What About the White Space?

By: Dr. Gary Anderberg

Sep 26, 2024 — The following is a think piece developed by your author for discussion among risk management readers of this Journal. It does not represent an official position or strategy of the Gallagher companies.

"White space" is a term with a number of meanings, but most of them center on the use of blank space on a paper page, a webpage, a billboard, a picture or a scene in a film and how, artfully deployed, it can set off or emphasize a line or two of text or an illustration.*

Sort of like this.

Your humble correspondent has been exploring the concept of using white space to define the potential roles of artificial intelligence (AI) in the complex architecture of risk and insurance management systems. In this case, white space means starting your analysis by defining the tasks best performed by real people, homo sapiens v1.0 — us. We offer these thoughts here in case they may help you to define best uses for AI in your own environment in managing risk or specific programs of insurance. Instead of scouting about for tasks we think AI might tackle, let's look first at what we know real people do better than any app, no matter how sophisticated. What's left, the white spaces, may then be ripe for AI-based development.

What sorts of things do those old-fashioned humans do really well? Let's look at just a couple of examples to get the hang of this idea:

• Humans talking to humans: Who among us has ever been delighted to realize that when we call Huge Amalgamated Inc. with a dicey and complex problem we want solved right now we have been plugged into an AI bot and the issue we really need to discuss is halfway between Option 3 and Option 4 — and a little bit like Option 6? Has anyone ever developed warm feelings toward a company based on their customer service bots? Simple stuff like admin procedures, addresses, phone numbers? Sometimes a bot is all you need. Meaningful stuff? Almost never. Certain types of problem solving are best handled person to person.
• Tribal knowledge: A great deal of what you need to know to be a really effective claims adjuster, for example, probably isn't written down anywhere that an AI can find. Good adjusters get good because they pay attention through hundreds or even thousands of claim encounters. They develop a sixth sense for what's causing distress to claimants; they know ways to reduce anxiety, depression and uncertainty; they can sniff out fraud based on previous incidents. And they talk to other adjusters about handling complex claims and getting to resolution. The same phenomenon occurs within risk departments and among underwriters or program managers all the time. Good people keep improving and getting smarter.**

Efficiency isn't improved by replacing effective employees with systems, but it can be enhanced by equipping those employees with apps that help them work by replacing clerical paperwork, making needed information more readily available, making the occasional suggestion to help along a return-to-work program or refine an underwriting issue.

Used correctly, the white space test helps us see how to make our good people even more effective by identifying those places where an AI-based decision support system or enhanced look up application can add value. There's a rich, ripe potential for many types of waste if we seek to deploy AI in ways where it isn't likely to add meaningful functionality. While GenAI especially gives us new tools to work with, bear in mind that an extensive EY study a couple of years back showed that 30 to 50% of process automation projects, the AI of a couple of decades ago, fail.

Want a few case studies? Just Google "examples of AI projects that didn't work" and lean away from the screen. Some examples are high-tech taffy pulls while others are quietly hilarious. We offer the white space test as one more tool you might want to use in deciding how your investments in AI can give you the best return while respecting the invaluable talent you have built up over the years in your risk management employees who have been everywhere, seen everything, know everyone, and are surprised at nothing.

*White Space is also the brand of snowboards marketed by the champion Olympic snowboarder Shaun White, formerly known as the Flying Tomato.

**My first boss in the third-party administrator business back in 1978 liked to say, "good people make poor systems work." He was right.