CIO Robert Pick is both passionate and realistic about how artificial intelligence (AI) will impact the insurance industry. Often cited as a sector that will be severely disrupted by AI, Pick and his organization Tokio Marine North America, are already considering the impact of this technology as they prepare for the next wave of data evolution.
Tokio Marine North America is part of the Japanese Tokio Marine Group, which has an annual turnover of $65 billion, operates in 43 countries, and mostly focuses on specialist and commercial insurance. Pick has two roles with the organization: CIO for the North American business, which he describes as his day job, and Deputy CITO for the wider Group, his night job. As North American CIO, Pick has additional responsibility for business process automation, business continuity, and crisis management.
The group role is necessary as Tokio Marine Group is a federated business that has grown over its 150-year history through mergers and acquisitions, particularly in the last 20 years. As any CIO with experience of the federated business model will tell you, the model has strengths and weaknesses. Wearing his group hat, Pick looks to bolster the strengths:
The model doesn't allow us to have one voice to the major vendors and markets. But, it is beneficial from a technology and digital innovation perspective because we are able to track different markets, look and learn. Especially as in the last five to seven years our CIOs and digital leaders have got very good at collaborating and sharing. As a diverse global company, we are as aligned as we can be and as different as we need to be.
That sharing is helping suppliers to understand the business and its needs. He adds that across Tokio Marine Group, technology departments have become closely integrated and aligned with the business operations. Pick says:
As technologists, that has allowed us to get more work done through an understanding of what the actual business challenges and needs are.
That alignment was helped by chairman Tsuyoshi Nagano a number of years ago telling the organization it was OK to experiment and even fail; Pick says:
He wanted to see us take some safe chances, and there is a natural desire among people to explore the technology and digital space.
That enthusiasm for technology has meant Pick and his team have increased their focus on data, which the CIO says is the most powerful asset the firm has:
Data is at the core of everything. I said that 10 years ago and almost disavowed it, but now I really believe it. Generative AI and the resurgence of classic AI have emphasized the necessity of having good, clean, highly curated quality data. That doesn't remove the need to do great work in applications, integrations, and dashboards. All of that is easier if our data is in good shape
This has led to a continual emphasis on improving our data, which is nothing new. There is a renewed importance and clarity around the need to improve data because there are acute reasons.
Those reasons are not just technological. In the weeks before our interview, the US was rocked by some of its worst climate emergency events, with the wildfires that devastated California; even as we spoke, a wildfire was causing damage in the state of Georgia. On this issue, Pick says:
Events like the wildfires in California can affect our bottom line (though in this case our exposure was limited), but more importantly, it affects our policyholders.
As an industry our role is to transfer that risk, but also, the other element is delivering risk mitigation and risk prevention through innovative solutions.
Pick says the insurance industry has power and a positive history here. Its data and services can influence what building materials are used and future building regulations. Following Hurricane Andrew, which hit Florida and Louisiana hard in August 1992, there was a reworking of building codes. The CIO says:
The insurance industry can help make communities more resilient based on the data we have. Leveraging data to build communities to be more resilient from the get-go leads ultimately to lower premiums and fewer claims, but also improves the sense of safety and solidity.
AI reality
AI will help utilize the data richness of the insurance industry, the CIO says, but first, the technology needs to mature and understand the nuance of the insurance sector:
AI at present is not auditable and it's not accountable. Yet I hear analysts say not being agentic is an existential threat to your business. Well, the reality is putting agents into a regulated transaction is a B-line to an audit.
I don't see many responsible or regulated businesses doing so, as it is going to be a couple of years before we sort out bias, toxicity and that all boils down to being auditable and accountable.
One of the CIO's main concerns is that the drift in the thought process that is inherent in today's generative AI tools makes audits very difficult. He argues that if you give an AI the same data set and the same prompt, you will not get the same answer five minutes, days, weeks or months later. He says:
The nature of an LLM, the vector databases, and the RAG all creates the potential for you not getting the same answer, even with the same foundation model and data. I have seen it when using Chat GPT and Grok AI, and you get a slightly different answer. This is because the LLM works in that one moment.
I think the prognostications about the death of applications and the rise of agents is way premature.
He is not dismissive of the power and potential of the technology:
The way we use applications will change, and the inflection point for interaction and decision-making will evolve. Hopefully, it will get a lot more interesting as drudgery is done by agents and automation.
The world will change, but it will be increments and evolution. Generative AI is a revolutionary technology, but it will be applied in an evolutionary fashion. As Charles Darwin taught us, sometimes evolution can happen very quickly under pressure, but it is still evolution.
Pick likens the current state of the AI market to the early commercialization of the internet in the mid-1990s:
Netscape was a good HTML browser, but if you wanted sound, you had to get a plug-in, and another if you wanted to decode newsgroups or if you wanted video then you needed an entirely different application such as RealPlayer. But then Internet Explorer came out and everything was built in.
He says that at present, there is a wealth of generative AI tools and a churn of new products on the market, but a packaged product is what CIOs and users need. This will be especially important for his sector, which wants to focus on being insurance experts and not AI experts.
My take
Despite AI agents being by far the most sensible trend among the wave of AI hype at present, CIO Pick brings a reasoned sense to the debate. Until a technology can be audited and held accountable in what is one of the most important transactions an organization makes, then its adoption will, rightly, be cautious.
