If your insurance company is still struggling to fill technology-related jobs, welcome to the club.
A dearth of potential employees with needed technology skills—and analytics skills in particular—topped the 2017 mid-year Insurance Labor Market Study’s list of industry hiring challenges for the eighth year in a row.
With over 80% of the insurers surveyed anticipating revenue growth over the next 12 months, the study found that almost two-thirds (62%) of these companies intend to expand their workforces. With total job growth projected at around 1.14%, that would add 15,000 new jobs to the industry’s existing employment base of 1.5 million.
In terms of technology, the study, conducted jointly by The Jacobson Group and Ward Group, a part of Aon Hewitt, found that larger insurers are the most likely to increase their analytics staff, while mid-size companies plan to emphasize technology positions more generally, followed by claims.
Smaller insurers are the exception, indicating that filling claims, sales and marketing positions are their top hiring priorities. But the study’s authors say, even for smaller firms, it’s still a tech story.
“Small companies are investing heavily in digital and mobile, which are reflected within the sales and marketing results,” says Jeff Rieder, partner and head of Cincinnati-based Ward Group, which offers compensation and performance benchmarking services. “It’s similar for claims, where investments include analytics.”
All industry sectors reflect the same tech hiring focus with the exception of Life & Health, where new sales and marketing positions top the sector’s list of staffing needs. “While technology remains key for life carriers, many appear to be more focused on generating growth,” Rieder says.
On the flip side, only 10% of the companies surveyed say they plan to decrease staff, and of those, the majority of the reductions do not include tech-related positions. Where staff downsizing is planned, this is most often attributed to acquisition-related reorganizations and the automation of certain business functions.
Automation is another factor leading to greater emphasis on tech. “Over the past 10 years there’s been about a 40% reduction in clerical-related employees, relative to total employees,” says Rieder. “Over the same period, the proportion of technology and analytics employees increased by 20%, meaning there are now far fewer clerical jobs in proportion to technology-related positions.”
Nomadism will soon add to the industry’s tech hiring pain, adds co-author Greg Jacobson, CEO of the Chicago-headquartered Jacobson Group, an industry recruiter. “For the first time since the downturn,” he says, “we’re seeing a willingness for people to change jobs.”
Unsurprisingly, the tech employee crunch is driving up salaries. “Technology compensation is running a couple of percentage points ahead of other positions,” reports Rieder. “More CIOs are discussing the need to make defensive compensation offers, in addition to higher merit increases, to prevent workers from being recruited away.”
With industry unemployment running at around 2%, according to the U.S. Bureau of Labor Statistics, the aging insurance workforce is a harbinger of more severe tech-related staffing challenges over next three to five years.
“Our employees are among the oldest in the economy, says Jacobson. “Approximately 40% are at retirement age. This is complicated by insurance companies ranking low among the Millennial and Gen Z workforce as attractive places to work. Even if the economy makes an adjustment, we don’t foresee that affecting carrier demand.”
Culture change ahead
So how does the industry ease its chronic tech shortage? Jacobson believes a cultural shift is needed.
“Insurers are competing for talent with industries where workplace flexibility is common,” he says. “This includes working remotely and changing the focus to the quality of output rather than the time of day a task gets completed. Workers also want opportunities to gain broader experience, rather than being confined to siloes.”
Moreover, “Millennials don’t value loyalty or longevity the same as their predecessors,” Jacobson adds. “Given the impending retirement turnover, insurers must learn how to onboard this cohort faster and maintain relationships,” so that if employees leave the door remains open for them to return.
Some insurers – particularly small and mid-sized firms – are already moving in this direction. “One carrier has completely eliminated its traditional PTO policy,” Jacobson notes. “As long as a worker completes his or her tasks, they can take whatever time off they need.”
On a larger scale, nascent efforts at industry promotion are gaining steam. Initiatives such as the Insurance Careers Movement partnership are seeking to attract younger workers via various educational efforts.
For insurers, the bottom line is this: “An insurer’s business and digital strategies are becoming one and the same,” say Jacobson. “Continuing to attract quality tech talent is an existential imperative.”
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