Weekly Wrapup: Insurers can't forget jobs in digital wave

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The Weekly Wrapup is an analysis of the week's insurance tech news from the editors of Digital Insurance.

Many have heard or read Allstate CEO Tom Wilson’s comments about AI recently: In a Bloomberg interview, he claimed that artificial intelligence was going to “rip through this economy like a tsunami.”

At Allstate, Wilson notes, because technological advancements made their jobs unnecessary, his organization cut 550 auto adjusters. They all found jobs elsewhere, he was quick to add, noting that Allstate is investing $40 million to help train employees for a changing economy.

“Whether you’re an accountant, an auto adjuster, a computer programmer, technology is going to take over,” Wilson told the audience. “We have to figure out, ‘How do we train them to do the new job, not the job that the computer can do?”’

This presents an interesting dichotomy, because in general, insurers continue to face major challenges in finding the right human talent and skillsets to keep up with the pace of digital adoption, the bedrock of artificial intelligence.

Earlier this year, Everest Group evaluated 23 insurers that operate globally across 18 dimensions, including strategy, innovation, process transformation, organization and talent, and technology adoption. Their published findings include:

  • Approximately 70 percent of those evaluated will increase their investments in digital technologies by more than 6 percent in 2018;
  • Although the digital budget is managed by the CIO and CTO organization, 45 percent of it is primarily influenced and led by the CMO, CDO, and business unit leaders;
  • There will likely be a significant increase in demand for some the next-generation technology themes, including artificial intelligence (AI), cloud-based IT infrastructure, Internet of Things (IoT), big data analytics, and robotic process automation (RPA), across the insurance value chain.

Everest’s research results are telling: More than 60 percent of the insurers studied are facing a major roadblock when it comes to finding the right skills and talents to embrace digital adoption. In fact, when Everest mapped insurers’ digital adoption investments against the skills gaps, they discovered that they’re in the red zone in cognitive and AI, IoT, RPA, and cybersecurity technology skills (see chart). I assert that this is especially true for smaller insurers with limited IT budgets (influenced by business unit leaders or not).

Allstate is obviously in a position to invest $40 million any way it wants. And because it is investing in employee re-training, it’s clear that the company has already uncovered operational areas that need improvement, because in order for insurers to get the greatest return on AI investments, we all know that operations need to be redesigned.

So, perhaps insurers that comprise the 60 percent of those facing major digital adoption roadblocks should begin at the beginning, evaluating their current operations, what digital transformation will mean in terms of new workflows, existing and planned labor, the culture that supports the transformation and the reality of its outcome. These new workflows will have tech at their core and AI in its forecast, and although not every underwriter will want to start a new career in big data analytics, by looking at the end game (the areas in which AI may ultimately eliminate jobs), insurers can first offer re-training in tech support areas that are so critically needed during and after the transformation. And rather than the ominous “technology is taking over” mantra, insurers taking a stepped approach to AI’s promise should focus on finding opportunities to leverage AI’s immediate benefits, developing emerging roles across all functional business areas, and repurposing jobs to support it.

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