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How to address the talent shortage in insurance underwriting

By: Michelle Gouveia
May 22, 2023 | Intelligent Intake, Talent Acquisition, Unstructured Unlocked

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Anyone and everyone in the insurance business knows the industry faces a talent shortage; there simply aren’t enough people to do the jobs that need to be done. In the latest episode of Unstructured Unlocked, we decided to tackle the insurance industry talent crisis head-on, exploring the reasons behind the shortage with respect to insurance underwriting specifically and, more importantly, what can be done about it.

Some of the talent shortage issues facing insurance underwriters are universal: employees leave for greener pastures elsewhere. Others are more inherent to the insurance industry and its reputation for being, as my podcast partner Chris Wells put it, not “sexy.” But solutions are at hand, including adopting more of a startup culture and using technology to take a lot of the drudgery out of underwriting processes, giving employees more time to focus on the challenging and rewarding aspects of the job.

Astute podcast listeners will know this isn’t the first time we’ve broached the insurance talent gap. In Episode 8, Wells interviewed Steven Weiss, who has held senior underwriting positions at companies including Munich Re Specialty Group Insurance Services. “The number is somewhere up around 100,000 people that the industry will be short by 2025 or 2027,” Weiss said.

Listen to the full podcast here: Unstructured Unlocked episode 18 – What is the talent crisis in underwriting?

How we got here

 

In part the issue stems from the large number of retiring Baby Boomers, an issue many industries face. But the insurance talent shortage goes deeper than that, and it’s not for lack of trying on the part of carriers.

In my own career at Travelers and Hartford Steam Boiler (HSB), a global specialty insurer and reinsurer, I witnessed the various developmental programs insurance companies put in place. Leadership development programs provided opportunities for employees to rotate through different areas, including underwriting, and undergo rigorous training to learn the job, including any nuances specific to each carrier.

After this 6- to 12-month investment in time and money, many of the candidates would take their newfound knowledge elsewhere. In many cases, they simply wanted something more cutting edge than the dumb terminal, “green screen” technology that is still prevalent at many insurers. Insurance simply felt too old school to many employees.

Wells sympathized. “If I’m 22 or 24 with a master’s in computer science and I want to get a job as a developer, the word sexy and insurance are never in the same sentence, right?” he said. “If you’re that age, you want to get a really good technology job, you’re probably not thinking insurance first.”

He also pointed out that engineering managers at insurance companies tend to stay in their jobs for a long time. “Unless they’re really sharp and driven, staying up to date on the latest way of thinking about software architectures and systems and all of that is a struggle,” he said. As a result, changes in technology and architecture can be slow to take hold in insurance – hence, the green screens.

 

Related content: From submissions to cost-justifying: Podcast covers the insurance process automation bases

 

Adopting a startup culture in insurance

 

There’s a definite upside to having folks stick with a company for a long time in that they become experts in how that company conducts business and all of its ins and outs.

On the other hand, there’s also a benefit to seeing more folks circle in who bring experiences from other companies. That generates more innovative thinking and better problem solving because you have a range of opinions and experiences to draw from.

And it’s that innovative thinking that’ll lead to adoption of more cutting edge and exciting technology. Wells likened it to a startup culture, which typically involves a constant flow of new people and ideas. Insurers need to ditch the “tribal culture” that says the organization can only bring in folks who have insurance experience.

“They don’t necessarily have to. They have to know how to code really well and architect scalable systems,” he said. “It’s the business’s job to make sure they know what the mission critical things are.”

His comment put me in mind of the “build vs. buy” decision that insurance companies are constantly making. The “build” option is far more time-consuming but perhaps more comfortable, even if it’s hard to pivot once you’ve set a direction.

Startups, on the other hand, take a “fail fast” approach that promotes innovation and, ultimately enables the company to be more responsive in meeting the needs of its customers. The more insurance companies can adopt that approach, or simply incorporate technology from startups, the more they’ll attract talented employees who relish the opportunity to work on the latest and greatest.

 

Related content: Why commercial insurance policy automation solutions should include policy servicing

 

How automation helps close insurance talent gap

 

Another sure-fire way to make up for a worker shortage is to increase the productivity of those you do have. That’s where automation and process optimization come into play.

An intelligent intake solution like Indico Data’s can perform 80% of the function that an underwriting associate normally does, in terms of reading and classifying underwriting submission documents. As Wells pointed out, if the insurance industry is 100,000 workers short and you can eliminate 80% of the work that needs to be done, now you’re only 20,000 short.

Now the question becomes, what do you do with all that free time you just created? The answer revolves around rethinking talent management in the insurance industry.

“HR should be thinking about how to change roles to make them more interesting and engaging,” Wells said. “Then you can hire a data entry worker who can grow into becoming an underwriter.”

Employees who see that kind of growth path from day one will be far more invested in sticking around. And, because much of that data entry role is automated, it’s a more palatable position from the get-go.

What’s more, as intelligent automation matures within organizations, it will increasingly be able to take care of the simplest submissions on its own. That leaves underwriters dealing only with the more complex cases, those that require their expertise and that keep them engaged and learning.

Find the full transcript here.

To hear our entire podcast on the insurance talent shortage, check out the full conversation on YouTube or on your favorite podcast platform, including:

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