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 is laying off 7,000 people. And those are just the headlines of a month that saw more than 100,000 employees laid off in the technology sector. If any of these talented tech people are looking for a new industry to call home, they could find a soft bottom with insurers looking to invest in technology and modernization.
Insurers feel pressure to update
The insurance industry has a reputation for being recession-proof, but it’s also notorious for being old-fashioned and slow to evolve. As customers and employees alike continue to demand a more seamless, 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?
The digitization of insurance companies specifically refers to:
- Use digital tools to track customer data and claims
- Automate internal processes to create a better employee experience
- Enabling customers to self-service their policies through digital portals
- Using technology to assess risk more accurately and make better underwriting decisions
Each of these aspects of insurer digitization helps the insurance company remain competitive in a world where consumers and employees expect a frictionless experience. However, they also come with costs that many insurers have been reluctant to invest in until now.
What are the costs of digitizing insurance companies?
For insurance companies, the investment in the modern infrastructure needed to undergo digitization may consist of any or all of the following:
- The initial purchase and implementation price of the technology, hardware and software
- Hire additional staff to manage both the digital transformation process and the resulting solutions after implementation
- Training existing employees to use a new process or solution
- Loss of productivity during downtime associated with execution or transition period
- The cost of maintaining and updating the new technology periodically
Some of these costs may not exist at all, depending on the type of technology the insurance company is adopting. However, even an idea Some of these costs can be prohibitively high, preventing insurance companies from starting the digitization process.
What are the benefits that insurance companies can get from adopting modern technology?
Despite the perceived costs, there are plenty of benefits insurers can reap by investing in an upgrade. These include:
- Save time and money by increasing operational efficiency
- A better customer experience as employees are freed from the hard work of spending time focusing on customer relationships and needs
- An improved employee experience that contributes to employee recruitment and retention
- Better data security with products with updated security and encryption standards
- The ability to scale quickly without requiring additional technology investments or sacrificing security or compliance
The tech industry is going backwards and letting hundreds of thousands of employees go
The tech industry is hitting a snag, as evidenced by the historic tech hairdos in the news. Reasons for this include many technology companies realizing that they have overstaffed in recent years and now need to adjust their workforce levels accordingly.
Why are tech companies hiring aggressively?
When 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 didn’t need the technology before for specific use cases suddenly did. Think: Zoom, Slack, Microsoft Teams, etc. Every digital productivity and communication software has become a must-have for almost everyone. This means that technology and software companies need to recruit technical and non-technical talent at breakneck speeds to keep up with the demand for their products.
Why are tech companies cutting their workforce so dramatically?
With a return to a pre-pandemic lifestyle, consumer and business demands have shifted to personal services, leaving tech companies with more people than they need. Although many companies maintain a primarily remote workforce, they have already implemented the bulk of the tech infrastructure they need. There is no constant demand by new customers for the products they need for the first time.
The insurance industry is facing a talent shortage
While it may seem that technology has an abundance of talent competing for jobs, the insurance industry is not in the same position. The great quit, the great retirement, and the great redistribution left this stable industry competing for very few experienced workers. At the same time, the reputation of the industry is not conducive to attracting new talent from other industries (or recent graduates who are just finishing school).
Unlike many other industries, the insurance sector has remained relatively stable in recent years. According to the Insurance Information Institute (III), there were more than 2.8 million people working across insurance agencies and carriers in 2021 — a net increase of more than 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 high compared to the average of 42.3 years across all US employees) masks the troubling fact that there are more insurance professionals in the 55+ age group than in any of the younger age groups measured by the bureau. United States Labor Statistics.
When these workers retire, they take a wealth of knowledge and experience with them. This is a major concern for the insurance industry, as these industry vets are proving difficult to replace. According to research by Jacobson Group, reported in Insurance Business Magazine, there were 367,000 unfilled but unfilled jobs in the insurance and financial services industry in 2022. Simply put, insurance companies are hiring, but they can’t find enough job candidates.
How can insurance companies benefit from technical layoffs?
The influx of tech talent laid off from other industries provides an opportunity for insurers in several ways:
- Insurance companies can create new internal technical roles to manage or even develop their own state-of-the-art technology solutions.
- Carriers can also fill roles left open by retired insurance employees, even in non-technical capacities, if they can entice these laid-off workers to move to new types of jobs.
- Since the tech industry tends to be made up of younger, highly educated individuals, insurers have an opportunity to offer unconventional and diverse perspectives that can help move them into the future, be it technological, cultural, or otherwise.
One prominent insurance company has already announced its intention to tap into the newly available technical talent. In an article published in Insurance Magazine in January 2023, Allstate stated that it is making investments in technology such as artificial intelligence and information technology, and plans to bring in talented software developers, engineers, and others to create the next generation of in-house and customer-facing technology.
Use technology to make the insurance industry an attractive profession for a new generation
Although February is designated Insurance Jobs Month, for those of us who work in the industry, every other month of the year is too!
We’ve written before about how different generations have vastly different experiences when working in insurance. We’ve also written about how technology adoption will be pivotal for insurance companies that want to stay competitive with both talent and customers. Whether it’s claims automation or support for a blended workforce, investing in modern technology is no longer optional.
At AgentSync, we help insurers (and agencies, MGAs, MGUs, and pretty much everyone in the distribution channel) simplify compliance management. Adding AgentSync to your tech stack comes with a lot of benefits and very few perceived costs of digitization. If you’re interested in learning more, check out our demo today.
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