The insurance industry is in flux. While strong growth is predicted over the next few years, the sector is moving away from a standard operating model towards a future with multiple challenges. Rising inflation, recession, geopolitical tensions, climate change, and more are all playing a part in shaping the future of insurance.
One key factor for ongoing success is your people. That means HR professionals have a vital role to play as they help develop a culture of innovation and resilience that can cope with the challenges of the future. We outline four challenges facing the insurance industry, and how HR teams across the sector can innovate their people programs in response.
1. Future-Proofing a Traditional Industry
To stay competitive, many insurance and financial services companies are shifting away from familiar products and leaning into a blend of new products, services, and revenue streams. They’re also reassessing the way they operate, moving towards cloud-based operations and remote or hybrid work. But to deliver these initiatives successfully, companies also need to attract and retain employees with the skills required to develop and market these kinds of offerings.
As a traditionally conservative industry, insurance isn’t always seen as an innovative sector when compared to other adjacent industries such as tech startups. Potential employees may be drawn to more forward-thinking companies that tell a compelling story about the employee experience, leaving insurance companies struggling to attract top talent.
What to Do About It
One strategy to rival competitors focusing on promoting company culture and values. In a CNBC workforce survey, 78% of employees say diversity and inclusion is a key factor when deciding where to work — so demonstrate how you prioritize diversity, equity, inclusion, and belonging (DEIB) to create an inclusive workplace.
“At IMA, one of the key strategies we’re using to future-proof our industry is putting our DEIB efforts into meaningful action by expanding our internship program,” said Bobbi McPherson, chief people officer at IMA Financial Group.
“To be truly ‘future-proofed,’ an enterprise must not be stifled by the often narrow representation that comes with legacy hires and recruitment methods,” she added. “By concentrating our intern program efforts on diverse universities, we intend to expand representation across program participants, our workforce, and the industry.
“This strategy includes building solid relationships with historically Black colleges and universities (HBCUs) and Hispanic-Serving Institutions (HSIs) while engaging with fraternities and sororities that primarily serve students of color to complement our inroads into Risk Management Programs across the country.”
Personal ethics are also coming to the forefront. Climate change is a top three concern for millennial and Gen Z employees — and personal values play an increasing role for these generations when they’re choosing who to work for. The insurance industry has been instrumental in the development of models used for risk management within climate risk toolkits — but do potential employees know this? By raising awareness of what your company does to tackle the issues that matter, it’s possible to attract socially conscious talent with the skills you need going forward.
“We’re taking a multi-pronged approach to ensure our company is well-positioned for success in the future,” said Timothy Derham, CEO and president at Universal Casualty Risk Retention Group. “We’re investing in new technologies to provide enhanced customer service and improved data security. We’re also expanding our product offerings to meet the changing demands of the market. Finally, we’re investing in our people by providing them with the training and education they need to stay ahead of the curve.”
2. Joining the Upskilling Revolution
The World Economic Forum estimates that by 2025, 50% of employees will need reskilling. Insurance executives and HR leaders must prepare for this now, by considering what skills their workforce will need to meet new demands in the coming years. It’s no surprise then, that reskilling and upskilling are now top priorities for workplace learning and development programs.
Skills are also changing the way we work. While HR practice has traditionally been based on jobs as the foundational structure, forward-thinking organizations are moving towards skills-based models. Here, employees aren’t limited to specific responsibilities in a job description but instead flow to different projects or assignments based on their skills.
Transitioning to a skills-based mindset resonates with workers. In a 2022 Deloitte report on skills-based organizations, 79% of employees said this improves the employee experience, and skills-based companies were 98% more likely to retain top performers.
What to Do About It
It’s time to invest in upskilling. In our 2023 State of People Strategy report, we found that 44% of insurance sector respondents plan on making significant investments into their employee coaching or upskilling programs.
“We have prioritized two training programs to roll out in the next 18 months that will help assist skill development in our associates at a foundational level,” said McPherson. “First, we plan to develop a more robust, year-long onboarding program for all new associates, establishing clear, systematic touch points throughout their first year. In addition, we plan to implement a first-time manager development program comprising a combination of self-paced learning, coaching, mentorship programs, and instructor-led training.”
Development programs can take many forms — for some teams, that looks like developmental reviews in addition to performance reviews. For others, it means having employees create individual development plans that guide their growth areas throughout the year.
“We’re offering our employees a range of learning and development opportunities,” said Derham. “We’re investing in our people by providing them with access to online courses, digital skills training, and mentorship programs. We’re also offering flexible working arrangements to enable our employees to pursue their learning goals.”
3. Embracing the Hybrid Work Model
Workers want (and expect) hybrid and remote work. But for traditionally office-based industries, shifting to a new kind of work environment can feel like a challenge. That’s why 70% of financial services employers still believe employees need to be in the office at least three days per week. But only 20% of workers think the same.
It’s time to embrace hybrid work and balance the disconnect between what organizations and their employees want. Doing so makes it easier to retain top talent when you give them the flexibility and work-life balance they’ve come to expect. From a cost point of view, transitioning to a hybrid work model can also cut down overheads, because office spaces can be smaller to account for fewer employees in the office.
What to Do About It
Now that the initial challenge of transitioning to remote work during a pandemic has passed, the insurance industry is gradually moving towards a hybrid work model. The challenge now is to find ways to make it work as a long-term strategy. “HR teams are no longer scrambling to respond and can now focus on the best options for their organization,” said Dave Carhart, VP of Lattice Advisory Services. “The basic idea of hybrid work has really been normalized, but the implementation and execution are still in experimentation mode.”
Our 2023 State of People Strategy report found that insurance companies expect an average of 45% of their employees to be working remotely some or all of the time. That’s certainly the case at IMA, where McPherson said: “We have a strong history and track record of providing flexibility for our associates to balance their work and personal lives. I would estimate that well over 50% of our workforce now participates in a hybrid work schedule, with others working unique schedules that fit their lifestyle needs. This creativity and flexibility are fixtures of IMA’s culture and make working with us an attractive option for job-seekers.”
Universal Casualty Risk Retention Group has a similarly forward-thinking approach. “We’re embracing the hybrid work model and giving our employees the freedom to work from home, the office, or a combination of both. We’re also investing in the necessary technology and tools to enable our employees to work seamlessly from anywhere,” said Derham.
4. Investing in HR Tech
Many of the people-centric challenges facing the insurance industry can be solved with HR tech. Performance goes both ways, and if you can’t match your employees’ expectations, they may be tempted to move into other adjacent industries that do.
Technology can help, whether you’re trying to monitor DEIB using accurate analytics (so you can report findings to your employees), identify upskilling opportunities, create a strong culture of employee development, or optimize engagement for remote workers. The key is investing in the right technology.
What to Do About It
The first step is identifying which processes need to be streamlined. An employee survey is a useful way to clarify what matters to your team. Then, selecting a platform that addresses all your needs can help deliver on performance management while keeping your HR team free to focus on strategy implementation — instead of swimming in paperwork.
“One of the four key pillars we’ve developed to foster innovation is continually enhancing, modernizing, and optimizing our HR technology platform for greater data integrity, reporting, and analytic capabilities while providing an intuitive user experience for all,” said McPherson. “In the last 18 months, we have implemented Lattice as our preferred talent management platform and are migrating new partner firm associates onto that platform.”
Mergers and acquisitions are also driving the need for HR tech, as companies with siloed systems and processes need to be blended and migrated to a new platform. “A current trend within the insurance brokerage industry is acquisition and consolidation,” said Diane Dooley, CHRO of World Insurance. “Demand for mergers and acquisitions activity continues to be high as business executives find their way to new growth.” Dooley said that this expansion is also increasing demand for both existing employees and new talent. The HR team at World Insurance is using HR tech to identify and hire graduate students with the right skills.
HR tech like Lattice Analytics is a powerful way to track behavioral trends, identify and retain top performers, and measure skills development.
See How It’s Done
When Policygenius needed a new employee performance management platform, they turned to Lattice for help. With performance reviews, real-time feedback, OKRs, and goals, Lattice helped Policygenius achieve a 99.2% completion rate for the latest round of performance reviews.
Read the full story: How Policygenius Streamlined Performance Management
“We’re investing in HR tech to streamline our recruitment and onboarding processes, improve employee engagement, and track our team’s performance,” said Derham. “We’re leveraging systems such as applicant tracking software, employee engagement surveys, and performance management tools to ensure our people are supported throughout the employee lifecycle.”
Creating an Industry That’s Ready to Face the Future
As the insurance industry embraces digital transformation, two aspects are key — people and technology. Leveraging both of these, in the right way, can help the insurance industry build a resilient workforce that’s ready to face the future.
Ready to find out more? Download our ebook, Fueling High Performance with Employee Growth in Insurance Companies.