Blog: Insurance needs to re-skill its workforce

Robot ethics

  • Insurance firms need a people strategy to adapt to the digital revolution
  • Up to half of tech roles will dramatically change in nature

In a world where insurance processes are being automated, the industry needs to re-skill the next generation of workers, writes Brett Moffatt, managing director, Europe, Middle East and Africa, of Talent Intelligence.

The Fourth Industrial Revolution is already dawning on the insurance industry.

While corporate insurance businesses have already identified insurtech firms – including some set for billion-dollar valuations – as the main challenge in their business strategy, it is time to recognise how their people strategy needs to adapt to this revolution, too.

As the World Economic Forum made clear in its recent Future of Jobs report, the exponential changes to businesses’ operations will continue into the next decade until, by 2025, machines will be doing the lion’s share of the most time-intensive tasks currently done by a human hand.

Digital transformation is changing the nature of the insurance profession rapidly, paving the way for automated processes triaging insurance claims and smarter productivity tools that allow globally-distributed employees to work remotely, collaborating as if they were working locally.

The WEF’s report heralded a net gain of 58 million new permanent roles in total created by new digital tools. However, the reality is that we live in a world of virtually full employment, where the predicted displacement of jobs could cause great disruption to the labour force.

To reach that net gain of 58 million new jobs, data algorithms, artificial intelligence and robotics are expected to displace 75 million jobs globally by 2022, before creating 133 million new permanent roles in the long term.

Already, in the US, there are around one million more roles than there are people to fill them. Europe is also gradually entering the same state of stagnation: too few people are switching jobs or retraining.

In the UK, lobbying by the British Chambers of Commerce, among others, to reinstate the Tier-1 post-study work visa demonstrates the challenge businesses have to fill tens of thousands of vacancies in highly-skilled roles.

The WEF determines from its survey that 54% of employees of large companies will need to re-skill or up-skill.

Among the largest digital insurance industry firms, the transition into a world dominated by insurtech may mean that up to half of tech roles will drastically change in nature, even if the number of roles increases in the long term. 

There will need to be a drastic increase in the provision of skills-training and support for those hoping to make the jump into these new roles.

Even if the vast majority of employees either remain in post or receive adequate training to adapt their role, around one-third are expected to see their role subsumed by the wave of automation, if the insurance industry reflects the Organisation for Economic Co-operation and Development average.

Will this lead to employees being laid off, directly replaced by robots? In one high-profile story last year, 34 employees at Japan’s Fukoku Mutual Life Insurance were made redundant, replaced with IBM’s Watson Explorer AI in an effort to boost company productivity by 30%.

The transition is unlikely to be this sudden. The best-performing businesses will ensure that the right employees are being re-skilled and moved to new roles.

Tactically speaking, businesses need to identify individuals who have different strengths and ensure that those who are set to retire soon – including up to 20% of the workforce in Generation X – are separated from those in younger generations.

Firms that suffer from a lack of generational diversity will face the greatest difficulty here.

Corporate insurance firms may be maintaining a balance of power against the insurtechs for now. Their long-term business performance will rely on having the right people strategy too.

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