The emergence of AI and generative AI (gen AI) has brought new energy to the age-old conversation about productivity. In this episode of the McKinsey on Insurance podcast, McKinsey senior partner Jörg Mußhoff sits down with partners Elena Pizzocaro and Selim Sulos to discuss why revisiting insurance productivity is at the top of CEOs’ agendas, how the most successful transformations use an end-to-end redesign approach, and why CEOs shouldn’t get distracted by the novelty of AI when traditional tools could encourage growth. The following transcript has been edited for clarity.
Many companies across industries are looking into not only how to unleash the power of AI and automation but also how to enhance new forms of productivity. Selim Sulos explains that after the challenges brought on by COVID-19, productivity has become a top priority for insurance CEOs. With inflation increasing the cost of claims and rising interest rates stagnating growth, insurance carriers are seeking ways to improve efficiency and drive productivity.
Elena Pizzocaro highlights the role of technology in improving productivity, with automation and AI offering new opportunities for streamlining processes. The potential for gen AI to eliminate up to 50 percent of manual activities presents a significant opportunity for insurance companies to boost productivity.
When it comes to driving productivity, the most successful transformations adopt an end-to-end redesign approach. By reimagining core processes and combining this with traditional techniques like performance management, companies can sustain long-term impact. Selim Sulos emphasizes the importance of balancing new productivity paradigms with traditional approaches, especially for midsize insurance carriers with capital constraints.
Redesigning end-to-end components is just the beginning of driving productivity. Selim Sulos explains that companies must also consider their technology and data pipelines to create a seamless flow that enables the effective use of AI and gen AI. By improving processes and technology infrastructure, insurance companies can unlock the full potential of these tools to drive productivity.
Elena Pizzocaro and Selim Sulos discuss the role of gen AI as a key enabler for productivity. Gen AI has the potential to automate tasks, assist users in completing activities, and improve the overall worker experience. From smart routing in call centers to content creation and modernizing legacy tech, gen AI offers practical solutions for enhancing productivity in the insurance industry.
In conclusion, Elena Pizzocaro emphasizes the importance of change management in transforming core processes and adopting new technologies. Selim Sulos warns against focusing solely on shiny objects like gen AI without first establishing the right processes to support them. By carefully considering the organization’s needs and implementing the necessary building blocks, insurance companies can leverage AI and gen AI to drive productivity effectively.
Overall, the conversation highlights the significant impact that AI and gen AI can have on insurance productivity and the importance of adopting a strategic approach to transformation. By combining new technologies with traditional techniques and focusing on change management, insurance companies can unlock new levels of efficiency and growth in the digital age.