Why The Biggest Insurers Are Going Back To School

When insurance companies say they struggle to attract top-level technology talent to their organizations because of the industry’s conservative reputation, it can become a self-fulfilling prophecy. But Mike Kozub, SVP of customer insights and analytics for Nationwide, doesn’t agree with that characterization ---- and he knows something about exciting occupations.

“I flew jets in the Navy up until 2002,” Kozub says. “And I think insurance is a fascinating industry for a couple reasons. First of all, you’re managing risk. You want to grow, but you can grow the wrong way. So there’s real high stakes when it comes to making decisions.

“And more recently, you have channel conflict,” he continues. “Plus, you’re interacting with consumers who largely don’t want what you’re selling, and at the time that they get to enjoy the fruits of what you deliver it’s a negative interaction [because they’re filing a claim for a loss]. Once you get exposed to insurance, it’s fascinating.”

Traditionally, the path by which insurers have attempted to expose the next generation of talent to their industry has been through internships. But that strategy is changing as acquiring the best graduates in data science and analytics has become crucial to insurers’ survival.

Some of the largest insurers in the country are developing programs collaboratively with faculty and administration at some of the best colleges in the country where the best students get to work with real-world insurance data and on real-world business problems that the companies face. The goal is to build a pipeline of talent that is ready to slide right into tech leadership positions at the sponsoring company and create a workforce that is ready to operate in the 21^st century insurance world. And they don’t have to look far.

In 2008, Nationwide – headquartered in Columbus, Ohio and the second-largest private employer in the region -- opened the Nationwide Center for Analytics and Customer Insight (NCACI) at The Ohio State University – the university with the third-largest enrollement in the U.S., and located right in Columbus as well.

In 2005, State Farm opened the State Farm Research and Development Center at the University of Illinois Urbana-Champaign, less than an hour from its Bloomington headquarters. There, the nation’s top P&C insurer runs its MAGnet – Modeling and Analytics Graduate Network – program, offering advanced study in big data and analytics. And last year, MassMutual entered a partnership with several colleges in the Pioneer Valley around Springfield, Mass. The life insurer works with Amherst College, Hampshire College, Mount Holyoke, Smith, and UMass Amherst on a multifaceted training and education program to develop data scientists from all walks of campus life.

“The field of data science is an amalgamation. You can be a classically trained statistician who has some programming experience, or a programmer with a little stats knowledge, or you can even be a physicist,” says Gareth Ross, the VP of analytics and research for MassMutual who created the program. “It was a grassroots effort driven by this natural alignment driven by the skills and the industry.”

Though these initiatives are not exact copies of one another, they do share some key similarities. Each is focused on data and analytics, with graduate students working with actual insurance company data to solve business problems. Each is relatively small – 10 or fewer students – who go through an interview process similar to the kind they would for a post-graduate job.

[Insurance Networking News profiles MassMutual's program.]

And the programs are successful: Mike McCaslin, Executive in Residence for Customer Insights and Analytics at the NCACI, is a graduate of the program, and MassMutual hired a class of seven data scientists in the first year of its program.

State Farm declined comment for this story. However, the company announced last year that the program is expanding to the University of Georgia, indicating that it also has been successful 

Industry-wide approach

It is true that insurers face a talent shortage, especially in technology. The Jacobson Group and Ward Group reported earlier this year that 400,000 insurance professionals are needed in the next five years, and that the industry is short in technology specifically. But insurers are driven to flip the perception of the industry as one that people don’t want to work for into one where exciting things are happening and the openings are opportunities, not challenges.

“We need our own version of the ‘Got milk?’ campaign,” says Kirsten Marr, VP of marketing at insurance analytics software provider Valen Analytics. “Right now the pervasive industry story is either non-existent or its negative.”

Valen, Jacobson, and Ward are among partners in the Tomorrow’s Talent Challenge campaign, which is focused on broadcasting on a wide scale the opportunities in insurance data and analytics.

“How are we actually going to get the discipline that we are sorely lacking, the most sought-after talent in the country?” Marr asks. “Insurers need to build their own talent pool, and for the midsize and small insurance companies, it’s a lot to take on by themselves.”

But the fact that several of the biggest companies have taken on this challenge on their own, with positive messaging about the opportunities in the industry, that’s a signal that insurers do get it, Marr says. In a competitive world where differentiation through technology is crucial, recruiting the most important talent is a job for the entire organization.

“Insurers need to not look at recruiting as an HR function, but more of a strategic priority at the C-level,” she says. “How do we broaden insurance beyond the risk management program [at colleges] and get into data science and statisticians? It’s a rally cry for the industry to do a better job of marketing itself to millenials and position insurance as an industry with a lot of interesting careers.”