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The Transformative Power of Disruption

Technology equals opportunity in the new age of claims

November 19, 2018 Photo

Claims and technology are joining forces to change the function as we know it. For many years, the industry relied on paper-based, time-consuming systems for managing claims. During catastrophic disasters, countless claims professionals had to physically travel to impacted areas to assess and report damages to their departments. Delays were inevitable as hand-offs were made among individual agents, claims professionals, and administrative staff. As a result, policyholders often had to wait several days or weeks for the payments to which they were entitled.

Most traditional claims operations have changed since technology entered the scene. Drones fly over disaster areas to take photographs, chatbots handle policyholders’ claims questions, and IoT telematics provide alerts to people exposed to preventable risks. Real-time monitoring sensors are diminishing claims volume for personal and commercial properties, and digitalization has allowed applications and supporting documents to be shared instantly.

In this age of innovation, improving or just maintaining retention rates can be challenging. Although optimistic about the potential improvements that technology may bring to their roles and performance levels, employees are uncertain of the pace and range of modernization’s impact. Many employees associate the changes stemming from technological transformation with staff reductions. They are concerned their employers are painting the picture of a future work reality without them.

However, the results from the “2018 Mid-Year U.S. Insurance Labor Outlook Study,” recently conducted by The Jacobson Group and Ward Group, indicate the opposite. Of the surveyed property and casualty carriers, 62.6 percent plan to increase their staff size in the next 12 months, citing increased business volume and expansion as primary reasons. This is in stark contrast to the study low of 31 percent in July 2009 at the height of the Great Recession. The survey also reveals that the claims function is the second-highest area in demand for property and casualty insurers, coming in only a tenth of a point behind technology.

Moreover, the industry continues to grow, and insurers need more employees to handle greater workloads from increasing business volume. The study found that all property and casualty carriers expect to maintain or increase their revenues, and more than half of them cited increases in market share as the primary reason, followed by pricing increases and economic expansion at 25.3 percent and 24.1 percent, respectively.

Embracing Innovation

The wind of innovation is providing claims operations an opportunity to step up to the next level. Continued industry growth and increasing demand for additional staff in both technology and claims show that modernization is poised to bring positive change, but only if insurers are prepared to embrace it.

One thing is for sure: Claims technology is here to stay. As technological advances streamline time-consuming tasks and increase efficiencies, claims professionals’ responsibilities are shifting toward higher-level adjusting and management. Corresponding skill requirements and changing policyholders’ expectations are requiring claims departments to promptly adjust themselves to the changing business reality.

Technology will, in fact, eliminate some roles. According to the “2018 Mid-Year U.S. Insurance Labor Outlook Study,” 5.5 percent of property and casualty insurers are looking to reduce staff in the next 12 months. Eleven percent of those companies report that automation will be the primary reason for staff reductions, followed by reorganization at 10 percent. However, this reduction rate is relatively small in comparison to the overall industry trend.

Technology is simultaneously creating new career opportunities that connect data, automation, and machine learning with business objectives. It is providing new roles, especially for professionals with non-traditional skill sets, that may offset the job losses. For example, chatbot designers will craft interactive scripts and automation specialists will create self-service digital platforms for policyholders to file claims instantly without consulting customer service representatives. Data scientists will analyze data to improve post-claims file reviews and work toward lowering claims handling and indemnity costs. These new roles are only a glimpse of innovation’s impact on the insurance workforce.

Retaining Employees During Modernization Projects

Even though the market points to more jobs and opportunities, employees are still concerned. It is difficult to reverse the uneasiness employees feel as their workplace changes at an unprecedented pace. It’s important that claims leaders be transparent and clearly and consistently share upcoming changes and initiatives with their teams. By approaching the future together, insurers can improve employee engagement and organizational strength.

Yet leaders can do so much more. We often use the term “disrupter” to refer to technological advancements. Indeed, these changes are transforming the industry and its work environment, but the term does not reflect the promising opportunities resulting for its customers and employees. Change is exciting, and management needs to put innovation in a positive light to ensure everyone truly steps into the 21st century.

Providing training opportunities on technical improvements can empower staff and improve retention rates. Organizations should evaluate employees as a sum of their skill sets, not as professionals confined to historic roles or disciplines. With the right training, team members can better transition into newly defined roles in their modernized departments. Allowing professionals to develop themselves and actively engage in the innovation process not only improves overall job satisfaction, but also positively impacts their perception of technological transformations.

Innovation presents an opportunity for the claims sector and its workforce to maintain and enhance productivity levels. Today’s organizations are tasked with closing the talent gap created as tenured baby boomers and traditionalists vacate their long-held management and executive roles. However, the “2018 Mid-Year U.S. Insurance Labor Outlook Study” confirmed that the industry is struggling to fill these vacancies, with executive positions topping the list of the most difficult roles to recruit for at a rating of 6.8. In addition, property and casualty insurers are growing their workforces at a faster rate than they expected. According to the recent survey, these insurers have grown their workforce 0.9 percent since July 2017 versus an anticipated rate of 0.79 percent. This, coupled with the industry’s shallow talent pool and virtually non-existent unemployment, is further aggravating the talent crisis.

Technology has the potential to keep those near retirement in the workplace. For example, deploying drones to impacted sites can extend the careers of tenured claims professionals who may no longer wish to travel. By offering incentives to delay retirement and providing training opportunities, insurers can buy enough time to develop succession plans and recruitment strategies. By decreasing potential retirees’ hours or offering them new roles within the organization, veteran claims professionals can mentor emerging team members and help integrate technological improvements into department operations, while ultimately decreasing the knowledge loss.

Competing in a Candidate’s Market

Innovation can also help forward-thinking insurers stay ahead of the curve in today’s competitive recruiting landscape. For years, the industry has faced a fierce recruiting environment brought on by the lack of emerging talent joining insurance and an exodus of mid-level professionals who were frustrated with the lack of upward mobility brought about by delayed retirements. As a result, insurers often find it increasingly difficult to fill mid-level roles and maintain productivity levels.

Claims positions have historically been moderately difficult to fill, hovering around a five rating on a 10-point scale (with 10 being the most difficult). The recruiting challenge continues today with claims positions reported at a 5.1 difficulty rating in the most recent study, an increase of 0.4 since January 2018’s study. The difficulty is greatest among property and casualty carriers, where claims roles are rated 5.4. This highlights the fact that tenured claims professionals are less interested in changing positions as they near retirement and that the discipline is not attracting enough emerging professionals to build a viable talent pool. This passive candidate market is complicating many companies’ recruiting strategies and lengthening the time it takes to fill open positions.

To bridge the gap, insurers are collectively focused on attracting and engaging millennials and Generation Z. They are the protagonists of the future workplace, projected to account for more than 80 percent of the national workforce by 2020, according to the Society for Human Resource Management. These generations had access to cutting-edge technology since their pre-teen years and are less tolerant of outdated equipment and software than others.

Organizations should continue investing in upgrades and replacing old systems to live up to employee expectations. Whether or not a company has modernized its systems and equipment is important for the emerging generations as they consider potential job offers. Insurers that move beyond their legacy systems and pursue end-to-end modernization can stay technologically competitive and attract greater numbers of young professionals to their organizations.

As technology changes claims organizations at an incredible pace, insurers must positively approach innovation together with employees and explore the potential the future of work is poised to offer. Technology builds a solid platform to provide the best for both consumers and claims professionals for years to come. The wave of innovation can also assist insurers in attracting top talent and emerging professionals to their organizations. The possibilities that technology can contextualize are limitless, and only those who embrace the changes and look ahead can turn “disrupters” into formidable assets.

About The Authors
David E. Coons

David E. Coons is senior vice president of The Jacobson Group.  dcoons@jacobsononline.com

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