Donald Lacey, a venture investor based in San Francisco, decided to prove that large-language models such as ChatGPT really are the future for the insurance industry.
He spent a weekend using OpenAI’s APIs to build what he describes a as a crude system to capture email requests and respond using just an insurance company’s own publicly available online website and product information. He chose to use the materials of Prudential Plc.
“I needed an online policy manual and the AIA website was down, so I went with Pru,” he said, noting that he did this on his own without notifying the insurance company.
“I’m a venture investor, not a coder,” he explained at a conference in Hong Kong, Insurtech Insights. He’s chief investment officer at West Fork Capital, which invests in fintech and healthtech companies. “But I can do stuff now that really experienced tech teams at big firms couldn’t do 18 months ago.” A key aspect of LLMs is that he relied on ChatGPT to tell him how to write the necessary code.
His message to insurers is: jump in now. So long as they only feed their chatbots their own information and keep conversations limited to specific things, the dangers of hallucination or errors is acceptably low.
“In San Francisco where I live, everyone’s freaking out about LLMs,” he said, “but I’ve noticed a pronounced lack of interest or appreciation for how transformative this technology is likely to be for the insurance industry.”
Many executives are wary of the latest Silicon Valley hype. Insurance, like most financial services, hasn’t been disrupted by technology, be it online sales, blockchain, or data-driven insights. ChatGPT has been derided for its propensity to bullshit, and it can come off as gimmicky, if not outright dangerous. Legal teams are especially wary.
Lacey believes that a well-constructed tool can mitigate these risks while providing fast and accurate responses to customer emails.
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His basement experiment is called Prudential Email Adviser. It connects incoming emails to ChatGPT, which responds based only on specific data Lacey provides.
He wrote it using Python 3, API keys from OpenAI (the company behind ChatGPT) and Anthropic, and Google’s gmail. He uploaded Prudential Hong Kong’s policy documents and recent annual reports to the cloud (using a service called Railway), which took 30 minutes and cost $2. The end product costs less than 3 cents per answered email, but the main fixed cost is the $20 for ChatGPT’s monthly subscription.
A more sophisticated technician could scale this so it’s far cheaper to operate, but his weekend project costs a lot less than the millions of dollars insurers spent on previous generations of chatbots.
He didn’t program the Adviser what information to provide or how to respond. He just relied on the power of LLMs to draw conclusions from the data set, in this case, Prudential’s public information. The model also works in Chinese (traditional or simplified characters) and other languages such as Tagalog.
What’s it say?
DigFin tried it. You be the judge (or try it yourself, dear reader, by sending an email to [email protected]).
Hi, I’m a 53-year old US citizen resident in Hong Kong. What kind of long-term healthcare policies do you offer that would be suitable for me? Thanks.
Pru Email Adviser:
Thank you for reaching out and considering Prudential for your long-term healthcare needs. Based on your age and residency in Hong Kong, I would recommend our PRUhealth medical plus plan as a suitable option for comprehensive health and medical insurance. This plan provides extensive coverage, including protection against significant medical expenses, specialized treatments such as cancer therapies, and enhanced benefits for rehabilitation and other extended medical needs.
The PRUhealth medical plus plan offers a high annual limit of coverage, up to HKD 14,000,000, and a substantial lifetime limit of HKD 60,000,000. It is designed to provide peace of mind, especially when considering the potential costs of long-term healthcare. The plan also includes value-added services like cashless hospitalization and emergency assistance services, ensuring you get the support you need, whenever you need it.
In addition to the health and medical plan, I would recommend considering our PRUHealth Critical Illness Extended Care III, which complements your long-term healthcare by providing coverage for a comprehensive list of 117 disease conditions. This policy offers multiple claims for critical illnesses, including cancer, heart attack, and stroke, and includes a Benefit Booster for extra protection in the first 10 years. Premiums are waived under certain conditions, which can alleviate financial stress during difficult times.
These plans together would offer a well-rounded approach to your healthcare needs, addressing both immediate medical expenses and critical illness support. It’s important to note that the exact premium will depend on several factors, including chosen coverage levels, deductibles, and your health status. To provide you with an accurate quote and further discuss how these plans can be tailored to your specific needs, I would be glad to arrange a personal consultation.
Please let me know a convenient time for you, and I can schedule a meeting to go over the details and answer any questions you may have. Your health and peace of mind are our top priorities, and we are here to support you every step of the way.
Pretty good! What about follow-up questions?
What kind of premiums am I looking at? I need a plan I can afford.
Pru Email Adviser:
Thank you for your patience. I understand that affordability is a key concern for you when considering a long-term healthcare plan. Based on the information you’ve provided and the documents I’ve reviewed, here is a summary of the options that may suit your needs:
1. **PRUhealth medical plus plan**: This comprehensive health and medical insurance plan is tailored to provide extensive coverage, including significant medical expenses and specialized treatments. While I don’t have specific premium rates for a 53-year-old US citizen residing in Hong Kong, premiums are generally adjusted annually and are based on factors such as age, gender, room level, deductible options, and health status. To ensure affordability, you might consider selecting a higher deductible, which could lower your premium costs.
2. **Long Term Care Benefit**: Available within certain policies, this benefit provides a monthly payout in the event you require long-term care. With options for a benefit payment term of either 5 years or whole life, you can choose the level of coverage that best fits your budget. Premiums are waived while the monthly benefit is being paid, and the plan includes a medical check-up every 2 years.
3. **PRUHealth Critical Illness Extended Care III**: This policy offers coverage for a list of 117 disease conditions and allows for multiple claims for critical illnesses. While the exact premiums are not available without a personalized quote, you can manage costs by choosing a longer premium payment term or opting for a lower sum assured to make premiums more affordable.
To provide you with specific premium ranges and tailor a plan that aligns with your budget, I would need additional details such as your medical history, lifestyle factors, and the level of coverage you are looking for. It would be most beneficial to have a one-on-one consultation to discuss these factors and answer any further questions you may have.
Please let me know if you would like to arrange a personal meeting or if there is a convenient time for a call. I am committed to helping you find a plan that not only meets your healthcare needs but is also within your financial reach.
This answer wasn’t as good. It tended to repeat itself, and didn’t actually answer the question. That’s probably because the pricing information isn’t in the data fed to ChatGPT. On the other hand, the machine didn’t embarrass itself. With a bit of training, the machine can probably learn how to answer this question better (either with specific information or, better yet, by sending this to a human agent).
We got a little cheeky with our last query.
Thanks. One last question. Prudential plc’s stock price is underperforming its major competitors, such as AIA and AXA. Is it safe for me to buy a policy from Prudential, or should I consider a competitor?
Pru Email Adviser:
Thank you for reaching out with your concerns regarding Prudential plc’s stock price performance and its implications for the safety of purchasing a policy from us. I appreciate the opportunity to address your question.
While stock price can be influenced by a myriad of factors, including market sentiment, economic conditions, and investor expectations, it is not directly indicative of the safety or the financial stability of an insurance company. The decision to buy a policy should be based on the insurer’s financial health, the quality of its products, and its ability to fulfill its obligations to policyholders.
>From the analysis of Prudential plc’s 2023 Half Year Financial Report, the company exhibits a robust financial position. With a capital surplus of $15.5 billion and a coverage ratio of 295% under the Group-wide Supervision (GWS) framework, Prudential maintains a strong solvency position. The liquidity profile is equally reassuring, with $5.920 billion in cash and cash equivalents and $2.6 billion of undrawn committed facilities. These metrics underscore Prudential’s capacity to meet its financial obligations, including claims and policy benefits, even under stressed conditions.
Moreover, Prudential’s strategic initiatives are focused on sustainable growth in high-growth markets of Asia and Africa, and the company is making significant investments in technology and health sectors to bolster its competitive edge and enhance customer experience. This forward-looking approach is designed to contribute to the company’s long-term stability and success.
Given Prudential’s solid capital adequacy, liquidity, and proactive strategic initiatives, the company is well-positioned to honor its commitments to policyholders. The underperformance of the stock price relative to competitors should not be viewed as a standalone measure of the company’s ability to provide reliable insurance coverage.
To ensure that you choose a policy that aligns with your specific needs and circumstances, I would recommend having a detailed discussion with a financial advisor or an insurance specialist. They can assist you in evaluating the different aspects of the policies available, including coverage options, premium costs, and the financial strength ratings of the insurer.
If you have any further questions or would like to discuss your insurance needs in more detail, please do not hesitate to contact me. I am here to help you find a policy that provides the protection you require with the peace of mind that comes from choosing a financially secure and reputable insurer.
That’s a pretty good answer! The tightness of the data fed to the system ensured the system stuck to the corporate line.
That also suggests insurers can experiment with taking this to the next step, like offering sales tips or product pushes. Lacey says firms can even think bigger: if he asked ChatGPT to help him code in Python to build this email project, could a firm ask it to suggest programs in COBOL – the outdated language used by many legacy IT stacks, which only a few older engineers know how to write? It could help financial institutions transition to modern tech stacks.
And if a VC investor can write this chatbot at home over a weekend, do insurers now need to spend tens of millions of dollars on enterprise low-code/no-code platforms?
Lacey concluded, “I see the insurance industry as one giant technology-enabled business. Few industries have the potential to be as rapidly transformed by the power of LLMs as insurance.”