In this excerpt from Gallagher Data and Analytics Leader Don Price’s “View from the Industry” on data science, published in full in Gallagher Re’s Global InsurTech report for Q3 2023, we explore potential use cases and the bear traps that cedants should be aware of.

Large language models (LLMs) have undergone many advancements and iterations to reach the sophistication they possess today and, as a result, now offer significant business potential — but the risks still need to be carefully considered and managed.

Early models pioneered a method for considering the sequence of words in future predictions. Enhancements, such as word associations and identification of grammatical structure, have allowed LLMs to interpret the meaning of sentences, while the explosion of publicly available data has allowed for robust training datasets that produce complex, sophisticated models.

As a form of generative artificial intelligence (Generative AI), LLMs operate as a text completion tool, predicting the next word using percentages of…