This post is part of a series sponsored by AgentSync.
In January 2023 alone, Amazon laid off 18,000 people; Google laid off 12,000 people; Microsoft laid off 10,000 people; and Salesforce laid off 7,000 people. And these are just the big headlines in a month that saw over 100,000 workers laid off in the tech sector. If any of these talented tech workers are looking for a new industry to call home, they may find a soft landing with insurance companies willing to invest in technology and modernization.
Insurance companies feel pressure to modernize
The insurance industry has a reputation for being recession-proof, but it also has a reputation for being old-fashioned and slow to evolve. As customers and employees alike continue to demand a more seamless and high-tech experience from the companies they interact with, legacy insurers are facing increasing pressure to invest in their digital experience.
What does digitization mean for an insurance company?
Digitization of insurance companies specifically refers to:
- Use digital tools to keep track of customer and complaint data
- Automate internal processes to create a better employee experience
- Enable customers to self-serve their policies through digital portals
- Using technology to assess risk more accurately and make better underwriting decisions
Each of these aspects of insurance digitization helps an insurer remain competitive in a world where consumers and employees expect a frictionless experience. But they also come with costs that many insurance companies have been hesitant to invest in as of now.
What does the insurance companies’ digitization cost?
For insurance companies, investments in the modern infrastructure needed to undergo digitization may consist of any or all of the following:
- The initial purchase and implementation price of technology, hardware and software
- Hire additional staff to manage both the digital transformation process and the resulting solutions after they are implemented
- Train existing staff in using a new process or solution
- Lost productivity during the downtime associated with an implementation or transition period
- The cost of maintaining and periodically upgrading the new technology
Some of these costs may not exist at all, depending on the type of technology an insurance company uses. But also idea of some of these costs can become too much and prevent insurance companies from starting the digitization process.
What are the benefits insurance companies can get from adopting modern technology?
Despite the perceived costs, there are many benefits that insurance companies can derive from investing in modernization. These include:
- Saves time and money through increased operational efficiency
- A better customer experience as employees are freed from boring work to spend time focusing on customer relationships and needs
- An improved employee experience that helps recruit and retain employees
- Better data security by using products with updated encryption and security measures
- The ability to scale quickly without requiring additional technology investments or sacrificing security or compliance
The technology industry is downsizing and letting go of hundreds of thousands of employees
The tech industry is hitting a snag, as evidenced by historic tech layoffs in the news. The reasons for this include many tech companies realizing that they have overhired in recent years and now need to adjust their workforce accordingly.
Why Are Tech Companies Hiring So Aggressively?
As the entire world went online overnight due to covid-19, technology companies seized the opportunity to meet consumer and business demands for digital products. Companies that had never before needed technology for specific use cases suddenly did. Think: Zoom, Slack, Microsoft Teams, etc. Every digital productivity and communication software became a must-have for almost everyone. This meant that technology and software companies needed to hire technical and non-technical talent at breakneck speeds to keep up with the demand for their products.
Why are tech companies cutting their workforces so dramatically?
With a return to a more pre-pandemic lifestyle, consumer and business demands have shifted back towards personalized services, leaving tech companies with more people than they need. Although many companies have a primarily remote workforce, they have already implemented the bulk of the technology infrastructure they need. There is not a constant demand from brand new customers for products they need for the first time.
The insurance industry is facing a talent shortage
While technology may seem to have an abundance of talent competing for jobs, the insurance industry is not in the same position. The Great Resignation, The Great Retirement and The Great Reshuffling have left this stable industry competing for a very small number of experienced workers. At the same time, the reputation of the industry does not help to attract new talent from other industries (or recent graduates who have just finished school).
Unlike many other industries, the insurance sector has been relatively stable in recent years. According to the Insurance Information Institute (III), over 2.8 million people worked between insurance agencies and carriers in 2021 – a net increase of over 500,000 people from 2012. Unfortunately, the average age of workers in the insurance industry is 44.7 years. This average (which doesn’t seem that high compared to a 42.3-year average for all US workers) hides the disturbing fact that there are more insurance professionals in the 55+ age group than in any of the younger age groups measured by the US Bureau of Labor Statistics .
When these workers retire, they bring with them a wealth of knowledge and experience. This is a major problem for the insurance industry, as it has proven difficult to replace these industry vets. According to research by The Jacobson Group, reported in Insurance Business Magazine, there were 367,000 open but unfilled roles in the insurance and finance industry in 2022. Simply put, insurance companies are hiring, but they can’t find enough candidates for the jobs.
How can insurance companies benefit from technical redundancies?
The influx of technical talent laid off from other industries presents an opportunity for insurance companies in several ways:
- Insurers can create new internal technology roles to manage or even develop their own modern technology solutions.
- Carriers can also fill roles left open by retiring insurance personnel, even in a non-technical capacity, if they can entice those laid-off workers to transition to new types of jobs.
- Because the technology industry tends to be comprised of younger, highly educated individuals, insurers have an opportunity to bring in non-traditional and diverse perspectives that can help them move into the future, whether technological, cultural or otherwise.
One prominent insurance company has already announced its intention to capitalize on newly available tech talent. In a January 2023 Insurance Journal article, Allstate reports that it is making investments in technologies such as artificial intelligence and telematics, and plans to acquire talented software developers, engineers and others to create its next generation of internal and customer-facing technology.
Use technology to make the insurance industry an attractive career for a new generation
Although February is designated Insurance Career Month, it’s also every other month of the year for those of us who work in the industry!
We have previously written about how different generations have very different experiences of working in insurance. We’ve also written about how the adoption of technology will be critical for insurers looking to remain competitive with both talent and customers. Whether it’s by automating claims or supporting a hybrid workforce, investing in modern technology is no longer optional.
At AgentSync, we help insurance companies (and agencies, MGAs, MGUs and pretty much everyone in the distribution channel) streamline compliance management. Adding AgentSync to your technology stack comes with many benefits and very few of the perceived costs of digitization. If you’re interested in learning more, check out a demo today.
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