Talent strategies for today’s insurers

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Insurers have been losing the war on talent. It’s time to change the odds.

For years, insurance carriers have been trying to reinvent the way they attract, motivate and retain employees to stay relevant to the modern workforce. While some have certainly had successes, many have fallen short — and with the median age of insurance company employees already higher than other financial sectors, replacing talent is fast becoming a critical issue. This isn’t just about losing developers to Silicon Valley. Across a full range of job categories, the industry is often seen as both limited and limiting by geography, incentives, career paths and more.

Over the past year, more immediate concerns dominated the spotlight, prompting us to publish COVID-19 and the insurance industry with practical steps for responding to the crisis. From the office environment and stress to the human resources function itself, the advice still applies. But the crisis overshadowed a deeper underlying risk: Insurers have largely been losing the war for top talent.

Now, there’s an opportunity to change the odds. The pandemic has forced companies to rethink the purpose of office work, but it’s also opening up exciting possibilities to reskill teams, redefine the nature of jobs and recalibrate incentives toward what today’s workers value most. This complements other key strategic priorities, including revamping the distribution model and developing a meaningful ecosystem strategy. But there’s a hidden warning, too. If your company doesn’t take these challenges seriously and its competitors do, you could see a significant talent flight that could have an impact on all of your company’s priorities.

Insurance talent strategies

The talent challenges for insurers: skills gaps, aligning incentives, and more

In the current environment, managing talent is undoubtedly complex. There are many big issues to tackle, including how to make change stick, how to achieve diversity and inclusion (D&I) goals, and how to address broad environmental, social and governance (ESG) concerns. For the insurance industry in 2021, though, four issues stand out.

  • Many companies aren’t ready for the potential fallout of a return to office work.
  • There’s a growing skills gap that insurers are struggling to close.
  • Insurers often make outdated assumptions about the importance of full-time, in-person work.
  • Compensation and benefits are increasingly misaligned with what workers want and expect.

Back to the office won’t mean back to normal

As vaccination rates rise and infection rates fall, some companies are pushing to bring everyone back to working in the office. We understand the appeal, but for millions of people, working from home turned out to be surprisingly feasible, welcomed and productive. One insurer we know had been steadily improving its employee engagement scores, listening to its people and connecting back to its purpose. After announcing a mandatory back-to-office policy, it experienced a strong backlash. Many employees saw the move as uncaring and misaligned with the company’s stated values.

That company isn’t alone. Many have stressed their willingness to listen to and care for their employees over the past year. Requiring the full team to come back could put the goodwill at risk, especially for dominant employers in relatively small markets. And the loss could be consequential. The pandemic has shown that people can increasingly work from anywhere and for companies based anywhere. “Remote” is now among the top search terms for job hunters.

This is where our research shows a huge gap between employer and employee attitudes. Broadly speaking, management wants to go back to the office, but employees aren’t fully on board. Many tech companies like Salesforce and Dropbox are giving many employees the option to work from home indefinitely if they wish. Others are taking more of a middle ground. Microsoft recently said, “it is our goal to offer as much flexibility as possible to support individual workstyles, while balancing business needs and ensuring we live our culture.” And, in the insurance industry, Nationwide announced plans last spring to permanently move to a hybrid operating model with employees working primarily from the office in four main corporate campuses and at home in most other locations. These high profile moves could raise the pressure on companies that reflexively call all their workers back to their desks.

Financial services workers on site

It’s getting harder to close the skills gap

Employee skills don’t always keep up with industry innovation. In a 2019 survey on financial services industry productivity, 81% of global insurance respondents said they were somewhat or very concerned about the availability of key skills, “putting pressure on costs and impairing organizations’ ability to innovate and meet customer expectations.”

And now, talent needs in the insurance sector are changing. Carriers still need core, industry-specific capabilities, but they also require skills like digitization, data science, behavioral economics and user experience design. Companies also need this talent under different terms, like project-based, short-term, designing and implementing new initiatives rather than executing steady-state operations. Yet pervasive digitization, which has been accelerating during the pandemic, means these skills are increasingly in demand across all industries. That means your firm isn’t just competing against peers for talent — it’s competing against the world.

Many insurance roles are already changing. Carriers have relied on people to handle relatively repetitive back-office tasks like the manual aspects of claims processing, policy renewals and fraud detection. Much of that rote work can now be automated and done virtually. What companies still desperately need is smart people who understand industry processes, can think through ways to make them more efficient and can pivot toward analysis and service. That leaves a growing gap between what current talent can offer and the power skills that employers really need, like self-direction, digital capabilities, empathy, communication management, adaptability and motivational aptitude.

Full-time or Full-time equivalent?

Many of the most valuable companies in the world now rely on a mixture of full-time employees and gig economy talent that they can access on-demand. Beyond cost efficiencies, the approach makes it possible to access a full spectrum of talent, from workers with undifferentiated skills to professionals with highly specialized expertise. In contrast, most financial institutions still rely primarily on more traditional employment models. In our 2020 Financial Services Productivity Survey, we found that only 5% of employees can be classified as gig workers now. But more than half of our survey respondents plan to have more gig-based employees over the next three to five years, driven by continuous cost pressure and the need to access digitally skilled talent.

Financial services increase gig-based employees

Getting to this point, though, will require overcoming several obstacles, including confidentiality concerns, a lack of knowledge, regulatory risk and overall risk avoidance. Companies also often have deeply ingrained procurement practices, particularly for talent. Supplier contracts with larger institutions can literally take years to complete, and it can be very difficult for new entrants to break down these barriers.

Incentives may be misaligned with what workers want

When today’s insurance executives joined the industry, the implicit corporate promise was very different from where we are now. Insurers traditionally offered stability: You can work here for 30 years, have a solid career with a reliable, respectable employer, and have a life. The appeal is undeniable, and yet it doesn’t intersect well with what many top tier job seekers want today.

Blame it on larger shifts in the economy. Older and younger employees are increasingly skeptical of that traditional vision, although for different reasons. Experienced workers have seen enough examples of companies breaking implicit promises around pensions and healthcare programs. They are wary of making tradeoffs in favor of stability, if they can’t trust that stability.

Younger employees may compare their own experience to peers working at other companies that they perceive to be more dynamic. Here’s a broad generalization from what we’ve found in our own firm: New workforce entrants are ambitious, they want to keep learning and advancing through the professional ranks, and they’ll move on quickly if their expectations aren’t being met. They want an employer with flexibility, work that is worthwhile and recognized, and ongoing feedback and encouragement. This description doesn’t match the workplace at many insurers because the cultural emphasis on risk management has led many companies to support rigid organizational hierarchies and specialization.

Today’s insurance jobs are rarely designed for the kind of career growth people now expect. They could be, but it won’t happen without a conscious effort. Consider that for many job seekers, gaining exposure to new experiences and building skills — and having more flexibility — may be at least as important as compensation when weighing competing offers.

Choosing to win: talent strategies for today’s insurers

Planning for a world of hybrid work

Companies have never had an opportunity quite like this to reenvision how they work. On the one hand, financial firms have been generally slower to announce work-from-anywhere policies. On the other hand, most of our clients are exploring what it would mean to embrace virtual working models. In many ways, these moves dovetail with other stated corporate objectives involving evolving social norms, commitments to culture and the way people work and interact in society.

By design or default, we expect that even laggards will move to adopt a more hybrid design over time. But there are very real issues to address. It’s time to reinvent how work gets done to enable a more virtual workforce, including training around remote collaboration, coaching and managing a remote workforce and reinforcing a common culture. We can all learn from global companies that draw together workers from São Paulo to Seoul to San Francisco. Companies that get it right will let everyone feel as if they are “in” the home office rather than a second-tier location, regardless of where they physically sit.

Overall, many insurers may turn to mobility standards — the degree to which an employee works from home — that vary by an employee’s role.

Finally, your real estate strategy may change significantly. In our December remote work survey, most executives told us they’re actively reviewing their holdings. Space needs now should factor in how many workers will be in the office each day, how much space they’ll need to be productive and still meet any health safety concerns, and whether companies will reduce their existing real estate footprints as they move to more remote work models or use flexible office space to meet fluctuating space needs.

Reinventing where work gets done

Real estate strategy in transition as companies anticipate multiple changes


Consolidate office space in at least one premier business district location
%
Open more locations, such us satellite offices in suburbs
%
Consolidate office space, but outside of major cities
%
We are not making changes to our real estate strategy over the next 12 months
%

Q: What changes are you making to your real estate strategy in the next 12 months?
Source: PwC US Remote Work Survey
January 12, 2021. Base: 128 US executives

Upskilling for today, and redesigning jobs for tomorrow

Adding skills

Many insurers tell us they struggle with a balancing act. Do we recruit technologically adept employees who understand the subtleties of the industry or help existing staff add digital literacy to their existing domain knowledge? This tension may increase, because even sophisticated functions such as underwriting and actuarial work include elements that could become irrelevant. Often, companies treat this as a short-term problem, moving work offshore rather than investing in talent they have. It rarely works the way they hope. There’s another option: helping someone reinvent themselves as a data scientist to enhance predictive analytics involving claims probability, establish customer risk profiles and rethink pricing models.

Digital skills are an ongoing need across an entire organization. What we know today may seem quaint in a decade, as drones and Internet-of-Things sensors and augmented reality become more commonplace. But for teams that are committed to the idea of innovation, these just become the latest tools to leverage. In The digital insurance workforce: going beyond aspirations, we describe six foundational steps that are common to every meaningful digital upskilling effort. As we’ve seen in our own firmwide digital upskilling efforts, putting a digital workforce into place is as much a matter of winning hearts and minds as it is of strengthening specific skills.

Rethinking roles

You’ll also want to skate to where the proverbial puck will likely be. Look at the roles across your organization and redesign them now for a digitized industry and a hybrid workforce. Our ProEdge product, which actively scans job descriptions to stay on top of which skills are in highest demand, shows how jobs are already changing. Consider these three examples:

Sales representatives

Sales reps have traditionally succeeded through strong interpersonal and networking skills — skills that may matter less now. As we note in Forces shaping insurance distribution, tomorrow’s sales reps will need to be comfortable with customer-relationship management (CRM) systems. They’ll need to demonstrate, using data-driven insights, how your products can benefit your customers.

Skills needed now

Skill needed in the future

 
  • Presentations

  • Sales

  • Written communications

  • Digital storytelling

  • Marketing automation

  • Intelligent automation

  • Digital marketing

 
Rethinking insurance roles: Sales representatives
Claims adjusters

In the past, property and casualty claims adjusters inspected property damage and interviewed policyholders to understand a given loss incident. But the overall claims-handling process will likely be far more automated, with significant self-service, virtualization and straight-through processing. Carriers may need fewer people to “run the machine,” paying more attention to managing exceptions. The customer-facing workforce will probably be equipped with productivity and decision tools that are highly scalable and efficient, potentially built around a robust or defensive claims handling strategy.

Skills needed now

Skill needed in the future

 
  • Customer service

  • Communications

  • Detail oriented

  • Custom service

  • Data analytics

  • Problem solving

 
Rethinking insurance roles: Claims adjusters
Underwriting support specialists

Insurers have relied on staff to handle the varied clerical work associated with day-to-day underwriting operations, helping address broker requests and keeping the back office moving. As much of this work becomes automated, it won’t make sense to have people toggling between disparate systems, but there will still be problems to resolve. This means a reimagining of the role and a need for a fundamentally different skill set, including using automation tools and the ability to derive new insights from data — including new sources such as sensors and external partners.

Skills needed now

Skill needed in the future

 
  • Written communications

  • Problem solving

  • Sales

  • Data visualization

  • Data analysis

  • Data management

  • Data science

  • Data modeling

 
Rethinking insurance roles: Underwriting support specialists

Rethink what it means to add staff

“Once you're open to creating a hybrid or remote plan, you can compete for talent in any market in the country.”

Julia Lamm, Global Workforce Strategy Leader, PwC

Recruiting

One of the most lasting effects of the pandemic may be the way it changes our world view of the labor market. For insurers, this could be a game changer. As we’ve noted, you shouldn’t take success for granted when it comes to hybrid work. But once you’ve decided to turn remote work into a core strength, you can compete for talent in any market in the country. If you’re based in New England, you can now make a credible appeal to people with the skills you want, even if they are committed to staying on the West Coast. If your offices are in Florida, you can still turn to project-based workers in Pittsburgh or a contract group in Austin. Most companies we know are still dealing with lingering talent challenges from this year of crisis. But by doubling down on working through these challenges, rather than reverting to what you already know how to do, you may be able to improve your competitive position for years to come.

Capitalize on flexible work models

Some high-appeal talent may be willing to work for insurers using a more flexible work model, such as part-time or on-a-project basis — but this avenue is often untapped. In our most recent financial services productivity survey, insurers reported using a lower share of contingent labor, fewer plans to access contingent labor in the next three to five years, and a lower likelihood of using talent platforms as a means to access this talent relative to other financial services firms.

Manage the risk of flexible work models

Some high-appeal talent may be willing to work for insurers using a more flexible work model, such as part-time or on-a-project basis. Carriers could benefit from this, gaining access to highly qualified talent as needed, especially if they can’t justify adding a role on a full-time basis. As the nature of work itself changes, carriers could augment their teams with contingent labor until their needs are more defined.

In Here today, gone tomorrow: contingent workers in financial services, we examine the risks affecting the use of independent resources — and there are many, from data security and regulatory mandates to the effect on the full-time workforce. But this, too, is a competency that can (and should) be developed. By developing the ability to scale your workforce up and down as needed, you’ll be able to respond far more quickly to rapidly changing markets.

What workers want

Make career paths more dynamic

Several years ago, we published an article on the value of finding broader career paths to retain talent in control functions such as audit, risk and compliance. In that report, we noted that there are departments across a company that need employees with regulatory expertise (or a cybersecurity background, or analytic skills) — and that cross-training and job rotations can be both healthy for the organization and motivating for employees. The advice still holds true across financial services — and it may have even broader resonance within insurance. As carriers build out their ecosystem strategy, they will likely have an ever greater need for employees who know their craft and want to want to apply it more broadly.

Emphasize flexibility over stability – and mean it

Flexibility can be learned and built into a culture. It applies to how you treat existing talent and how you source new capabilities. Even during the pandemic, with work-life balance often blurring, many people on your current team may prefer having more vacation time to a pay raise. By allowing for experimentation in alternate work weeks, you may gain far more in employee engagement and loyalty than you might lose in productivity. The same applies to external resources: using programs like PwC’s own Talent Exchange, you may be able to scale your team far more effectively than sourcing and hiring full-time staff. This even applies on a larger scale. While your corporate development group may see value in acquiring an InsurTech startup, you may really just need that team’s strengths for 18-24 months. The InsurTech may be open to working out an arrangement while it builds up a sustaining revenue stream of its own.

Share your story

As people long for opportunities to make their work more purpose-driven, insurance companies stand to benefit. At its core, the industry offers a way for people and businesses to be more resilient in the face of adversity. It’s here to help, and this is a message that can resonate for recruiting and retention. It’s also worth noting that there’s a connection between upskilling and wellness. Employees want to feel that their work is making a meaningful contribution to an organization’s mission. As insurance companies proceed with their digital transformation, they are becoming some of the most dynamic workplaces in the country — and this is also a message to promote. Today, it’s possible to go into insurance at an entry level and have immediate responsibility and more interesting work than a corresponding position at a tech firm. The culture and brand perception are going to be different, but the daily work experience can be very appealing.

Talent: the choice insurers face

How companies respond to the post-pandemic rebound says a lot about how they see their future. For insurers, it could be particularly telling. Faced with the pivotal moment, some will likely retreat to what they know. Others will likely note that the business environment has changed, and they need to make changes too.

For talent, as with the other insurance top trends we’re highlighting in 2021, these changes have been coming for a while. The industry has had a staffing problem. The emphasis on full-time work has been feeling dated. The employer-employee value proposition has been strained as worker priorities have shifted. What’s different? The recognition that companies now have the ability to address these challenges.

We’ve all been jolted out of our routines by this pandemic event. But we have also learned that our teams are surprisingly capable at adapting to entirely new ways of working — learning new technologies, reinventing processes and supporting each other. Like a child riding a bicycle without training wheels for the first time, many of us are looking around and saying, “We can do this.”

It’s not time to sign up for the Tour de France — yet. Adapting to new ways of working will not be a one-time process. Rather, carriers should expect a continuous evolution over time in response to new technologies, market developments and changes in consumer preferences and competitive dynamics. Many incumbent carriers have cultures that are proudly traditional with deeply established processes, and they may have a harder time implementing change. But we are reassured by the work that we have already seen leaders do and we earnestly hope that others will seize the opportunity to reimagine the way they acquire, incentivize and retain talent.

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Julia Lamm

Principal, Global Workforce Strategy Leader, PwC US

Matt Adams

Insurance Practice Leader, PwC US

Ellen Walsh

Insurance Advisory Leader, PwC US

Marie Carr

Global Growth Strategy, US Financial Services Practice, PwC US

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