Insurance has always been a data business. With its ranks comprised of actuaries, and its tracking of morbidity and mortality rates as cornerstones of the business, insurance company products have long been predicated upon developing and analyzing vast repositories of data to predict life expectancies, anticipate health conditions, and provide financial protection.
With the advance of rapidly emerging machine learning and Artificial Intelligence (AI) capabilities, it is now possible to capture and analyze data, and predict outcomes, with far greater precision. It is against this backdrop that long standing insurance industry pioneer Prudential Financial recognizes an opportunity to disrupt a traditional legacy business. A senior Prudential executive poses the question, “How does a 150-year-old insurance company pull an Amazon? Can we take an internal capability and turn it into a revenue-generating business?”.
Founded in Newark, NJ in 1875, Prudential Financial is a Fortune 100 (#55) and Global 100 (#85) company which provides insurance, retirement planning, and investment management products and services to consumers and institutions across 40 countries. Originally named The Widows and Orphans Friendly Society, then the Prudential Friendly Society, Prudential is today the largest insurance provider in the United States with $1.4 trillion in total assets. Known to generations of customers for its Rock of Gibraltar logo, the company’s slogans “Get a Piece of the Rock” and “Strength of Gibraltar” are still widely identifiable with Prudential.
Spearheading Prudential’s data and AI-driven disruption and transformation initiative is Kjersten Moody, who was hired in June 2020 as the 150-year-old firm’s inaugural Chief Data Officer. Moody had previously served as the inaugural Chief Data and Analytics Officer for State Farm, a position she held for 3 years, exceeding the average industry tenure for a CDO of 18-24 months. Before that, she held leadership positions in data and technology with Unilever and Thomson Reuters. In her role with Prudential, Moody is responsible for the company’s data platform, data automation, AI and ML, and data governance functions. In this capacity she works closely with each of the company’s business lines.
Moody characterizes the data and AI transformation efforts at Prudential as an effort to “meet the customer where they are” and lower the perceived barriers to life insurance, like medical exams. She explains, “With our latest endeavor, we are working with our customers to refocus our planning on longevity, as opposed to the traditional insurance mindset of mortality, and in doing so, deliver a highly personalized approach to retirement planning and health and wellness”. Moody describes this as “a different vantage point for the customer, focused on how you are going to live”.
As an example of the AI-driven transformation that has been underway within Prudential, Moody cites the rollout of a new underwriting process using AI to replace legacy, rules-based underwriting. This use of AI increases the speed and flexibility of the analysis, resulting in a 98-99% accuracy rate in forecasting longevity. This increase in speed and accuracy contrasts with traditional industry accuracy averages in the 75% range. The ability to apply AI and advanced machine learning approaches has reduced underwriting time “from 22 days to 22 seconds” and eliminated the need for laborious physical exams.
It is from these disruptive initiatives that in 2022 Prudential Financial launched a new independent venture known as High Peak, which is a Fintech/Insurtech start-up incubated from within Prudential with financial backing of the firm. Moody is a co-founder and currently serving as the entity’s interim Chief Executive Officer, not the typical opportunity for an industry Chief Data and Analytics Officer. She is currently recruiting her successor as CEO, as she focuses on her full transformation mandate.
High Peak’s first product is called Acusite and is an AI-driven longevity model that originates from Prudential’s use of machine learning and AI to innovate and transform its underwriting processes. Acusite is now being licensed by High Peak to provide other organizations outside of Prudential with the same insights into customer longevity estimates. The product is differentiated by a data set that is 3x larger than traditional longevity models, which enables it to predict lifespans with much greater accuracy, resulting in applications across industries:
- Faster, more accurate, and more cost-effective policy decisions with fewer customer inputs, for insurance.
- An exponentially richer and more personalized plan for customers by looking at a spectrum of risk categories, for financial planning.
- Potential applications for customer wellness.
The ambition of High Peak, says Moody, is to deliver value to new industries and audiences for Prudential, something she describes as an “extension of the data value stream”. Moody continues, “This is the result of more than 6 years of research and development efforts to leverage the depth of our data around application history and claims. We learned that we could do things with a high degree of accuracy and speed at a very low cost in a way that changes the customer and the human experience. The result is a simplified and easier process for buying insurance, critical for online purchasers.”
Moody summarizes the transformation which has taken place within Prudential: “AI is the differentiator. It brings exponential value and speed to legacy processes”. She continues, “classical machine learning techniques improve explainability, and these algorithms make decisions more understandable”. She adds “all of this must be done in a responsible manner”, emphasizing the criticality of responsible AI and keeping a “human in the loop”.
Reflecting on her time at Prudential and the launch of the High Peak business, Moody concludes, “How does an insurance company pull an Amazon? Become better than your competitors at a core capability and offer it as a service.”