Allstate’s cloud-first approach to digital transformation pays off

Allstate’s Jeevanjee credits the company’s top brass for grasping the importance of aligning its IT infrastructure with new business processes, which had to be rearchitected to maximize the rewards and minimize the risks of its switch to digital business. And it has all been undertaken with a cloud-first approach.

“It was built and designed to run on the cloud,” Jeevanjee says. “It wasn’t built to run on premise.”

Re-engineering how claims processing gets done

In many ways, Allstate is still at the beginning of its digital journey — only 3% to 4% of claims “on the book” are currently processed on the cloud and much data remains in on-prem XML databases common to the insurance industry — though the advanced technology and business modernization blueprint is rock-solid, the CIO says.

Allstate’s global IT team, with staff based across North America, Northern Ireland, and India, developed the infrastructure and new processes, deploying them first in Allstate’s home state of Illinois for nine months to determine how customers would react to the new digital experience before rolling it out in Tennessee. Allstate expects to be up and running in about one third of the US this year for automobile policies through direct distribution.

“We learned a ton about how customers react to us, and this is what I mean about changing our organization,” Jeevanjee says. “Getting a fast focus on that experience was extremely helpful in making the experience the best we possibly could.”

Allstate began moving to the cloud in 2019 and began the deployment of its curated multicloud blueprint upon Jeevanjee’s return to the company in 2022.

As the company re-engineers and tests every aspect of its auto and home insurance applications in each state, it is building it anew on AWS as the core workhorse, while making use of Google and Microsoft cloud services for specialized applications such as AI.

The methodical approach does not mean Allstate is a technology novice. The company deployed automation in business processes long ago to remove manual steps and speed up the transactions.

In fact, the company has deployed several machine learning models for key applications, including claims predictions — such as determining whether an automobile in an accident is a total loss — and more evolved homegrown-trained machine learning models that make these recommendations independently.

Enhancing customer experience with gen AI

Allstate has also developed a generative AI application based on ChatGPT 3.3 informally dubbed MyStory, which vastly reduces the time for customers to report a claim after an accident or incident. Rather than go over and over an account of an accident to various clerks and adjustors, customers recount the incident once and it is summarized in a document and delivered to all necessary parties.

When a human representative calls the customer, they are fully informed and ready to move to next stages. “We put people in the flow when it matters most,” says Jeevanjee, noting this important change in the process has vastly improved customer satisfaction.

Arun Chandrasekaran, distinguished VP and analyst at Gartner, says he is seeing similar generative AI pilots being undertaken at financial services and other insurance companies, as well as technology, media, and entertainment organizations.

According to Chandrasekaran, insurance companies have been leading the way to implement technologies such as speech to text and transcription to speed up claims processing and customers satisfaction, and use of generative AI, which, although presently low in the insurance industry, is projected to grow significantly in the next 12 months, is just the latest stab at achieving these outcomes.

“These use cases have been around in the insurance sector actually for a while now,” he says. “Where language models can add value essentially is in terms of better cognition, because they’re able to craft responses” and bring in more information to re-create events in an effort to more accurately handle claims. “As models evolve in the future to become fully multi-modal, they [will be] able to traverse different types of data.”

One of the four largest automobile and home insurers in the US, Allstate manages roughly 190 million policies protecting cars, homes, motorcycles, health, disability, lives, personal devices, and identities, according to a company spokesperson.

The organization employs roughly 54,500, and supports 10,100 exclusive Allstate agents and 51,900 independent agents. About 7,000 employees are dedicated to IT throughout the company under Jeevanjee’s leadership.

The CIO’s biggest challenge in its cloud-native approach from the start is “changing the culture to become a digital company,” Jeevanjee says, noting that getting the commitment from the entire C-suite to embrace the plan has made his job far easier. “What we’ve done is look at all of our processes and make them digital ready.”