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In case you missed it, Allianz shared one of the most thought-provoking pieces about the impact of GenAI for software that our team has come across this year. How AI could change insurance, part of Allianz’s #globalriskdialogue, provides a thorough overview of the impact of Generative AI across the Insurance landscape.
Some findings include:
- Impact: The potential of $1.1T of impact across insurance as a whole
- Benefits: Significant productivity gains and deeper, faster risk assessments
- Risks: Data protection, confidentiality, the threat of cyber attack, ethical concerns, and liability exposures
These insurance-wide findings about the impact of GenAI map neatly to the impact of Generative AI specifically for the software development lifecycle (SDLC).
- Impact: The potential of a $900B impact on software development functions (McKinsey & Company, 2023)
- Benefits: Huge productivity gains for the engineering function, 20-40% in the near term from our estimates, and 10-55% from others (Thoughtworks, 2023; GitHub, 2022)
- Risks: Gen AI code produces risks for security, data protection, intellectual privacy, team knowledge, vendor compliance, and relating to regulations
What lies ahead? Our team at Sema predicts at least four types of major impact:
- First, as direct employers of software developers, insurers will be able to realize productivity gains from their engineering teams. This will lead to more precise and more performant products, delivered more quickly for their internal and external software consumers.
- Second, engineers who work at insurance companies using Gen AI chatbots for the SDLC will see big improvements in their experience at work. 60-75% of developers have reported an increase in satisfaction from using such tools (GitHub, 2022) because they can remain in their flow state and experiment faster.
- Third, companies with software teams will have new requirements in the underwriting process. Specifically, seekers of Cyber Security Insurance and Reps & Warranties Insurance (RWI) in Mergers and Acquisitions (M&A) will be asked to demonstrate the Gen AI provenance of their code. That means differentiating and explaining what is human-created, what is Gen AI-created, and what is a mix.
- Fourth, insurance companies — as heavily regulated purchasers of software and software development services — will be asking their vendors to provide Gen AI Code proof of provenance to address the risks described above.
In short, not only will GenAI have a significant impact on the insurance industry as a whole, but the specific implementation of GenAI in software development will also bring about a transformation that will extend beyond insurance companies.
At Sema, our clients will start receiving GenAI code evaluations and Generative AI Bills of Material (GBOMs ™) beginning January 2024.
About Sema Technologies, Inc.
Sema is the leader in comprehensive codebase scans with over $1T of enterprise software organizations evaluated to inform our dataset. We are now accepting pre-orders for AI Code Monitor, which translates compliance standards into “traffic light warnings” for CTOs leading fast-paced and highly productive engineering teams. You can learn more about our solution by contacting us here.
Disclosure
Sema publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information purposes only. To request reprint permission for any of our publications, please use our “Contact Us” form. The availability of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship. The views set forth herein are the personal views of the authors and do not necessarily reflect those of the Firm.
