Life Insurance International. “Although the technology has been somewhat disparaged by the industry, disregarding its capabilities and potential completely may see some insurers fall behind the technology curve as its uses slowly grow.”

Aspiring blockchain professionals should conduct research to learn more about insurance companies and other employers that are using this technology in order to identify potential employment opportunities.        

Big Data is Transforming the Insurance Industry

Many industries—such as politics, sports, and health care—have been transformed by data mining and analysis, the process of collecting and analyzing data to find commercially useful relationships or patterns. Although some of the basic concepts of data analytics have been used by the insurance industry for decades, the industry has been slow to incorporate all that Big Data has to offer. But this is changing as insurance companies see the success that organizations in other industries are having in utilizing data to improve worker productivity, market to current and potential customers, and manage risk (a key concern of all insurance companies). “Big data—and the field of data analytics—is exploding beyond traditional risk selection and underwriting practices into virtually every aspect of insurers’ operations,” according to PropertyCasualty360.com. “Only organizations that prioritize integrating this new approach to data and individuals who successfully adopt a data mindset will effectively harness this new reality in the insurance industry.”

Insurance companies are collecting data from online and social media activity, e-mails, phone calls, wearable devices, telematics (in vehicles and in smart home devices), phone surveys, employee management software, and many other sources. In 2016, 42 percent of insurance carriers used Big Data techniques in their underwriting, pricing, and risk selection processes, according to a report from Willis Towers Watson. Property and casualty insurance executives report that they expect to increase their use of Big Data to make better management decisions, understand customer needs, develop new products, create improved loss control and claim management practices, and improve marketing, distribution, and sales. A fast-growing use of Big Data is for predictive modeling, which is a statistical technique that uses machine learning and data mining to analyze historical and current data to predict and provide forecasts. Sixty-seven percent of life insurance companies surveyed by Willis Towers Watson report that predictive analytics have helped reduce issue/underwriting expenses, while 60 percent credit the additional insights for increases in sales and profitability. 

One of the biggest challenges for insurance companies will be to harvest and utilize unstructured data, which is typically unorganized and not housed in databases for easy analysis and cross referencing. Examples of unstructured data include information collected from programs that scan customer calls for keywords or software that automatically organizes and categorizes the notes of adjusters or sales workers for use by other teams or executives. Information technology specialists are creating and/or utilizing artificial intelligence and machine learning to identify, capture, and analyze unstructured data, and there will be strong demand for these IT whizzes. 

The insurance industry is experiencing a shortage of data experts, and it’s recruiting outside the industry, as well as identifying and training current employees that can be trained to work in data analysis. The Institutes (which was previously known as the American Institute for Chartered Property Casualty Underwriters) has taken notice of the dearth of data analysts in the insurance industry and created the associate in insurance data analytics credential to help people prepare for this career. 

Insurance customers are not as excited about the use of Big Data. Seventy-two percent of 1,000 American adults surveyed in 2018 by LendEDU (a Web site that helps consumers learn about and compare financial products) believed that insurance companies should not be allowed to use Big Data to determine risk in a potential insurance policy. Only 15 percent thought it was okay for insurance companies to use Big Data. Fifty-five percent of respondents believed that insurers accessing private data was equally as threatening as tech companies doing the same.

Although privacy issues will always be paramount in regard to engaging customers and protecting their personal data, look for Big Data to eventually be integrated into nearly every customer- and employee-facing area. 

More Companies Selling Microinsurance Policies in Emerging Markets

Microinsurance is insurance that is targeted at low-income households (the working poor, people in developing countries, etc.) that have few or no financial reserves and whose incomes vary considerably. It is characterized as having low premiums, which are paid in irregular installments because of the sporadic earning streams of the insureds. A small loan may also be included with the premium to help the insured start or grow their businesses. The Microinsurance Network, a nonprofit global organization of microinsurance industry experts, reports that up to 221 million people worldwide were covered by at least one microinsurance policy in 2021.

“With limited growth prospects in the insurance markets of developed countries, insurers see emerging economies as presenting significant potential for growth and profitability,” according to The Insurance Information Institute. Swiss Re, a provider of re-insurance and insurance, predicts that emerging markets will continue to increase their share of the global insurance market (based on direct premiums written) from 21 percent in 2018 to 34 percent in 2029. The company identifies emerging markets as countries in Latin America and the Caribbean, South and East Asia, Africa, Central and Eastern Europe, the Middle East (excluding Israel), Central Asia, and Turkey.

Insurance Companies Are Struggling With Low Interest Rates

One challenge that is industry-wide is low interest rates. Part of an insurance company’s revenues includes interest income from their investment portfolio. The money invested comes from customers’ premiums, which can be invested while being held in reserve for future claims. Because of low interest rates, most insurance companies are not earning the income from interest they once were on their investments and this is having a huge impact on them.

Low interest rates are also affecting insurance company investment products. Many life insurance companies built up annuity policy writing and other interest-rate-sensitive products such as universal life policies, making them a large part of their portfolios, and low interest rates are having a significant effect on these companies. As a result, many companies have stopped offering these types of products or they are charging higher premiums or fees for them.

To boost their investment portfolios, some large insurance companies are joining the shadow-banking club, which some define as those that “act like banks, without being regulated like them.” In 2019, nonbank lenders had $52 trillion in assets, according to CNBC. This was a 75 percent increase since the end of the financial crisis. With the largest banks being stymied by post–2008 rules that make it harder to extend loans, insurance firms such as MetLife Inc. and American International Group are competing with banks to make loans to businesses and consumers. “While many insurers have been in the commercial real-estate market for decades, the industry is branching out into home mortgages, small-business lending, car loans, renewable-energy financing, and student debt,” according to Bloomberg. Some insurance companies are creating units that invest client funds rather than just the money they hold to back policyholder obligations. Bloomberg reports that “insurers have also formed joint ventures, invested in private equity funds that lend, or acquired lending companies, giving them stakes without carrying loans on their balance sheets.” Some industry watchers worry that insurance companies do not have the loan-underwriting expertise of longtime lenders—creating operational risk. 

Unclaimed Fund Policies

A challenge to the life insurance sector is working with regulators’ increasing examination of unclaimed fund policies. Public officials in charge of unclaimed property and insurance regulators have claimed that life insurers check public records such as Social Security to investigate whether a policyholder has died so that they can stop annuity or retirement benefits. However, these companies don’t perform the same diligence in trying to determine whether they need to pay death benefits to the policyholder’s beneficiary, and so the funds are escheated to the state of residence. These officials say billions of dollars are currently idling in unclaimed funds when they could be paid to beneficiaries. Life insurers have denied this practice, indicating that policy owners many times fail to maintain accurate beneficiary information making it very difficult to locate those to whom benefits are owed. But insurance commissioners have responded by wanting to take a closer look at how the insurers in their states are handling this aspect of the business.

According to the professional services firm PwC, no insurance commissioner has ever required an insurer to take defined steps to determine whether an annuitant or policyholder has died. But companies are now creating policies and procedures to do so, creating an unanticipated and unfunded administrative burden. Companies and regulators continue to partner to resolve this growing issue.

Changing Demographics

As the population of the United States becomes more diverse, insurance companies must adjust to meet the needs of consumers with different cultures and needs. The non-Hispanic White population is projected to shrink over coming decades, from 199 million in 2020 to 179 million people in 2060,” according to the U.S. Census Bureau. “The fastest-growing racial or ethnic group in the United States is people who are two or more races, who are projected to grow some 200 percent by 2060. The next fastest is the Asian population, which is projected to double, followed by Hispanics whose population will nearly double within the next four decades.” Insurance companies need to understand the changing demographics in order to better serve the specialized insurance needs of various ethnic groups, as well as ensure that their workforces reflect the changing demographics of the insurance-buying public.

The Internet Emerges as a Key Resource for Customers

The Internet has become the leading way consumers and some businesses perform research and purchase insurance. Progressive Insurance Company was one of the first to offer auto insurance online via its Web site, and in 1996 began advertising comparison rates online, allowing customers to get a quote and compare premiums with other leading companies. Esurance, founded in 1999, was another leading online auto insurance company. It was purchased by industry giant Allstate in 2011, but phased out in 2020 by the company as a separate brand. As consumers were drawn to the ease and convenience of using these companies, traditional insurers quickly created their own online formats to compete. The result was that consumers were no longer satisfied to wait days to receive a quote from an insurance agent; they wanted it instantly. Independent insurance agents suffered most from this development, which made it difficult for them to compete against companies with multimillion dollar marketing campaigns. These companies also had the funds to ensure their names and Web site links rose to the top of the list on popular search engines.

“The breadth of information now available on the internet has created a consumer base that is now able to research and self-educate from many places they trust,” according to professional services firm EY. “Consumers now desire the ability to find the best information available with an assurance that it is high-quality and reliable information—the shift is that this assurance no longer needs to come from a traditional agent. With this shift towards a self-educated consumer, agents are being used to confirm what the consumer already wants. The agent’s role will begin to change as they serve as a confirmer of the information already obtained by the consumer and a facilitator of the actual purchase.”

In addition to changing how consumers and companies do business, the Internet has also led to a new emerging product: network security and privacy liability insurance. This insurance protects companies in the event that sensitive company information and customer databases containing sensitive customer information are stolen. “Cyber risk is the biggest emerging risk by far,” notes Bob Philips, vice president of Wells Fargo Insurance Services in Columbus, Ohio. He also says that some companies don’t always recognize the risk because they feel their firewall or other protection is enough. What companies don’t remember is that laptops, cell phones, PDAs, and other equipment can be stolen and used to access sensitive files.

The heavy use of the Internet has also affected jobs in the insurance industry, according to Gary Irvine, who served as the assistant vice president of talent management at Grange Insurance in Columbus, Ohio, for nearly 12 years. “Companies are moving away from the personalized process for personal lines of insurance and moving to automation,” says Irvine. “This has caused the contraction of jobs in personal insurance lines and created a need for technical IT personnel.”

The Metaverse and the Insurance Industry

The metaverse is an emerging 3–D-enabled digital space that uses converging technologies (e.g., artificial intelligence, augmented and virtual reality, digital twins, blockchain technology, cloud computing, social platforms, e-commerce, Internet of Things) to create a lifelike experience online. It can be used by people to have fun, engage in commerce, meet business and other goals, and utilized for other purposes. The metaverse is in the early stages of development, and skeptics do not believe that it will ever generate enough interest and/or revenue to be a viable digital space. Despite its uncertain future, Meta has spent billions of dollars to build a metaverse empire, but its metaverse initiatives have failed to meet company expectations (as of 2023).

Despite the challenges of building the metaverse (and getting the public and businesses to embrace it), 89 percent of 3,200 executives surveyed by Accenture in 2022 believed that the metaverse would play an important role in their organization’s future growth. (Survey respondents represented nearly 20 industries from companies that generated $500 million or more in annual revenue.) Accenture reports that “executives expect returns from their metaverse investments in the short run.” According to its 2022 Accenture Business Trends Survey, “respondents in companies having some form of a strategy around the metaverse believe that in the next three years, a 4.2 percent share of their revenues will come from new products, services or business models related to the metaverse. This represents a value of $1 trillion.”

The metaverse has many possible applications in the insurance industry. “As metaverse technologies mature, insurers could have even greater potential to interact with customers and employees in improved and differentiated ways,” according to DigitalInsurance. “Imagine a metaverse-inspired buying experience that combines the physical world of an insurance agency with a virtual world to help consumers digitally obtain and service a policy.” The metaverse may provide insurers with the opportunity to develop and market new types of insurance policies (and create another revenue stream) to mitigate the loss or theft of cryptocurrencies, in-game currencies and tools, other virtual objects, and almost any other product or intellectual property that can be created and used in a virtual world.

The future is uncertain regarding how the metaverse will be used in the insurance and other industries, but job-seekers should be aware of the field both as a potential expertise area in insurance and as a career option (e.g., AI specialists, metaverse designers, software developers).     

Generative AI Will Have Major Effects on the Insurance Industry and Beyond

Generative artificial intelligence (AI) is one of the newest technologies being used in the insurance industry. It is a form of machine learning algorithms (including large language models) that can be used to create new content (including text, simulations, videos, images, audio, and computer code), as well as analyze and organize vast amounts of data and other information. One of the best-known examples of generative AI is ChatGPT, which was released in late 2022 by the San Francisco-based company OpenAI. “Easy-to-consume generative AI applications like ChatGPT, DALL-E, Stable Diffusion, and others are rapidly democratizing the technology in business and society,” according to A New Era of Generative AI for Everyone, a report from Accenture. “Anything conveyed through language (applications, systems, documents, emails, chats, video, and audio recordings) can be harnessed to drive next-level innovation, optimization and reinvention.”

Generative AI will be used in-house in the insurance industry, as well as to provide a better customer experience. “As the initial examination of these systems goes forward at high speed, many in the industry are trying it out,” according to InsuranceNewsNet.com. “Their experiences inevitably have brought benefits, especially in the areas of idea generation, time savings and, to some extent, research, as well as in expediting mundane tasks including content outlines, editorial calendars, content briefs, FAQs, social media captioning, and even search engine optimization.”

Although generative AI is already in use in many industries, it’s important to understand that there are growing pains, challenges, and risks associated with this technology. First, generative AI is only as good as the information that it receives (or that is available online or through other sources) before it creates new content. For example, content created by generative AI may post incorrect or outdated information that would be misleading for business users and customers. Next, insurance companies share a large amount of sensitive information (e.g., medical records, financial data, business information), and the sharing of data between third-party products like ChaptGPT would not be feasible because it would not keep this data secure. Developers are working on creating proprietary generative AI technology that can be used in the insurance industry. Other major concerns include ethical issues, security risks, and operational challenges.    

In the insurance and other industries, the use of generative AI will eliminate or reduce the need for many low-level jobs. It also will create the need to train employees to work effectively with AI-based processes, as well as demand for workers to develop AI-based software and ensure that generative AI processes are being used appropriately and ethically and generating accurate data. Many new occupations will emerge as a result of these developments, including generative AI utilization directors, implementation specialists, product and adoption managers, quality controllers, editors, engineers and software architects, and output auditors.

“Generative AI will play a significant role in the future of insurance, though much remains to be seen in what ways it will impact the industry,” according to Jon Hutson and Eric Pinckert in an article about the technology’s effect on the insurance industry at DigitalInsurance. (Hutson is the co-founder of BrandCulture, a brand and organizational growth consulting firm, and Pinckert is a co-founder and the managing director of the company.) Hutson and Pinckert go on to say that “as with many sectors, generative AI is only recently beginning to be understood, let alone harnessed, though the industry can expect much innovation, and quickly. What is certain is that the most nimble legacy carriers and insuretechs which are able to adopt new innovations quickly will be well-positioned to thrive in this rapidly changing landscape.”

Remote Work Growing in Popularity

Many insurance companies offer remote work opportunities for their employees, but in the wake of the 2020 COVID-19 pandemic such arrangements became the norm. To protect their workers' safety and help slow the spread of coronavirus, companies implemented new work-from-home policies that required workers to stay out of their offices and cancel nonessential travel. Post-pandemic, many companies continued to offer remote options to employees, or hybrid in-person/remote options. A McKinsey Global Institute analysis found that “three-quarters of the time spent on activities in the finance and insurance industries can be done remotely without a loss of productivity. These activities include analyzing information, processing claims, and underwriting,” but the institute points out that “complex claims requiring in-person analyses of damage and nuanced judgment will more likely still need to happen on-site.”

The benefits of remote work post-pandemic include reduced office operations expenditures and the opportunity to rebuild talent acquisition processes and pipelines (including attracting skilled workers from other areas of the country and even foreign countries to address talent shortages).

Potential drawbacks include the enhanced need to monitor employees to ensure that they do not abuse remote work options and the risk of weakening company culture. Additionally, some job-seekers—especially those in younger age brackets—prefer in-person positions. Fifty-seven percent of members of Generation Z and 34 percent of Millennials who were surveyed by Joblist.com in late 2022 preferred an in-person position. Sixteen percent of Generation Z and 17 percent of Millennials preferred a hybrid work model. “Although returning to an office might be emotionally charged, over time we expect to see the world settle down into a hybrid model, with some days in the office and some days working remotely,” according to the McKinsey Global Institute. A hybrid option allows companies to rethink their real estate footprint while helping the industry shed stuffy perceptions that some industry professionals, particularly Millennials, have characterized as a detractor for wooing new talent.”