The times they are a changing…and nowhere is that more true thanin the insurance industry. Technology is constantly evolving andwill significantly impact every aspect of the industry fromadjusting to claims management, fraud and subrogation, as well ashow new products are developed in the future. That's the good news.The bad news is that there will be significantly fewer insuranceprofessionals to use all of this new technology.

For years analysts have been forecasting a significant loss ofindustry talent and now that loss will occur in the immediatefuture. According to a study by McKinsey and Co., 25% of theprofessionals in the insurance industry will retire by 2018,leaving an enormous talent and experience gap in an industry thatis already experiencing a worker shortage.

Related: Future shock: Recruiting the insurance industry'snext generation

Insurers face several challenges. Industry consolidation hasrequired the blending of technology, employees, cultures and otherindustry resources, and successfully meshing those factors takestime, effort and capital. As baby boomers begin scaling back theirhours and adjusting to retirement, capturing the decades ofknowledge they have and passing it onto the next generation ofworkers takes on new significance. And then there is the issue ofeven finding employees to train and fill the huge gaps left byretiring workers. In addition, millennial workers have differentpriorities and work styles, which will force insurers to rethinkhow they provide service to their policyholders in a 24/7world.

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The impact

Industry experts have identified several areas that will see thegreatest impact as experienced professionals leave their companies.While technology will be able to help mitigate some of the effects,there will be growing pains as insurers figure out how to transferdecades of knowledge in just a few short years.

Sean Allen, vice president, North America for XchangingInsurance Services, says that field adjusting will be one of theareas most affected by the loss of experience. "It's veryindependent and not very sexy," he explains. "Millennials want agroup atmosphere – that sense of belonging. Independence isn'tattractive to them. A quarter of the industry in field adjustingwill retire by 2018 and there will be a lot more focus on desktopadjusting and the use of technology."

Related: 5 ways to bridge impending talentgap

Because millennial customers generally don't want to interactwith their agents, Allen says they are more likely to do things ontheir own like self-adjust their simpler auto and property lossesusing some of the new mobile applications currently on the marketand being used on the personal line side. "You can take photosbased on what the apps tell you to do and there is no need for afield adjuster to go out. The information goes to the desktopadjuster and the policyholder has turned into a field adjuster," hesays.

Anthony Tempesta is a senior manager with Ernst & Young(EY), and co-authored a claims talent survey, "You claim there is aTalent Gap," conducting in-depth interviews with senior claimsexecutives at 10 property and casualty insurers. He says thatinsurers will see the greatest loss of experience in theunderwriting, claims, actuarial and information technology areas."It's not just about recruiting new talent and dealing with themillennial workforce," he says. "It's about keeping the existingworkforce too. Incentives and compensation weren't getting the jobdone." He says companies need to look at how they acquire the righttalent; how they develop these new employees; how they can shiftresources around within the company, as well as develop programsthat reward the company's top talent and recognize them as futureleaders. 

The industry is also trying to change its perception of beingstaid and boring. "People think of insurance as slow, bureaucratic,and not terribly exciting," says Michael Costonis of Accenture."The fact is that the industry is changing very rapidly right now.To be successful in claims, professionals of the future need to bedata savvy, customer centric, and a master problem solver. This jobrequires the ability to be multi-faceted and adaptable."

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Bridging the talent gap

Finding the next generation of workers to enter the insuranceindustry has taken on a new sense of urgency. With 1.8 millionstudents graduating with bachelor degrees this year, the employeepool is large, although insurers are finding that recruitingmillennials means far more than just attending a few college jobfairs. "We want to make sure that students have a relationship withus and we want to make sure they understand that we have a lot tooffer," Matt Higgins, senior claims supervisor for Amica toldattendees at the Property Loss Research Bureau (PLRB) conferenceearlier this year. "A lot of insurers sponsor students to attendevents like PLRB. It lets them see what the industry is really likeand they have some good opportunities to meet a lot of greatpeople."

Related: Can veterans help solve the industry's talentshortage?

Insurance companies are providing speakers for career days atthe college and high school level because reaching students andeducating them about the industry before they've declared theirmajors can help direct them to a career they had not consideredbefore. For students who choose to pursue a degree in riskmanagement or an insurance-related discipline, the employment rateafter college graduation is running about 98% according toprofessors for these programs.  

The University of Georgia has the number one insurance programin the nation through its Terry College of Business. Other collegesthat have insurance and risk management programs include St. John'sUniversity, Florida State, California State at Fullerton andIndiana State to name a few.

Koory Esquibel was a finance major at the University of Georgiawhen he took risk management as his business school elective. "Ifound I had the opportunity and the potential to do well in thisfield and I didn't know what I wanted to do after college." He tooka number of property and casualty classes, which led to anopportunity for an internship with Marsh. Now Esquibel is in atwo-year rotation program at Marsh where he will work in twodifferent positions for one year at a time. "I want to gain as muchinformation as I can," he says.

Andrew Johnson also attended the University of Georgia and didan internship with Aon. "It was a two-month long interview," hesays and the internship offered him an opportunity to hear fromexecutives in the company through a speaker series. "You had achance to find out if this is really what you want to do." Studentsalso had the opportunity to move onto to other divisions within thecompany. Johnson says the internship gave him the chance to meetpeople inside and outside of the company to see what the insuranceindustry really entailed. "I'm risk averse in nature, so seeingstrategies for risk and solving problems intrigues me."

Photo: Monkey Business Images/Shutterstock

Insurers seeking millennials

Besides school programs, one way insurers are reachingmillennial prospects is through social media. "But insurers have tobe more sophisticated than just creating a Facebook page forpotential employees," advises Costonis. "Instagram, Twitter andother venues can provide contact with potential candidates as wellas ways to identify people who have a real interest and aptitudefor the industry."

Related: The talent gap's direct impact on merger &acquisition activity

"Will your current employees recommend your company?" ShameemAwan assistant vice president at Amica Mutual asked the audience atthe PLRB conference. "Check out what they're saying about yourcompany on sites like glassdoor.com, jobitorial.com and fault.com,"she advised. "You have to identify the actionable items on thesesites and employee surveys and then act on that information."

Company websites have to be current because they tell about theculture of the organization. Awan recommends having a hiring planand an interview team, including the supervisor of the positionbeing filled. "Be transparent about job responsibilities, have themtalk to someone in that role and don't rush the interviewprocess."

Reaching millennials through their peers is another means tofinding new workers. Christopher McNulty, senior vice president,claims at Hiscox says, "One way we we've found to reach newmillennial employees is to have millennial co-workers who we trustact as mentors or coaches to them so that they can speak the samelanguage."

Engaging current employees is also critical to maintaining arobust workforce. Asking employees what they do or don't like abouttheir jobs can provide valuable feedback and allow management toencourage and support employee growth.

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Millennials' career goals

In 2012, the My Path Initiative powered by The Institutes andits affiliates conducted a survey that examined millennials'attitudes about work and the insurance industry. According to thesurvey, a competitive salary and benefits, as well as the work/lifebalance of the job were the main attributes millennials consideredin a job. Salary was selected as important by less than half of themillennials surveyed, compared to nearly two-thirds of those inolder generations which rated salary and benefits as important.Millennials were more interested in career advancementpossibilities (25%) when considering a job than older generations(16%), learning opportunities (20%), work they could do on theirown schedule (52%), work that involved helping others (49%) andworking with others (46%).

Costonis agrees that these factors are important to millennialworkers. "It has been noted that millennials are looking forwork/life balance, but it's more than that. They want the companythey work for to have a commitment to helping society at large, andthey want the company to have a commitment to using technology tomake employees' lives easier. Nothing turns off millennials morequickly than coming to work on day one and facing a legacy systemdating back to the mid-1980s, with less sophistication than many ofthe personal devices they use."

Allen concurs that "millennials want innovation, flexibility andindependence in a job" and says once they find the right position,they are willing to stay there for a while. "We think of them asjob-hopping. Once they're satisfied with their place of employmentand a job trajectory, most will stay 3-6 years according to arecent Census study."

Interestingly, he says the company atmosphere also matters. "Alot of them want a good social atmosphere with less pay, not morepay and a less social atmosphere."

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In his book, Fiercely Loyal, Dov Baron says "by 2025,millennials will become 75% of the global workforce." He also saysthat this generation is more willing to work in smaller firmsbecause they are attracted to the "start-up culture" many of themoffer. "They want to choose when and where they work. A start-up'sculture usually facilitates them being able to dress casually, haveworkplace flexibility, and be innovative. Smaller companies alsoprovide an environment where they can get involved in variousbusiness activities too." Not exactly the atmosphere found in mostinsurance companies, which is why the work environment and cultureof many insurers will be changing and adapting to meet theirworkers' vision of the ideal workplace.

Allen says that "insurers are retooling the look and feel of theactual organizations themselves. They are looking moresophisticated and tech savvy than traditional and the environmentsthemselves are changing. There are social hubs where workers cancongregate in the center of a building, cafes for a socialenvironment and impromptu meetings, and more places for employeesto gather and talk. Carriers need to be more creative than theyhave in the past and think outside the box."

Xchanging has a virtual workspace environment. "We have hotdesks so people can sit wherever they want when they come in,"explains Allen. "You can move to work with different groups if youwant and you can work from home several days a week too." He saysthat by giving workers more flexibility they'll be more willing towork. "Not being so stuck and regimented behind a desk is whatpeople are looking for."

Allen shared that one office he visits has a pool table and beerstations so employees can have a beer while they're meeting. "Theworkplace has to be more fun and social and keep people engagedwith fun activities." Creating an environment where employees areengaged outside of the office creates a sense of "belonging" soworking for a company becomes far more than just picking up apaycheck.

Work/life balance is important to employees of all generations,but how it is executed in a company frequently depends on how it isencouraged by those in management. Hiscox promotes their commitmentto a work/life balance to prospective employees during therecruiting process and backs up the commitment with their policies."We also offer five weeks of paid time off and expect our team totake it and will have a talk with them if they don't," advisesMcNulty. "There are times that working extra hours is necessary,however, we try to limit them as much as possible."

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Knowledge transfer

Insurers also need to find a way to capture and transfer theknowledge their senior staff members have to the next generation."Workers heading for retirement are the holders of vast amounts ofvital information such as how to spot unusual claims activity;which doctors provide reliable examinations; how to conducteffective investigations, which needs to be transferred to youngerworkers," says Costonis. "Employers should be thinking about formaland informal mentoring programs, or keeping senior people on asconsultants or trainers. This not only keeps older people in theworkforce, it keeps them energized and on top of their games."

Shani Magosky, CEO of Vitesse Consulting, recommends reversementoring as one way to use the unique skill sets of the variousgenerations. "Millennials can mentor older employees on technologyand older employees can mentor newer employees on business andetiquette. Both groups feel valued and like they are contributingsomething."

Newer employees can also play a role in "establishing anddisseminating a greater understanding of how social media, mobiledevices and other innovations can work to improve the way the jobgets done," adds Costonis.

McNulty says that Hiscox has a "robust onboarding program thatis conducted by our managers and senior staff – it consists of amix of PowerPoint and practical training designed to give the newhires critical skills so that they can hit the ground running." Thecompany also matches new hires with a coach who acts as a mentor sothe employee has a dedicated staff member to go to with questionsnot answered in the training process.

In order to maximize the strengths of their millennial workers,Hiscox finds out what they are passionate about and tries toinvolve them in projects that target those interests. The companyhas an anonymous suggestion box which allows employees to provideinput on how the company can improve the daily work life. Thesuggestions go to a roundtable comprising representatives from eachteam in the company. In order to qualify for the team, employeeshave to achieve their key performance indicators and service levelagreements. This provides an incentive to achieve some of the moremundane tasks in the company and keeps employees engaged andinvolved.

A number of companies move employees around to different teamsor divisions so they can get a broader context of the company andthe opportunities available, as well as see how their contributionsimpact the business as a whole. This allows them to see what otheropportunities the company has for employees who want to work in adifferent aspect of insurance and helps to retain those who arealready knowledgeable about the company's customers and processes. 

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Going forward

Tempesta says "there will be a war for talent and poaching willbe ramping up significantly" in the coming years. The most movementwill be seen in the middle-management area. He believes thattechnology and flexible work environments will help to address manyof the concerns millennials have about entering the insuranceindustry, but the entire industry will undergo a culturalchange.

Related: 11 ways to attract and keep youngtalent

Customers' use of their mobile devices to check claims andaccess information will continue to change how carriers respond."Technology is there to provide information immediately and thatwill enable a transition of the workforce and how they operate,"adds Tempesta.

For insurers, the talent gap provides the perfect opportunity todemonstrate how quickly they can change to accommodate theirpolicyholders, while attracting and managing the next generation ofemployees as they develop them into a workforce that will transformthe industry.

Patricia L. Harman is the editor-in-chief of ClaimsMagazine.