InsurTech
What’s Next for Talent….?
Historically, Tech in Insurance meant a legacy system, website and desktop apps.
The IT department was viewed as a cost to the business and innovation was limited to one-off projects around making better use of legacy data and/or reducing cost.
Typically companies would have an IT Director, support managers and helpdesk staff and a small number of outsourced provider relationships.
As Internet technologies evolved, insurers, reinsurers and brokers began to realise that they could also harness these technologies to provide better service to their customers. The role of the IT Director evolved to that of Chief information Officer. They also began to realise the value of the vast amounts of data they held and many companies also appointed a Chief Technology Officer to get the best out of their data to enhance their customer relationships. Suddenly, the IT department became the hottest place to work in the firm.
Software development managers and project managers appeared on the scene, where previously they had only been found in software companies, and companies appointed development teams to work alongside business units. For the first time, IT were customer-facing and generating revenue for the business by developing websites for customer use, e.g. motor insurance, residential property insurance, travel insurance and term life cover.
We are now seeing a further change in attitude, as companies work to remain relevant in the digital age.
Firstly, the evolution of cloud and data technologies allows companies to collate, process and manipulate legacy data from multiple sources, which previously would have been impossible or massively cost-prohibitive to do.
This has led to companies hiring teams of business analysts, data warehousing and machine-learning experts, and these individuals are often hired without a background in Insurance. We see talent migrating into the sector from Tech and FinTech companies, as well as from FinTech divisions within banking and consultancies.
Many CTOs and CIOs have embarked on global data warehousing programmes and have appointed expert data warehousing programme managers to act as conduits between the business and CIO. Typically we see co-located teams of data warehousing project managers, technical architects, software developers and support staff, working to agile deliverables. Individuals with proven skills in the data warehousing space have become highly sought-after. These programmes attempt to harness AI and machine-learning for competitive advantage and experts in this area are vital to their success.
Secondly, the increased level of data available from both internal and external sources has prompted a sea-change in the use of analytics at current operational levels for both underwriting and claims management, particularly in the property and casualty classes. We have seen the shift towards the actuarial approach to underwriting over the last decade and many actuaries are now choosing to forge careers as underwriters. Similarly, the finance and risk functions have far greater analytical capability, resulting in enhanced control and management of both balance sheet and operational risk.
The evolution of data collation and manipulation techniques has allowed companies to employ a truly risk-based approach to underwriting, with far greater levels of accuracy in pricing and risk management than previously possible. Entire products are developed from scratch and product owners have evolved who work alongside the underwriting and claims teams. These talented individuals harness new technologies to enhance these products and lock in a more interactive customer experience. Similarly, we have seen the evolution of the claims analyst, charged with supporting claims and underwriting functions with a view to future cost-efficiencies.
We see many exciting developments in technology which insurers, reinsurers and brokers are working to understand, implement and, in many cases, cover. Many tech start-ups have also appeared providing direct access services and/or products which add value to an insurance or reinsurance proposition. In addition to the use of AI and machine-learning for underwriting and risk management, products within, for example, parametrics, lifestyle rewards and distributed ledger technology are evolving rapidly. We are predominantly seeing a strategic partnership approach being utilised by insurers, reinsurers and brokers, rather than direct hiring in these areas. Technologists who can define the value proposition, risk/reward ratio and manage these strategic partnerships to successful delivery are anticipated to be in high demand.
However, the Insurance sector faces a major challenge in attracting new talent and skills, as it has the unfortunate reputation for being slow-moving, old-fashioned and hierarchical. A Liberty Mutual survey of millennials also found that many view the industry as unethical and purely profit-driven. There is also a compensation gap between the Insurance and Tech sectors, as well as a perception that the culture in the Insurance sector is rigid and staid, compared to the perception of the culture in Tech as being flexible, exciting and fun.
An EY study noted that employees are three times more likely to stay with a purpose-driven company than with one whose principal goal is to make money, and participants universally agreed that the industry’s sense of mission and purpose is an important and under-utilised asset in attracting and retaining talented workers.
Companies in the Insurance sector need to work hard to change the adverse perception, transform culture, and compete on compensation to truly compete with the Tech sector for talent....and soon.
Frank Whelan - Managing Partner