Chubb plans 20% staff reduction in next few years as it moves to AI
Chubb is planning a 20% headcount reduction in the next three to four years as it plans to move 85% of its major underwriting and claims processes to automated systems, according to an investor presentation.
The presentation says digital transformation will impact 70% of the company in the next three years. This will include sales and marketing, underwriting, claims, finance, and other functions.
“Data, AI, and process automation will be the driving force to achieve growth at low marginal cost,” the presentation says.
It projects a run-rate expense savings of 1.5% combined ratio points by making the transition.
“We are on a mission to re-invent ourselves again,” the presentation says.
It says the company has already made significant investments in data centers and wide-scale data ingestion capabilities and has more than 3,500 engineers.
Out of 193 auto insurance companies surveyed by the National Association of Insurance Commissioners (NAIC) from December 2022 to December 2023, 88% said they plan to use or plan to explore AI models in their operations.
In 2023, NAIC approved a model bulletin on the use of AI by insurance companies. It outlines the need for processes and controls to prevent possible AI inaccuracies, discriminatory biases, and data vulnerabilities.
The bulletin reminds insurers of established regulatory laws, such as the Unfair Trade Practices Model Act, that regulate unfair methods of competition or unfair or deceptive acts. It states that governance and controls on AI systems are needed to comply with these laws.
Florida also just filed new legislation that would place parameters on AI insurance claims handling, requiring mandatory human reviews of claim denials.
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