The insurance industry talent crisis doesn’t get as much attention as some other objects of obsession among analysts and reporters. But unlike, say, the state of modern core systems or the use of burgeoning data analytics, the talent crisis just keeps getting worse. That being the case, it was nice to hear that an industry supplier was joining an effort to do something about it: Valen Analytics became a member of Change the Equation – a non-profit dedicated to promoting science, technology, engineering and mathematics (STEM) education and career choices – and has launched Tomorrow’s Talent Challenge, an initiative to increase insurance industry participation in activities promoting STEM.
The insurance industry’s talent problem consists of two mutually reinforcing trends: more and more insurance veterans retiring and fewer and fewer talented young people joining up. Both trends are demographically conditioned – the large Baby Boomer cohort makes the workforce top-heavy with regard to age. But the latter trend may also be affected by perceptions that the industry is boring, and that its technology environment is antiquated and frumpy – and not only for IT professionals, but also for internal business users, distribution partners and end-customers.
One of the ways the industry has responded to talent constraints is to use automation to free up high-value-added talent for more important uses. Valen’s own underwriting profitability solutions provide benefits in that vein, along with their other merits. But as valuable as that kind of help is, it’s not going to be enough when one considers the increasing importance of data and analytics to the insurance industry and business in general against the backdrop of a serious talent shortage.
Recent Deloitte research based on Department of Labor statistics estimates that the insurance industry will have 400,000 positions it needs to fill by 2020, and that 20 percent of experienced underwriters will retire within the next few years. Meanwhile, only 69 percent of American high school graduates are getting their college degrees within four years, and there’s a projected shortfall of 3 million workers with college degrees by 2018.
Change the Equation, whose membership consists of senior executives across industries, is a philanthropic and activist organization dedicated to doing something about the problem. Its activities aim at maximizing the effects of philanthropy by promoting rigorously managed programs, running its own initiatives to encourage youth to consider STEM careers, and also advocating public policy that supports STEM education.
Valen CEO Dax Craig acknowledges that his firm joined Change the Equation in part to be associated with a good cause, but also because of a deeper kind of self-interest. “Recruiting and retaining analytics talent is tremendously challenging,” he explains. “For us to be successful as a provider of advanced data and analytics, we need great analytics talent, and our insurance carrier customer need great talent on their side as well for our projects to succeed.”
Valen began thinking about the problem a couple of years ago and reached out to colleges as a first step, according to Craig. “We learned that analytics talent wasn’t interested in insurance at all – not because they thought negatively about insurance but because just hadn’t thought about it at all. They were thinking about hedge funds or Google or some other sort of internet startup, for example.”
Despite being more challenged than other industries to attract talent, there is only one insurance company in the Change the Equation’s roughly 100 members: State Farm (Deloitte, whose research we cited earlier, is a member).
To promote greater insurance industry participation in STEM-supportive efforts, Valen has launched Tomorrow’s Talent Challenge. The initiative will involve efforts to engage the insurance industry to respond to the need for more pre-K-12 students to pursue STEM education and college degrees, and to encourage young people to pursue a math education and explore careers in insurance analytics and technology.
In cooperation with Change the Equation and the Jacobson Group, Valen will host a conference call (information link here) on Nov. 14 to discuss how insurance carriers can get involved with Tomorrow’s Talent Challenge.
“Tomorrow’s Talent Challenge is intended to spark the insurance industry’s involvement, with Change the Equation as the catalyst,” Craig comments. “Corporations from other industries are having great success in developing and attracting talent, but the insurance industry is currently not at the table.”