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This is a dynamic time in the insurance industry. As the 2017 Accenture Technology Vision for Insurance reports, ecosystem powerplays and AI advances are both poised to rewrite the insurance innovation landscape.
But the theme of this year’s report—technology for people—is a reminder that insurance will always remain a people-centered business. Insurers use a team of people to create value for other people. Firms that manage their teams well have an advantage over those that do not. Recent technological advances have opened the door to new workforce management tools that could transform not only the insurance industry but also the broader economy.
New workforce marketplace tools give insurers the chance to invent their own future.
An approaching skills crisis
The arrival of these tools is fortunately timed, as insurance is facing a pending skills crisis.
Bureaucratic management models have played a large role in the past success of the insurance industry. These models work wonderfully in times of stability. But the insurance industry is increasingly dynamic and the bureaucratic approach stifles innovation and favors the status quo by design. Three quarters of insurance executives surveyed report that corporate bureaucracies are a hurdle for innovation.
Further, many experienced industry professionals will retire in the next few years. The Insurance Information Institute, an American industry association, estimates that half of the insurance workforce in the United States is over 44 years old. A quarter of them will retire by 2018. The industry needs to do more to attract top-tier “digital natives” to replace them, as AI and the need to orchestrate ecosystem powerplays change the typical insurance job.
Insurers are acutely aware of the need to rethink their approach to talent. Of the industry executives surveyed, 62 percent planned to increase their organization’s use of independent freelancers over the next year. Yet just 23 percent said they currently view freelancers as a seamless part of the workforce. Almost 80 percent said their organization is under competitive pressure to boost innovation in the workforce and corporate structure.
Addressing this growing challenge will take creativity and new skills. The insurance workforce of tomorrow will expect to find pervasive collaboration technology at work. They will be open to—or maybe even looking for—freelance and portfolio careers. Insurers will need to master new labor platforms and collaboration tools to attract the workforce they need.
Some insurers are already taking steps in this direction. When State Farm needed to test whether dashboard cameras could detect a distracted driver and automatically alert the driver, it used Kaggle, a networking platform for data scientists, to crowdsource machine learning solutions. Other insurers, like Allstate and AXA, have also used Kaggle.
The new global marketplace for skills
Platforms like Kaggle offer insurance carriers the ability to test new talent management practices without immediately making permanent changes to their existing business models. Other popular platforms of interest include Freelancer, Gigster, Upwork and Catalant. These services are already quite popular. Upwork reports more than $1 billion per year in freelancer earnings and is used by 20 percent of the Fortune 500. Catalant has a network of over 30,000 MBA-type consultant freelancers. Almost 30 percent of insurers surveyed are using platforms like these on a large scale, with 48 percent using them in select business areas.
The opportunity to experiment with services like these before tinkering with core business models will be welcome in a broadly conservative industry like insurance. Some insurers have created innovation labs or red teams to nurture the next generation of digital talent and solutions. Others are experimenting with partnerships [LINK to post #3] to move into the new global marketplace for skills.
Unshackling digital ventures
The most proactive firms are spinning out their digital ventures into independent companies, granting them the latitude to chase disruptive business models without legacy technology and processes. For example, Allstate has launched a transportation startup called Arity to capitalize on the 20 billion miles of driving data and more than one million active telematics connections at Allstate’s disposal. Arity will sell telematics solutions to automakers, ride-share companies and even traditional Allstate competitors.
Other leading insurance incumbents are making insurtech investments. In 2016, deals involving insurance tech startups grew 42 percent to top $1.7 billion across more than 170 transactions. XL Group’s Innovate arm invested in Slice Labs, an on-demand insurer for ride-share drivers and home-share owners. The insurance comparison portal PolicyGenius attracted capital investment from three different legacy insurers.
Workforce marketplace predictions
When it comes to fast-changing workforce management tools and the pressing need to find new talent practices, we predict that:
- Within five years, talent marketplaces will provide workers with improved earning opportunities and more rewarding work, secure benefits and respected credentials compared to traditional full-time employment.
- Within five years, most industries will have new, dominant leaders whose businesses are structured on small cores and powerful ecosystems. Corporations still burdened with legacy bureaucratic business models will experience an erosion of market power.
- In the next five years, on-demand labor platforms will emerge as a primary driver of economic growth in developed and emerging economies worldwide.
The examples above provide a glimpse of the digital tools that are already transforming how insurers find and manage talent. But what does the digital revolution mean for how insurers treat their customers?
Next week, we’ll look at how technology’s expanding capabilities can help insurers make life for their customers better. In the meantime, the full Accenture 2017 Technology Vision for Insurance report—which includes 100-day and one-year plans for insurers to get ahead of tomorrow’s workforce marketplace—is available here.