27 jul 2016
A tech-savvy future for insurance
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Creating a diverse workforce in the London Market
Our recent interview with London Market Group (LMG) Chief Executive Officer Ben Reid examines the threats and opportunities facing the insurance sector at great length. Whilst London remains the world’s leading insurance and reinsurance hub, it is under pressure on all fronts. One major concern deserving further consideration is the London Market’s mixed record in attracting a diverse workforce from outside its traditional hunting grounds.
With this in mind, the LMG recently launched the first market-wide talent report, based on research undertaken by Deloitte. The report identified a number of challenges and opportunities in building a talent base across the London insurance and reinsurance market and highlighted some of the current and emerging skills gaps. It is fair to say the same dynamics can be seen across the wider insurance industry in the UK as discussed below.
Of particular interest is the changing work patterns driven by technological and digital advances and the rise of the Millennials. The tried and tested path of building a career from an entry level administrative position is disappearing as roles are increasingly moving away from London and the UK, or being replaced by technology. The likelihood is that in future, the London workforce will be smaller…but highly skilled.
By 2025, Millennials will make up 75% of the global workforce. The expectations they have about a career path will differ markedly to what we have seen before. Consequently, companies will have to work harder to retain and develop talent.
The industry has been hiring talent from outside insurance but could do far more and has not always been outstanding on retention. Chief Marketing Officers, Customer Insight and Analytics professionals and Chief Digital/Data Officers have moved into the industry from sectors such as telecoms, FMCG and utilities and have gone on to hire more diverse talent into their teams. The boards of insurers are having success appointing NEDs from the technology sector as they recognise insurance is playing catch up in terms of revolutionising itself.
There is a huge pool of talent available, with a workforce of circa 1.7 million skilled workers in London alone, recently rated the highest skilled city in the world. Earlier this year, HM Treasury commissioned EY to deliver an evaluation of the UK’s fintech environment in which London was voted the global fintech capital, employing over 61,000 people and generating £6.6bn in 2015.
The key factor in London’s success in attracting fintech (and ‘insurtech’) skills is an ecosystem made up of talent (available technology, financial services and entrepreneurial talent), capital (significant resources for start-ups and scale-ups), policy (a supportive government and interested regulator) and demand (from consumer, corporates and financial Institutions). Yet at the same time, the insurance industry scores relatively low for graduate career preferences, ranking 18th out of 30 for the most popular career choices, according to Deloitte’s 2015 graduate career survey. So, how to attract technology savvy graduates and experienced hires to a career in insurance?
While automotive telematics and data driven health products have been around for a decade, there is now real impetus in the way they are impacting the lives of consumers. The idea of monitoring and rewarding “good behaviour” is powerful and can be seen in the growth of gamification, wearable tech and lifestyle products.
In this new age of personalised, data driven product development in insurance, the industry has a fantastic opportunity to place itself at the forefront of many of the changes in society. A new service proposition beyond renewal and claim is required and the onus on the industry is to better understand and connect with the customer.
To counter business model disruption from outside the industry, insurers are increasingly working in partnership with start-ups and developing in-house capabilities. “Data driven curiosity” is on the rise and insurers are searching for ways to remain relevant to their customers.
Traditional motor insurance will fundamentally change with the onset of driverless cars and new products are being created for cyber, robotics, AI and drones amongst others. As Internet of Things (IoT) devices become more prevalent, giving rise to new insurance models, the battle between insurers, utilities and consumer product manufacturers will be over who owns the customer relationship. Will Samsung and Apple be more trusted by consumers to insure their IoT products than the insurers themselves?
Change is a constant and the pace of change is accelerating. The impact of digital and technological advances is stoking demand for new talent and catapulting insurance to the forefront of this rapid change. An insurance career has never been so attractive and exciting!