The EY 2020 U.S. and Americas Insurance Outlook surveyed insurance professionals to understand the key issues shaping the industry in the near term. Underpinned by a changing workforce, the influx of technology and rising customer expectations, the survey uncovered the trends that will shape the industry in the years to come.
Here are three challenges that rose to the top as imperative priorities for the industry to overcome in the next three years:
1) Winning the war for talent. Although staff count has risen 17% in the last decade for the top 20 regional insurers, according to S&P Global Market Intelligence, dramatic workforce reductions are expected in the coming decade. That means finding qualified candidates remains one of the top challenges for independent agents, a task encumbered by the sector’s low rankings in surveys of the most attractive global industries.
Today’s tight labor market means it’s vital that the industry invests more time and resources to attract new college graduates as the next generation of insurance leaders.
“The industry is still stereotyped and many jobseekers think insurance careers are limited to sales, claim adjustors or actuaries,” says Laura Hollerich, distribution optimization leader, EY. “One of the key challenges to appealing to new talent is that other sectors look more attractive and innovative to recent graduates in data science and other in-demand industries.”
“To attract and retain the necessary talent, some insurers are tearing down the walls in cube farms, undoing hierarchical office designs and canceling dress codes,” Hollerich adds. “Others are updating working arrangements to feature gig and part-time workers and adopting remote and flexible working environments.”
Insurers should also make the link between their employees and the consumer marketplace. Hiring and promoting more women, millennials and Generation Z employees, as well as giving prominence to increased diversity and the career opportunities the industry provides, should be a priority.
“While the industry needs to hire thousands of jobs over the next few years, it is equally important to retain and train top talent,” notes Tyler Asher, president, independent agent distribution, Liberty Mutual Insurance, in a separate conversation. “That comes through having a strong and diverse culture and creating opportunities for growth and advancement.”
“Agencies that make sure their employees and candidates reflect the broader population and that cultivate a culture of diversity and inclusion will stand out in the future as the employers of choice for people entering the industry,” Asher says.
2) Digitizing customer experience, sales and distribution to improve excellence and efficiency. Incorporating digital processes does not mean sacrificing relationships. In fact, it can improve engagement, which is the basis of relationships. Moreover, a measured and careful approach to digitalization can reduce agency operational costs and increase revenue.
“Automating the elements of the agent role that are ‘customer neutral,’ especially high-volume administrative functions, is an opportunity to automate low-value tasks,” Hollerich says. “Doing so will free up their time to focus on parts of the relationship that matter most to customers, such as providing advice on the best coverage solutions during life events, such as having a child or buying a home.”
In addition, “new technology can assist with more targeted lead generation which should improve new business conversion ratios, as well as cross-selling and up-selling opportunities,” she says. “It is also just as important to define where the intersections of human support and digital tools are most likely to occur within the sales funnel or customer lifecycle and model the hand-offs between them.”
Within these technological shifts, independent agents’ understanding of their customers and the products that will provide them with the solutions can give them an edge. “They can use technology to deepen their connections with customers and prospects. They can use data to predict what their customers will need, before they need it,” Asher says. “This can help independent agents be more proactive, instead of reactive or solely relying on a policy expiring for a moment to connect.”
In conjunction with a well-designed website, email, social media and chatbots, agents can leverage technology to develop relationships at scale through marketing software and communications tools “to stay top of mind and deliver on modern consumer expectations,” Asher adds. “Consumers expect their agents to have a digital footprint and be available 24/7.”
3) Collaborating with InsurTechs and other third parties. New and specialized carrier-designed, digital products will continue to be developed to meet the changing needs of insurance buyers, such as ride-sharing and contingent workforces, the EY study found. These products may be jointly developed to address the unique needs of various niches.
“Digital technologies will result in significant process automation in underwriting, claims and insurance services that could introduce significant operational efficiencies. These efficiencies would be passed on to consumers, which could result in competitive pricing of the insurance products and services,” Hollerich says.
“Independent agents will respond or fold to this emerging trend by providing a digital flavor of agent services to consumers, especially millennials, focused on low-touch, automated digital experiences, competitive commission structures and a broader set of services,” Hollerich adds.
Will Jones is IA senior editor.