Chubb is the largest publicly traded insurance company for property and casualty has announced plans to cut its workforce worldwide by around 20% in 3 to 4 year in the context of a sweeping digital transformation plan that focuses on automation, artificial intelligence, and the complete redesign of workflow.
The radical plan, revealed during a recently-released investor conference, it is among the biggest restructuring initiatives in the insurance industry up to now and is predicted to affect 70 percent of the company in the three years to come.
Chubb currently employs around 43,000 employees around the world according to its third-quarter profile of the company.
A Massive Shift: Automating Core Insurance Functions
As part of this new plan, Chubb will seek to automatize, digitize and automatize the majority of its core business processes that include:
- Marketing and sales operations
- Support and administration for underwriting
- Claims handling
- Financial functions
- Operational workflows and policy
The company is aiming to build processes from scratch by transforming to AI-powered systems that can handle large-scale, rule-based tasks that require significantly less human intervention.
Chubb anticipates that the project will yield significant cost efficiencies by focusing on the savings in run-rate expenses equivalent 1.5 to 1.5 points off the ratio of its combined when the transformation is completed.
Insurance Sector Faces Industrywide Automation Pressure
Chubb’s move is a reflection of a wider and faster-growing trend in international the insurance market.
Research from MIT’s Project Iceberg found that the existing AI tools are capable of delivering 11.7 percent of the all U.S. wage value that is an astounding $1.2 trillion worth of work.
This study found that insurance sector is:
“squarely in the area of greatest exposure”
…because the majority of insurance workflows, such as insurance underwriting, policy-issuance and claim processing are document-heavy routine, repetitive, and easily divided into tasks that can be automated.
In this way, the structure of insurance work is ripe to AI transformation.
Chubb’s ‘Radical Automation Goals’: 85% of Underwriting and Claims Processes to Be Automated
In the investor presentation Chubb’s transformation has been built around a number of benchmarks that are aggressive:
* 85 percent automation of the major underwriting processes
* 90% automation of the major processes for settling claims
* 85 percent of the global gross written premiums to be derived from digitally or fully digitalized business
If these targets are met, they could place Chubb as one of those with the highest technologically-advanced insurance companies around the globe.
Other Insurance Giants Are Making Similar Cuts
Chubb is not alone in restructuring its workforce around AI.
Allianz recently revealed plans to eliminate 1,500 to 1,800 jobs within its travel insurance operations–equivalent to 6.6% to 8% of Allianz Partners’ global workforce–as automation reshapes customer service and claims roles.
In the entire industry, major insurers are changing their staffing model towards more efficient, AI-enhanced operational structures that aim to cut down manual work and increase the size of operations effectively.
A New Operating Model: AI at the Core of Insurance Growth
Chubb stated that data artificial intelligence, artificial intelligence, as well as automated processes will be the foundation of its future operating model. Chubb hopes to:
- Perform greater volumes of insurance routine tasks via digital channels
- Reduce labor-intensive administrative work
- Growth in the scale premium without growing operating costs
- Increase consistency and speed the process of deciding on claims and underwriting
According to the company’s own words the company’s own words, these technologies will serve as the “driving power to drive the company’s goals at a low cost.”
Bottom Line: A Workforce Reset Anchored in AI
Chubb’s strategy to reduce up to 20 percent of its global workforce is a major shift towards digitalization and automation of insurance operations. As AI tools revolutionize every aspect of underwriting and claims Chubb, and the insurance industry as a whole–is changing the amount of human work needed to run a global insurance company.
The actions taken by Chubb, Allianz, and other major carriers point to an era of change that will see AI is not just a tool to help with insurance workflows, but it is the core of the process.
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