(Image credit: Adobe Stock.)
The insurance industry workforce is evolving. An estimated 25 percent of insurance industry workers are expected to retire in the next 12 to 18 months. As insurance accounting workers age out of the workplace, not enough younger workers are taking their place to sustain a viable workforce.
And the very nature of employment is changing: By 2022, it is estimated that 20 percent of the overall workforce will be composed of contract employees, part of the new phenomenon we know as the “sharing economy.” Other aspects of hiring are becoming more complicated as well. Candidates make decisions more quickly and new laws are limiting conversations around topics such as compensation.
As with most aspects of our lives, technology is playing a role in employment trends, particularly in our industry. The legacy systems often in place at insurance firms cannot compete with the appeal to younger workers presented by the new technology at other firms. When employees across a range of industries were polled about innovation at their companies, insurance employees gave ratings eight percentage points lower than average.
With all of these challenges, how can an insurance firm attract and retain enough workers to support the growth of its business; and how does it combat the key person risk involved with retirement?
A Comprehensive Solution
Major shifts in technology are making outsourcing a more attractive option. For decades, insurance firms had to rely on spreadsheet programs and other non-integrated legacy systems. Documentation was often sparse and processes were ad-hoc. This was not only inefficient, but led to significant key person risk that could result in data and productivity loss when staff members resigned or retired. Choosing to hire an outside partner relieves the firm of all of those challenges.
Outsourcing can enable the firm to leverage artificial intelligence (AI) in the middle and back office as it automates client service and other core functions and efficiently meet ever-shrinking deadlines to close books. A survey of the top four leaders in the insurance industry revealed frequent use of the following types of AI:
- Chatbots/AI assistants: Dynamic responses to internal agent inquiries and tailored guidance on business protocols.
- Driver performance monitoring: Machine learning algorithms applied to client data to help inform the development of products for insurance clients.
- Insurance market analytics: Machine learning algorithms are used to interpret driver data in an effort to monitor market trends and identify business opportunities.
Chart: Advantages of Outsourcing
What to Look For in a Partner
Instead of spending more money on operations, recruitment and legacy systems, all of which create business risk, an insurance firm can potentially obtain more transparency and better reporting by outsourcing data management needs to an experienced provider. Once the decision is made to outsource these services, the firm should conduct interviews and research to find the best provider to meet its unique needs.
- Experience: Through years of experience, an outsourcing partner gains knowledge in a variety of reporting areas. The partner can use this experience to help overcome the firm’s unique challenges and achieve its goals.
- Technology: A key benefit of outsourcing is the ability to leverage new technological advances without a heavy up-front investment. Insurance firms should maximize this by confirming the partner uses comprehensive and robust systems.
- Client Service: A perfect outsource provider does not exist. When performing due diligence on potential partners, speaking with current clients is critically important in receiving a third-party perspective and learning how issues and obstacles are addressed and resolved when they arise.
Rather than grappling with hiring and retaining new investment accounting staff, insurance firms can leave those staff and system issues to a specialist and focus on their core competencies of insurance and risk management, business growth, development and support of sales staff, claims processing and other core activities.