In 1969, when my grandfather Herbert W. Kaufman founded the H.W. Kaufman Financial Group, computers had just begun networking with each other, and banking automation was still a year away.
Needless to say, we have come a long way.
Today, the desire — and need — to implement and adapt to technological changes in our industry has never been more essential.
It's undeniable that the insurance industry has been and always will be a relationship-driven business. My grandfather and father, Alan Jay Kaufman, built the H.W. Kaufman Financial Group and its subsidiaries — including Burns & Wilcox — by understanding the value of a handshake and attracting and retaining the best talent available. However, the world has evolved over the years and so too has the way businesses operate.
While hiring the best and brightest is vital to the future of our industry, as employers we must provide these young and talented professionals with the best tools possible to do their work. Intuition, expertise and the ability to develop trustworthy relationships with clients and partners are integral to our business. Although technology has not developed this skill just yet, it can surely provide efficiencies in other areas.
Enhance operational proficiencies
Technology and big data present a significant opportunity for the insurance industry to enhance operational proficiencies and further understand the risks and needs of clients.
For example, in a world in which the amount of devices connected to the Internet is projected to reach 50 billion by the year 2020, clients expect insurers to connect with them on a 24/7 basis. Insurers who learn to harness this interconnectivity are poised for sustained success. They are able to use that information to develop more accurate pricing models and improved underwriting procedures.
Over the years, the insurance industry has developed a reputation for lagging behind when it comes to embracing emerging technology. However, times are changing as we see insurers in both standard and specialty markets investing in technologies ranging from mobile tools to predictive analytics. According to a recent study by Celent, the insurance industry is expected to spend $189.2 billion on IT systems and technology by the end of 2018 — an annual increase of approximately 4 percent.
Next generation of insurance professionals
In addition to improving operations today, investing in technology will lead to greater interest in insurance from the next generation of professionals, including millennials and Generation Z entering the workforce. With 25 percent of the industry's workforce expected to retire by 2018, it is no secret that the insurance industry is facing an inevitable talent shortfall.
Young, tech-savvy professionals will not invest in an insurance career unless they recognize that our industry is heavily investing in technology.
These investments don't change the importance of expertise or face-to-face contact; however the adoption of new technologies will significantly enhance client relationships and demonstrate the industry's commitment to innovation.
Who better to capitalize on that opportunity than the next generations of our workforce?
Daniel J. Kaufman serves as the senior vice president at H.W. Kaufman Financial Group. Opinions expressed in this article are the author's own.