By Naomi Grosman    |    16-minute read

In the first article in this summer Quarterly Review, we look at leadership attitudes towards artificial intelligence (AI) and machine learning (ML) and explore what anxieties might be at play that are potentially holding back later adopters from fully embracing this new reality. In the second article, we look at how the industry is preparing for knowledge transfer. Just as AI deployment is expected to ramp up, decades’ worth of industry experience and expertise are leaving the industry, with up to 25 per cent of workers projected to retire by 2027. Are we moving fast enough to keep up with these intersecting trends?

Adopting, fast and slow

“Artificial intelligence is a sensitive topic, so if you lead only with efficiency you lose the crowd because people think of it as replacing employees. But you can’t replace people in insurance. AI is not sophisticated enough to do a lot of the work insurance professionals do.”―Bryant Vernon, Chief Claims Officer at Aviva Canada

Artificial intelligence that detects voice patterns. Programming that teaches computers to read and consolidate unstructured data.

This is just a sample of technology that is being used by Canadian insurers to improve business processes and customer experience.

Artificial intelligence is becoming ubiquitous and is being used across the insurance ecosystem to benefit consumers and the sector itself, whether it be through pricing, service, or risk analysis.

But industry buy-in of advanced technologies remains on a spectrum.

Behind the scenes, the power of human psychology and the morass of insurance regulation and business operations is potentially thwarting some insurers’ ability to adopt AI — a process that is lengthy, complex, and expensive.

“Adopting AI is a cultural, time, financial, and talent investment, which can pose big challenges,” said Bryant Vernon, Chief Claims Officer at Aviva Canada. “Any build-out of new technology is not going to happen in a year but a number of years — it takes a lot of time and effort.”

He said at the core if employees and customers are not an integral part of technology adoption, it will likely fail.

“If you don’t bring your people along when adopting a new solution, if you are not designing it for your team, it’s not going to work,” Vernon said. “These tools require adoption that drives value and if it doesn’t, if people are opting out, it’s not going to work.”

He said because there is a lot of staff training involved, and potentially steep learning curves, it requires a shift in thinking as it will change day-to-day work flows.

“Adopting AI is a long road,” Vernon said. “In a way, you have to go slow to transform fast.”

Ron Glozman, founder of artificial intelligence software company Chisel AI, said insurance business leaders are not hesitant to adopt artificial intelligence. They see deploying technology as a benefit to their companies as a whole — staff, policyholders and the balance sheet.

He said stronger forces are at play that have created the spectrum of artificial intelligence adoption rates in the insurance industry.

“People are excited but I wouldn’t say many have advanced technologies like artificial intelligence deployed — the majority of the industry has yet to adopt it in business processes,” Glozman said. “We are in the phase (of companies) starting to build business cases, somewhere along the spectrum of the buying journey but haven’t implemented yet.”

He said approximately 25% or fewer businesses have AI deployed and scaled, which means a large majority is behind.

He said impediments to adopting AI range from organizational size, structure, and cost. This is particularly true for smaller operations.

“Until costs are lowered a lot of these small companies just don't have the resources and capacity to fund projects and get involved in AI adoption,” Glozman said. “That immediately takes out a large chunk of the industry.”

He said once there are more off the shelf technology solutions, which will likely happen in the next two years, things will start to change and smaller companies will be able to adopt artificial intelligence solutions.

Another reason for adoption delay is differences in organizational structure, he added.

Chisel AI’s technology reads unstructured data, policy information that lives in different databases and worksheets (Word, PDF and Excel documents, for example), and combines and summarizes the information. Its products include helping carriers triage insurance applications, and compare policies to mitigate errors and omissions.

Glozman said for larger organizations that have centralized underwriting departments, calculating a return on investment of adopting Chisel AI’s technology is straightforward.

Smaller companies that are already hindered by the cost of adopting artificial intelligence have a harder time determining its value.

“Many companies that grow through acquisition run as separate offices and often have one person that does policy checking, accounting and receiving, and payroll,” Glozman said. “The ROI is not as clear to them.”

He added that artificial intelligence solutions are new and regulations haven’t caught up. Pair that with difficult procurement and regulatory reviews and it doesn’t align with quick adoption.

Aviva Canada’s Bryant Vernon said it is hard to pinpoint exactly why the Canadian market has been slower to adopt artificial intelligence compared to U.S. counterparts.

He echoed Glozman’s sentiments that regulations could be a factor in the slower rate of adoption.

“I don’t think the Canadian market is as competitive and the regulatory burdens make it hard to differentiate, and it could be argued that there is less pressure to invest,” Vernon said. “But we are increasingly seeing more companies invest in technology capabilities.”

Jas Dhindsa, Chief Technology and Data Officer at Gore Mutual Insurance Company, agreed that regulation is in many ways a barrier to technology adoption. Ironically, however, the Canadian insurance industry is standing in its own way when it comes to technological transformation.

If collaboration between companies was more commonplace, the industry as a whole would be farther along with technology adoption.

Prior to joining Gore Mutual last year, Dhindsa led TD’s North American Branch Banking Technology and Digital Banking Practice across the bank’s multiple business lines. He said during his time at TD he was regularly in touch with his counterparts at RBC, BMO and other companies.

Similar to what he experienced at TD, insurance stakeholders in markets like Scandinavia and Australia are sharing and collaborating information that is helpful to speed up technology adoption across the industry.

“These players are not afraid to discuss and share best practices,” Dhindsa said. “That this doesn’t happen in Canada is not one person’s fault. The history behind hesitancies around information sharing is complex and cultural — like regulatory barriers.”

“There is a sense of competition and there is information that can’t be shared but insurance misses opportunities in terms of what is possible that can make the industry as a whole successful.”

Current collaboration through industry forums is restrictive because there are not enough participants to drive more constructive conversations that could lead to technology standardization — and therefore speed up adoption — for the industry, he said.

“What is the benefit of restricting conversations, why not have more inclusive, high quality conversations?” Dhindsa said. “With fewer participants there are missed opportunities to standardize across the industry.”

The lack of these conversations and collaboration is not out of stubbornness. It’s potentially rooted in a more primal emotion.

“There is a fear factor that is driving the lack of information sharing,” Dhindsa said. “Sharing the information each company has about its technology adoption strategies is seen as a strategic disadvantage but a shift in mindset — breaking the mindset barrier — is needed.”

He said the pillar of Gore Mutual Insurance’s digital transformation is implementing cloud-based systems, which is the foundation of its digital transformation journey and strategic plan to become a top 10 national insurer within the next three to five years. And without adopting cloud-based technologies, the company could not achieve its ambition.

“Prior to our digital transformation strategy, the lack of digital technology at Gore Mutual was considered a huge barrier to achieve our goal,” Dhindsa said. “So the board and organization as a whole decided to invest in state-of-the-art technology solutions.”

At Aviva Canada, the claims department is using artificial intelligence technology from Cogito to facilitate better conversations with customers, which is expected to improve experiences for policyholders and employees.

He said Cogito originally developed its technology to detect symptoms of Post Traumatic Stress Disorder in war veterans. Aviva is using the technology to enable better connections with customers.

“You can figure out what causes friction, confusion and the operation can become more efficient,” Chief Claims Officer Bryant Vernon said. “But even more importantly, it's about connecting with the customer because we want to have the trust of the customer, we want to help guide them into this process.”

As an American transplant to Canada, he said his anecdotal observation is that Canadians place an emphasis on human-to-human interaction — but the Covid experience might change that.

“Canadian customers put a lot of value on human connection and interaction — they rely on advice and having a conversation,” Vernon said. “But Covid has changed a lot of people’s perceptions and, as a whole, people are getting more used to using technology to get things done and that will put pressure on companies to adopt because people will be asking for it more.”

He said even though customer’s perceptions may be changing, technology adoption within a company has to be in collaboration with employees — a response to what employees are asking for. If it is a top-down decision, it could fail.

“We listen to our teams’ pain points, what they are saying they have issues with and align (technology adoption) with that,” Vernon said. “Artificial intelligence is a sensitive topic, so if you lead only with efficiency you lose the crowd because people think of it as replacing employees. But you can’t replace people in insurance, AI is not sophisticated enough to do a lot of the work insurance professionals do.”

Chisel AI’s Ron Glozman said at the organizational level, business leaders don’t need convincing of the benefits of artificial intelligence and adopting advanced technologies.

But employees are still weary.

“There is fear and scepticism holding people back — companies want this technology but their people have to be brought along on the journey,” Glozman said. “I understand what people are saying, the emotional piece is difficult.”

“When people talk about AI they think of it as replacing people but I see it as augmenting and helping them out. People will be able to work on things where it makes the most sense and where they get a sense of purpose and feel the flow of their work instead of being stuck in manual processes.”

Trends and tactics for knowledge transfer

“Skills that workers used to survive in the past — even in the last five years — have changed dramatically...and you see it with top leaders who are focused on innovation, critical thinking, and emotional intelligence while in the past, it was centred around the expertise of a certain function or product."― Erin Gattoni, VP of Human Resources at CNA Insurance

Artificial intelligence adoption in the insurance industry is shifting what skills insurance professionals will need to embody.

The insurance industry is transforming. There is a changeover to a partially automated workforces that intersects with dramatic retirement projections.

According to a Statistics Canada study 10.6 per cent of Canadian workers were at high risk (probability of 70 per cent or higher) of automation-related job transformation in 2016, while 29.1 per cent were at moderate risk (probability of between 50 and 70 per cent).

Drilling down further, the study revealed that potentially 4.8 per cent of insurance industry jobs are at high risk for job automation.

In the Insurance Institute’s 2018 demographics study, it was forecast that more than 25 per cent of workers would retire by 2027.

As deployment of advanced technologies is expected to ramp up, decades’ worth of industry experience and expertise is leaving the industry.

Erin Gattoni, VP of Human Resources at CNA Insurance, said while it is difficult to predict retirement trends, it is clear that no company is immune to the risks associated with decades’ worth of industry knowledge leaving companies as more experienced employees retire.

She said adapting to retirement trends and technology advancements calls for a proactive strategy through the employee life cycle to promote and encourage knowledge transfer at all levels within the organization.

“Fundamentally, it comes down to having a proactive recruitment strategy, learning and development plan, and an inclusive culture, to have openness and collaboration, along with a focus on comprehensive succession and progression strategies for talent. This coupled with internal programs like mentor and mentee programs lead to successful knowledge transfer. ” Gattoni said.

She said retirement and knowledge transfer, paired with advancements in technology, is episodic — it won’t all happen during a set period. Skilfully moving through these trends requires a continuous process.

“Having goals and values like those at CNA — continuous learning, accountability, collaboration, external focus, innovation, inclusion — provides an environment where current and future talent will thrive as we continue to work and live in this constant state of disruption,” Gattoni said. “(Focusing on) continuous change and disruption will help organizations drive forward with innovation at the forefront. While retirement projections are something we're dealing with now, there's always going to be a state of change where you have to be agile, you have to continue to provide an employee experience that thrives in that type of environment.”

She said CNA studied its retirement projection and the knowledge that could be lost over time. It looked at what active strategies to put in place to ensure employees are working within an environment with a constant feedback loop of knowledge transfer between newer and more experienced employees and how that is balanced with emerging trends.

“(Our strategies include) focusing on identifying and engaging experienced talent within the insurance marketplace, which is very hard to find,” Gattoni said. “And while you're identifying and engaging experienced talent, at the same time you have to have programs focused on developing the next generation of professionals.”

She said some strategies include developing a unique recruitment pipeline with proactive recruitment and talent engagement and getting (the CNA brand) out — what it's like to work at the company.

Chisel AI’s Ron Glozman said it is crucial for companies to establish knowledge transfer not only between newer and older employees but also between older employees and the artificial intelligence technology, which relies on machine learning where systems learn to make decisions.

“One of the main selling features of artificial intelligence technology is its machine learning capabilities, that it can learn and improve based on human input,” Glozman said.

He said the most skilled underwriter can check approximately 32,000 policies in their lifetime.

“That’s a lot and companies want to retain that knowledge,” Glozman said.

He said Chisel AI’s programs have seen 100,000 policies since the company was established less than a decade ago.

“As our artificial intelligence gets used and each person contributes their knowledge, the machine learns and it will have more breadth and depth,” Glozman said. “Having learned from the retiring employees, the machine will retain that retired person’s knowledge — that is what the knowledge transfer is about, checking more policies than any one person and getting that knowledge captured before the people leave the industry.”

At CNA, there is a back and forth flow of knowledge transfer — expertise flows from both new recruits to experienced employees and between company departments.

Gattoni said it’s important to facilitate a transfer of knowledge through a type of “jungle gym” career path.

“Insurance is such an exciting industry to be a part of because there are so many ways you can swing your career — within the area you currently reside or switching over to something completely different,” she said. “Within insurance, talent switching from underwriting to HR...others have moved from claims to underwriting, or operations to underwriting, or finance to underwriting — there’s this type of “jungle gym” mentality to continue to transfer knowledge even between departments, which is useful.”

She said one of the company’s core tenet’s is a focus on continuous learning and internal training programs, including mentor-mentee programs, as it’s important to facilitate a type of learning that creates a knowledge tree that reaches beyond the regular, siloed type of organizational structure.

“What helped us is that mentorship is available at all levels (and) it starts with that initial (mentor-mentee) partnership, having a program within the organization to assess skills, both at the senior level along with the mentees, to create what is beneficial for both parties, results in creating that strong network of talent,” Gattoni said. “Another area that we focus on is thinking about the life cycle of an employee and how to map out where talent is and understand what their career aspirations are along with how to best support and give them resources to create an environment in which they can thrive.”

But the adoption of artificial intelligence in the insurance industry and retirement projections does not only drive the need for comprehensive knowledge transfer. It is shifting the skills for which employees are being recruited.

Gore Mutual’s Jas Dhindsa said as insurance organizations look to digitize their operations, they are increasingly looking outside the industry for new talent.

“You can never discount the insurance context and institutional knowledge but, at the same time, to transform you also need to bring a complementing and challenging perspective to shake things up,” he said. “This type of change will help (the industry) a lot — but it has to be done with purpose, you can’t just copy and paste and expect a different outcome.”

At CNA, identifying skills such as learning agility and resiliency has become part of the recruitment process.

“It's all about finding individuals that have that agility to learn quickly, both in terms of internal technology changes but also a sense of comfort with shifting technologies and markets, to stay ahead of the curve,” Gattoni said. “It's hard to find, and it's really hard to dissect when you're going through the interview processes.”

She said the emphasis on these skills is not only due to technology adoption, the pandemic has shifted priorities as well.

“Agility has always been key to our hiring process and ensuring candidates can get up to speed quickly, but (now) it's more about understanding that comfort level with change,” Gattoni said.

She said the company has gone through several changes during the pandemic, like learning to work in a 100% virtual office environment.

“When we look at the types of individuals that are set up for success at CNA, it leads to thinking about that agility and comfort with the changing market, because not only is the market changing, our clients are changing,” Gattoni said. “That level of comfort with change and staying ahead of the curve relates to one of our core and fundamental values: continuous learning, and that's what keeps us ahead of the curve.”

She said creating a work environment where talent can thrive — where employees feel comfortable and connected — in an uncertain world establishes collaboration and facilitates knowledge transfer.

She said through all these uncertainties driven by shifting technologies, changing markets and the pandemic, the individuals who have long-term resilience will have the greatest impact.

“Skills that workers used to survive in the past — even in the last five years — have changed dramatically...and you see it with top leaders who are focused on innovation, critical thinking, and emotional intelligence while in the past, it was centred around the expertise of a certain function or product,” Gattoni said.

“You're going to continue to see this ongoing commitment to build resiliency in the workforce and that's what employees are looking for...employers who are focused on the development and learning to elevate and reskill (employees’) talent.”

She said for organizations to sustainably grow the business in this rapidly changing market, there needs to be a focus on supporting their talent to reinvent their skill set and to hiring talent who have a passion and drive for learning.