Why insurer Nationwide is investing $1.5 billion through 2028 on AI and other tech initiatives | Fortune

To make this lofty target a reality, the property and casualty insurance company on Wednesday announced it would invest $1.5 billion through 2028 to support technology innovation initiatives, including $100 million that will be earmarked to advance AI each year for the next three years.

The AI spending will go toward creating and managing AI assistants that will take on more work tasks, training and education, software development, and the underlying infrastructure to ensure that the AI systems that Nationwide relies on are resilient and secure.

Jim Fowler, Nationwide’s chief technology officer, says that the new financial commitment represents a 20% increase from what the company has been spending on an annual basis “in the last couple of years.” Since 2015, Nationwide says that it has invested $5 billion in technology modernization.

It is also indicative of a strategic pivot of Nationwide’s AI Playbook. Four months ago, Fowler says the company’s leadership met and wasn’t pleased to see dozens of AI use cases had proliferated across the organization. While workers were getting more efficient, it wasn’t always clear how they should use their extra time. Ten of Nationwide’s C-suite leaders worked collaboratively to identify 18 flagship AI use cases to prioritize across the business.

“We stepped back and we said, ‘We’ve got to get out of experimentation mode,’” says Fowler.

A few of the flagship AI use cases that Nationwide will be focusing on include a tool that will automate 80% of pets claims, including the resolution of 25% of those claims with an instant settlement. Fowler says this application of AI will create more capacity for the operations team to hunt down new business. For the farm and agricultural insurance business, AI tools are expected to reduce the review time for those claims by 20%.

In recent months, CTOs and chief information officers have pivoted their investment strategies to focus on fewer bets tied to bigger business outcomes. This new approach could help them finally achieve a steadier return on their AI investments, which has proven to be difficult to achieve as enterprises near the three-year mark since the debut of ChatGPT. 

“Part of what we’re doing differently, that I see other companies doing, is we’re setting targets that are the ROI,” says Fowler. “And those targets are big enough that even if we don’t get to the full target, we will still be wildly happy with the outcome.”

That includes an efficiency target for Fowler’s own software employees. His goal is to use more AI coding assistant tools to cut the cycle time to write new software by 50%. “I’ve got no shortage in the backlog of demand for technology,” says Fowler, especially given this week’s big new IT investment.

Nationwide, which ranks 72 on the Fortune 500, says it has already scaled six AI initiatives. Those tools include a generative AI claims assistant that can summarize the log notes of complex customer claims. When a claims representative gets in touch with a customer to discuss a large reported loss, it gets a one-paragraph summary to bring them up to speed on the case. 

An AI-enabled tool is also being used by developers to help migrate legacy code to new platforms. Fowler says that this tool has driven a 50% reduction in code conversion time for Nationwide’s development teams. That solution was developed during one of Nationwide’s hackathon events.

Already, AI chatbots and other productivity tools have been embraced by some early AI adopters. Nationwide says it has identified around 1,000 employees who had made themselves more productive using AI. While the company wants to continue to encourage that usage, Nationwide also wants to focus more energy and dollars on the flagship ideas. 

“What we saw is that with all the experimentation that was going on over the last two-and-a-half years, nothing was scaling,” says Fowler. “I don’t want to take away from the associates the ability to kind of drive their own local productivity, but I want to be more intentional about where we’re going to get scale for bigger solutions.”

Next week, Fowler says that Nationwide will host a symposium for roughly 1,000 employees who have an associate vice president title or above. The company will tap the expertise of both internal and external speakers to talk through expectations for how technology, including AI, will improve operations and the future strategy for every business unit.

These bigger bets on AI from have raised questions about the future of work and surveys have shown workers are worried that they’ll be displaced by the technology. Just this week, Amazon announced it will cut about 14,000 jobs as it accelerates spending on AI.

But AI may not necessarily be a job killer at Nationwide. Fowler says that the company’s sales have grown 50% over the last five years and “we’re really not expecting that to slow down.” His hope is that AI and other innovative technologies will make it easier to generate more business.

“This isn’t just an efficiency play,” explains Fowler. “AI is not just about productivity.”

John Kell

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NEWS PACKETS

Amazon to cut 14,000 corporate jobs amid AI push. Mere months after Amazon CEO Andy Jassy said that efficiency gains from AI would mean fewer jobs, the tech giant announced a fresh round of layoffs that will reportedly span various departments including logistics, payments, video games, and the company’s cloud computing business. Reuters on Monday had reported that the layoff total could actually affect as many as 30,000, but Amazon says that will increase hiring for some parts of the business and the 14,000 figure represents an overall workforce reduction. The newly planned cuts would surpass the total of the company’s rolling reductions in 2022 and 2023 that led to more than 27,000 corporate job eliminations, as Amazon and other tech giants angled to slim their workforce after a pandemic-era boom in hiring.

Global IT spending is projected to hit a record in 2026. As CIOs are busy preparing their 2026 budgets, it looks like many of these technologies will have a lot more money to invest in generative AI and other technologies, as research firm Gartner projects that global IT spending will surpass $6 trillion. It would be a record amount and indicates a big 9.8% increase in spending from this year, growth that is driven by investments in data center systems and software, both categories that reflect the increased demand for AI. “The cost of software is going up and both the cost of features and functionality is going up as well thanks to gen AI,” said John-David Lovelock, an analyst for Gartner. Gartner also projects that shipments for mobile phones and PCs would be strong next year, but at a slower pace than in 2025.

Alaska Airlines to review IT systems after recent outages. After an IT outage grounded hundreds of flights late last week and caused four days of flight disruptions this summer due to a hardware failure, the airline says it will bring in external experts to review its IT infrastructure. “We are immediately bringing in outside technical experts to diagnose our entire IT infrastructure to ensure we are as resilient as we need to be,” the company said in a statement shared with the Anchorage Daily News. An airline analyst at Raymond James has warned that the IT outage that canceled about 400 flights could cost Alaska Airlines $26 million. Those losses will be included in the company’s fourth-quarter results.

McKinsey warns bank profits could take a massive hit if they don’t adapt to AI. The consulting giant has issued a stark report that warns that AI could erode the banking industry’s profitability by $170 billion, or 9%, over the course of the next decade, as consumers will embrace AI agents instead of humans to handle some of their financial services needs. Bloomberg notes that while the banking sector is set to generate cost savings between 15% to 20% from investments in AI, McKinsey has warned that competition from AI will likely erode those gains and that most of the benefits will be accrued by customers.

ADOPTION CURVE

Leaders are bullish on the ROI for agentic AI despite tech being in early stages of deployment. While some recent studies have poured cold water on the promised ROI of AI, an agentic AI-focused survey published Wednesday from data intelligence company Collibra and The Harris Poll took a far more bullish stance. 86% of respondents say they were “confident” that agentic AI will drive ROI for their total organization, with similar proportions confident that their investments in the technology will spur innovation (85%) and governance (84%). The survey polled more than 300 data management, privacy, and AI decision makers from U.S.-based companies.

Nine out of ten technology leaders say their organization is currently developing or rolling out agentic AI, though most remain in the very early stages of developing this more autonomous form of the technology. When asked about implementation methods, a clear majority are relying on vendors or third-party partnerships (58%), while 49% are building their own agentic systems internally. 

Collibra CEO and founder Felix Van de Maele tells Fortune that many enterprises will build their AI agents on top of platforms offered by Salesforce, ServiceNow, SAP, and others, but that this approach will come with challenges related to tracking an explosion in the number of agents that will be deployed, data reliability, and securely monitoring what actions they are authorized to take.

“If something goes wrong, the impact is much bigger,” says Van de Maele. “The stakes are higher and so the governance of that is going to be important.”

Courtesy of Collibra

JOBS RADAR

Hiring:

– USPTO is seeking a CIO, based in Alexandria, Virginia. Posted salary range: $150.2K-$225.7K/year.

– Premier America Credit Union is seeking a CTO, based in Los Angeles. Posted salary range: $237.1K-$375K/year.

– URBN Dental Implants & Invisalign is seeking a CTO, based in Houston. Posted salary range: $100K-$150K/year.

– Covered California is seeking a CTO, based in Sacramento County, California. Posted salary range: $12.1K-$14.5K/month. 

Hired:

– F5 named Michael Montoya as chief technology operations officer, where he will lead the enterprise-wide strategy for the cybersecurity company. Montoya’s appointment also comes as F5 says it will advance a “comprehensive security initiative” after it disclosed a system breach by a “nation-state threat” actor earlier this month. Montoya previously held chief information security officer roles at Equinix and Digital Realty.

– First Financial Bankshares appointed Tim Brown as EVP and CIO, succeeding John Ruzicka, who has served as CIO since 2018 and will transition to the role of chief banking operations officer. Brown joins the Texas-based bank from community bank Johnson Financial Group and previously spent 30 years at the insurance and banking services company USAA.

– The Lovesac Company announced the appointment of Jacob Pat as chief technology and digital transformation officer. Pat joins the furniture retailer after most recently serving as VP of product at Salesforce following its acquisition of PredictSpring, where he led global product for retail cloud. He also previously served as CTO at beauty company Deciem, which Estée Lauder acquired last year.

– RTX Fintech named Minor Huffman to serve as CTO for the finance broker, overseeing the company’s global tech strategy and leading new infrastructure developments to support the platform’s growth. Prior to RTX, Huffman founded TIBBS Consulting, which advises fintech clients on trading technology. He’s also previously held leadership roles at banking giants Credit Suisse and JPMorgan.

– Envestnet has named Bhaskar Peddhapati as CTO, where he will oversee all aspects of technology, engineering, and information security for the wealth management software provider. Most recently, Peddhapati served as SVP and head of mortgage technology solutions at IT provider Cotality and spent more than a decade at research firm NielsenIQ, including serving as global head of technology.

– Maris-Tech has promoted Hananya Malka to the role of CTO, succeeding Magenya Roshanski, who is retiring from the developer of video and AI-based edge computing technology. Malka has worked at Maris-Tech for 15 years, most recently serving as research and development manager.

– Schellman announced the appointment of Abhi S. Visuvasam as CTO, overseeing the technology strategy, AI development and integration, and innovation for the IT compliance company. Visuvasam has held technology leadership roles at IBM, Accenture, and most recently at cloud master data management provider Reltio, where he served as field CTO for enterprise architecture and solutions.

– Waypoint Bio appointed Patrick Kaifosh as CTO, joining the biotech company after previously leading research as director of research science at Meta and co-founding CTRL-Labs, which was acquired by Meta in 2019. At Waypoint, Kaifosh will lead the stronger integration of machine learning, robotics, and spatial biology to support the development of cell therapies for solid tumors.