Insurance Staffing Reflects Changing Industry

It seems insurers can’t win. Criticized for being stuck with traditional (read outdated) technology systems and processes, they are now losing the labor force that makes those systems and processes work. We all know that this is largely due to the growing number of retiring Baby Boomers, who are taking a vital knowledge base with them. It may sound like yet another great reason to modernize, but the reality is that modernization takes planning, budget and time, and those insurers that have not yet addressed the need to update their technology platforms will face similar issues: fierce competition for the talent that’s left.

Those that do choose to modernize face other labor issues, namely, that digital automation may also be creating a vacuum of tech-related talent in our industry. For example, I read with interest a report from U.S. Bureau of Labor that estimates employment in insurance underwriting will decline 12% between 2014 and 2024. The assumption is that straight-through processing, digital environments and changing expectations of the underwriter’s role may make the job as we know it today obsolete.

Automation is the culprit for more than just reducing the underwriting function, note Sylvain Johansson and Ulrike Vogelgesang, authors of McKinsey’s “Automating the Insurance Industry.”

“Our most probable outcome for insurers sees up to 25 percent of full-time positions consolidated or reduced as a net aggregate, occurring at different rates for different roles over a period of about a decade,” say the authors from McKinsey’s Western European Insurance Practice. When asked if a similar report for the North American market was available, Johansson claimed that 90 percent of these results are similarly applicable to North America.

Insurance is not alone: Employers across all vertical markets are in a battle to find the skills they need among the global talent pool. The inability to attract and retain talent ranked fifth on Aon’s global 2015 Global Risk Management Survey, and came in second place in North America and the Asia-Pacific region. It is a growing challenge worldwide, says Aon, affecting industries from construction to finance, with jobseekers lacking the required skills, and those with the desired capabilities and experience facing increasing competition for their talents, putting pressure on wages and benefits.

I don’t see this as all doom and gloom. On the contrary, insurers of all sizes are being forced to recognize and act on one of the greatest opportunities to date: to attract, source, train, develop and retain workers with skills in advanced computing (web-based cloud platforms, agile software development, machine learning, advanced analytics, mobile technologies and the Internet of Things to name a few).  

Acting on this opportunity will result in insurers being creative. Perhaps it will result in changing the expectations of business users, putting more responsibility on them to work with IT on innovation. Perhaps it will be a matter of changing the underwriter’s job description to embrace the next generation of technology innovation in order to bolster their decision-making capabilities. It most certainly will mean that insurers will focus inward, grooming and developing the right talent for the right job.

It isn’t about the technology—it’s about viewing technology the way we view every other aspect of the organization’s operations. In other words, I believe the leaders in our industry are starting to recognize that the solutions to these growing technology-related human resource challenges must be part of a holistic business strategy. At a minimum, this tosses the business/IT discussion right out the window. At a maximum, it throws open the door to necessary change in the way we view the role of IT as enabling the business, and gives it the credit it deserves—as a necessary part of the business.

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