New insight highlights concern around an aging workforce
The insurance industry in the United States is facing a significant challenge due to a shortage of skilled workers, with projections by the US Bureau of Labor Statistics suggesting that the industry could lose around 400,000 workers through attrition by 2026.
This issue is compounded by an aging workforce, with many employees nearing retirement. Consulting firm RSM highlights this demographic shift, which occurs against a backdrop of rapid technological change, regulatory shifts, and evolving customer preferences.
This talent gap underscores the importance of effective succession planning to ensure continuity in leadership roles and other critical positions. The value of experience in the insurance sector means that any gap in planning could harm customer trust and impact long-term revenue.
The industry faces multiple challenges, including knowledge and skills gaps, a broader talent shortage, and the need to adopt new technologies. If unaddressed, these could lead to competitive disadvantages, operational inefficiencies, increased regulatory risks, and difficulties in retaining customers, potentially harming the sustainability of businesses.
What skills are in demand in the insurance industry?
There is a growing demand for skills in data analytics, cybersecurity, and digital marketing, with data-related capabilities being especially critical. Insurance companies are increasingly using their data to gain insights for risk assessment, fraud detection, and customer segmentation.
Over 50% of insurance providers are actively recruiting data analytics skills, as reported by productivity software company ZipDo. This trend highlights the essential role of data analytics in adapting to the digital age, driving innovation, making informed business decisions, and enhancing customer experiences.
However, the effectiveness of a data-driven approach depends on factors such as data quality, the suitability of models and algorithms, and the goals of specific applications. Inadequacies in these areas could expose companies to fraudulent claims and inaccurate risk assessments, affecting both financial performance and reputation.
Specialized knowledge in insurance laws, compliance frameworks, and risk management practices, coupled with an understanding of data strategy, is crucial for roles like insurance underwriting and claims adjustment. The US Bureau of Labor Statistics anticipates a decline in these professions from 2022 to 2032 due to automation and increased efficiency.
The integration of new technologies and digital tools presents challenges for an aging workforce that may lack tech proficiency. Promoting a culture of ongoing learning and skill development is essential to address these workforce challenges effectively.
The adoption of advanced technologies such as artificial intelligence, machine learning, and data analytics can streamline operations, improve efficiency, and enhance the employee experience. Embracing such innovations positions insurance companies as modern, forward-thinking entities, potentially attracting younger generations who value technology-centric work environments.
“Data analytics, cybersecurity and digital marketing are skills we expect to be in especially high demand as workforce pressure continues. But data-related skills, in particular, will be paramount for various business functions of insurers,” RSM US financial services senior analyst Marlene Dailey said.
In an interview with IB US earlier this year, Dailey also analyzed the blockchain boom and assessed if it will finally make its mark on the insurance industry.
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