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

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

Insurers face several challenges. Industry consolidation has required the blending of technology, employees, cultures and other industry resources, and successfully meshing those factors takes time, effort and capital. As baby boomers begin scaling back their hours and adjusting to retirement, capturing the decades of knowledge they have and passing it onto the next generation of workers takes on new significance. And then there is the issue of even finding employees to train and fill the huge gaps left by retiring workers. In addition, millennial workers have different priorities and work styles, which will force insurers to rethink how they provide service to their policyholders in a 24/7 world.

Insurance adjuster

Photo: Goodluz/Shutterstock

The impact

Industry experts have identified several areas that will see the greatest 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 transfer decades of knowledge in just a few short years.

Sean Allen, vice president, North America for Xchanging Insurance Services, says that field adjusting will be one of the areas most affected by the loss of experience. "It's very independent and not very sexy," he explains. "Millennials want a group atmosphere – that sense of belonging. Independence isn't attractive to them. A quarter of the industry in field adjusting will retire by 2018 and there will be a lot more focus on desktop adjusting and the use of technology."

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

Anthony Tempesta is a senior manager with Ernst & Young (EY), and co-authored a claims talent survey, "You claim there is a Talent Gap," conducting in-depth interviews with senior claims executives at 10 property and casualty insurers. He says that insurers will see the greatest loss of experience in the underwriting, claims, actuarial and information technology areas. "It's not just about recruiting new talent and dealing with the millennial workforce," he says. "It's about keeping the existing workforce too. Incentives and compensation weren't getting the job done." He says companies need to look at how they acquire the right talent; how they develop these new employees; how they can shift resources around within the company, as well as develop programs that reward the company's top talent and recognize them as future leaders.

The industry is also trying to change its perception of being staid 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 be data savvy, customer centric, and a master problem solver. This job requires the ability to be multi-faceted and adaptable."

claims in college

Photo: Kzenon/Shutterstock

Bridging the talent gap

Finding the next generation of workers to enter the insurance industry has taken on a new sense of urgency. With 1.8 million students graduating with bachelor degrees this year, the employee pool is large, although insurers are finding that recruiting millennials means far more than just attending a few college job fairs. "We want to make sure that students have a relationship with us and we want to make sure they understand that we have a lot to offer," Matt Higgins, senior claims supervisor for Amica told attendees at the Property Loss Research Bureau (PLRB) conference earlier this year. "A lot of insurers sponsor students to attend events like PLRB. It lets them see what the industry is really like and they have some good opportunities to meet a lot of great people."

Insurance companies are providing speakers for career days at the college and high school level because reaching students and educating them about the industry before they've declared their majors can help direct them to a career they had not considered before. For students who choose to pursue a degree in risk management or an insurance-related discipline, the employment rate after college graduation is running about 98% according to professors for these programs.

The University of Georgia has the number one insurance program in the nation through its Terry College of Business. Other colleges that have insurance and risk management programs include St. John's University, Florida State, California State at Fullerton and Indiana State to name a few.

Koory Esquibel was a finance major at the University of Georgia when he took risk management as his business school elective. "I found I had the opportunity and the potential to do well in this field and I didn't know what I wanted to do after college." He took a number of property and casualty classes, which led to an opportunity for an internship with Marsh. Now Esquibel is in a two-year rotation program at Marsh where he will work in two different positions for one year at a time. "I want to gain as much information as I can," he says.

Andrew Johnson also attended the University of Georgia and did an internship with Aon. "It was a two-month long interview," he says and the internship offered him an opportunity to hear from executives in the company through a speaker series. "You had a chance to find out if this is really what you want to do." Students also had the opportunity to move onto to other divisions within the company. Johnson says the internship gave him the chance to meet people inside and outside of the company to see what the insurance industry really entailed. "I'm risk averse in nature, so seeing strategies for risk and solving problems intrigues me."

Millennials in claims

Photo: Monkey Business Images/Shutterstock

Insurers seeking millennials

Besides school programs, one way insurers are reaching millennial prospects is through social media. "But insurers have to be more sophisticated than just creating a Facebook page for potential employees," advises Costonis. "Instagram, Twitter and other venues can provide contact with potential candidates as well as ways to identify people who have a real interest and aptitude for the industry."

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

Company websites have to be current because they tell about the culture of the organization. Awan recommends having a hiring plan and an interview team, including the supervisor of the position being filled. "Be transparent about job responsibilities, have them talk to someone in that role and don't rush the interview process."

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

Engaging current employees is also critical to maintaining a robust workforce. Asking employees what they do or don't like about their jobs can provide valuable feedback and allow management to encourage and support employee growth.

Millennials working

Photo: Pressmaster/Shutterstock

Millennials' career goals

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

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

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

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

millennial worker

Photo;Santiago Cornejo/Shutterstock

In his book, Fiercely Loyal, Dov Baron says "by 2025, millennials will become 75% of the global workforce." He also says that this generation is more willing to work in smaller firms because they are attracted to the "start-up culture" many of them offer. "They want to choose when and where they work. A start-up's culture usually facilitates them being able to dress casually, have workplace flexibility, and be innovative. Smaller companies also provide an environment where they can get involved in various business activities too." Not exactly the atmosphere found in most insurance companies, which is why the work environment and culture of many insurers will be changing and adapting to meet their workers' vision of the ideal workplace.

Allen says that "insurers are retooling the look and feel of the actual organizations themselves. They are looking more sophisticated and tech savvy than traditional and the environments themselves are changing. There are social hubs where workers can congregate in the center of a building, cafes for a social environment and impromptu meetings, and more places for employees to gather and talk. Carriers need to be more creative than they have in the past and think outside the box."

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

Allen shared that one office he visits has a pool table and beer stations so employees can have a beer while they're meeting. "The workplace has to be more fun and social and keep people engaged with fun activities." Creating an environment where employees are engaged outside of the office creates a sense of "belonging" so working for a company becomes far more than just picking up a paycheck.

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

generational workers

Photo: Pressmaster/Shutterstock

Knowledge transfer

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

Shani Magosky, CEO of Vitesse Consulting, recommends reverse mentoring as one way to use the unique skill sets of the various generations. "Millennials can mentor older employees on technology and older employees can mentor newer employees on business and etiquette. Both groups feel valued and like they are contributing something."

Newer employees can also play a role in "establishing and disseminating a greater understanding of how social media, mobile devices and other innovations can work to improve the way the job gets done," adds Costonis.

McNulty says that Hiscox has a "robust onboarding program that is conducted by our managers and senior staff – it consists of a mix of PowerPoint and practical training designed to give the new hires critical skills so that they can hit the ground running." The company also matches new hires with a coach who acts as a mentor so the employee has a dedicated staff member to go to with questions not 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 to involve them in projects that target those interests. The company has an anonymous suggestion box which allows employees to provide input on how the company can improve the daily work life. The suggestions go to a roundtable comprising representatives from each team in the company. In order to qualify for the team, employees have to achieve their key performance indicators and service level agreements. This provides an incentive to achieve some of the more mundane tasks in the company and keeps employees engaged and involved.

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

Millennial workers

Photo: Rawpixel/Shutterstock

Going forward

Tempesta says "there will be a war for talent and poaching will be ramping up significantly" in the coming years. The most movement will be seen in the middle-management area. He believes that technology and flexible work environments will help to address many of the concerns millennials have about entering the insurance industry, but the entire industry will undergo a cultural change.

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

For insurers, the talent gap provides the perfect opportunity to demonstrate how quickly they can change to accommodate their policyholders, while attracting and managing the next generation of employees as they develop them into a workforce that will transform the industry.

Patricia L. Harman is the editor-in-chief of Claims Magazine.

Special Reports /

7 things the insurance industry needs to know about the looming talent gap

Related Stories

Recommended For You