Chubb Cuts 20% Workforce for AI Drive

Chubb is set to undergo a significant transformation aimed at automating key functions within its insurance operations, planning to reduce its workforce by up to 20% over the next three to four years. This initiative, presented to investors, will impact roughly 70% of the organization as the company seeks to digitize its various business units and streamline their underlying processes.

Currently employing about 43,000 individuals globally, Chubb’s restructuring will touch various operational areas, including sales and marketing, underwriting administration, claims, finance, and other core functions. This transformation strictly aims to redesign workflows and enhance efficiencies within the organization.

Chubb has set a target for run-rate expense savings that would reduce its combined ratio by about 1.5 points following the automation effort. This move comes amid a broader trend within the insurance sector where companies are increasingly leveraging automation technologies. Research from MIT’s Project Iceberg estimates that the existing AI capabilities could handle tasks amounting to nearly 12% of total U.S. wage value, representing about $1.2 trillion annually. This statistic underscores the potential for automation in areas heavily reliant on document processing and rule-driven tasks, positioning the insurance industry as highly susceptible to such transformations.

As part of Chubb’s “radical automation goals,” the company aims to achieve automation in 85% of its major underwriting and claims processes. Furthermore, it anticipates that 85% of its global gross written premium will be generated from business that is fully digital or significantly digitally enabled. This ambitious approach mirrors strategies adopted by other major insurers such as Allianz, which plans to eliminate 1,500 to 1,800 jobs within its travel insurance sector in response to similar pressures from AI.

These moves signal a broader shift among insurers, not only in upgrading technological systems but also in rethinking workforce models in segments where AI and digital platforms can efficiently manage increased volumes of routine inquiries and processes. Chubb’s assertion that data, AI, and process automation are essential for achieving growth at a lower marginal cost reflects a strategic pivot necessary to remain competitive in an evolving market.