New era, new skills

In just one generation it has become hard to find someone who has spent their entire working career with a single insurer, broker or loss adjuster. What was commonplace up until the early 1990s is now almost unheard off. In place of such reassuring stability, redundancy now features on an increasing number of CVs.

Mergers, cost-cutting, automation, competitive pressures, regulatory demands and financial crises have all played their part in swelling the toll of lost jobs in the insurance sector. Now we have to add to that the impact of a new wave of technological innovation with artificial intelligence at its heart. This could make the upheavals of the past 25 years look modest.

Steve McNamee, managing director at Exchange Street, said recruiters were seeing this shift in emphasis first hand: “Consolidation is not as much of an issue as it was five years ago. While it is still an issue in the broking market, acquisitions have slowed so maybe consolidation has gone as far as it can for the short to medium term. Cost cutting is now the big issue as insurers need to become more efficient in what is a heavily saturated market.

“Technology is probably the key driver. Aviva recently asked all of their staff whether they could be replaced by a robot, and it is inevitable that this will only grow in the future.”

It isn’t just the ranks of clerical and administrative staff that are most threatened but the once sacrosanct, highly paid roles of actuary, underwriter and risk analyst. Any role that involves handling data and making decisions based on the interaction of different data fields could be vulnerable. Many in the insurance industry did their best to ignore the research findings from Oxford University published just over three years ago that warned these roles could be replaced by AI-driven algorithms.

This highlighted key insurance jobs as the most vulnerable to automation over the next decade. Once dismissed, that reality is now with us.

The authors of the research paper, entitled The Future of Employment: How Susceptible are Jobs to Computerisation?, looked at 702 occupations and assessed their vulnerability to the advance of technology. Out of those jobs, insurance underwriters were ranked as the fifth most likely to be eliminated by technology. Insurance claims and policy processing clerks fared only a little better, coming in as the 14th most vulnerable. See The Rise of the Machines, Insurance Post 

This doesn’t mean the pressures on jobs from restructuring, competition and cost-cutting have relented. A recent global survey of insurance CEOs by PricewaterhouseCoopers revealed that a quarter expected to make staff redundant in the next year and this is certainly being seen in the UK with Allianz, Axa, Towergate, Kwik Fit and Markerstudy among the firms to slash staff already this year.

That larger firms feature prominently among those shedding jobs shouldn’t be a surprise, says McNamee: “Large insurers are more likely to reduce staff than smaller insurers. Large composites insurers are still facing legacy staffing issues from takeovers, as well as being historically over-staffed themselves in many areas. Most smaller insurers tend to be run more efficiently so there is less scope for additional cost cutting”.

In the claims sector the drivers seem to be different, say McNamee: “Adjusters tend to make cuts to staff numbers if they lose a big contract with an insurer. Most of these deals are for three years, so there is always some churn at the end of them, with staff being made redundant by the adjuster that loses the contract and then being taken on by the adjuster that won the contract”.

If the Oxford academics are right, skillsets that were once considered core to insurance may no longer in demand as they once were but CEOS are worried about skills shortages. 91% of those responding to the PwC survey said they are one of the biggest threats to growth. This reflects concerns raised in the Chartered Insurance Institute’s regular skills surveys.

The focus of concern when it comes to skill shortages is increasingly on the InsurTech revolution which is gathering pace across the industry. This is where those who want to thrive in the industry in the future must focus their attention said Thomas Peplow, UK development lead for consulting actuaries Milliman in a recent blog although he offered some words of comfort for those with long experience in the industry who feel threatened by this trend: “It may be that younger staff are better versed in InsurTech culture and the opportunities of data analytics, than older generations. But young, digital talent will only be attracted to businesses that offer an environment in which they feel they can thrive.

Insurers can create a breeding ground for innovation by combining new data science skills with their existing in-depth knowledge of the industry.”

Consultants KPMG also offer genuine hope for those who fear that traditional skills will be pushed aside: “Recruiting talent and talent development of the right skills needed for success in the digital world is a major challenge for insurance companies. Digital channels will probably require fewer people, and people with a potentially different skill set. However, insurers must also preserve and transfer the critical expertise of seasoned actuaries, underwriters and other professionals. Getting the balance right can be challenging in part because insurance companies operate in highly regulated environments”, says KPMG.

This is translating into some genuine opportunities for the right people, says McNamee: “There are still plenty of opportunities for skilled underwriters within many of the smaller specialist insurers. In the broking sector, a number of experienced account executives have gone down the Appointed Representative route which has become very popular over the past 3 years. Also short term contract work is more prevalent these days, so there are still good options out there for experienced professionals. Location can also be important – you may need to be flexible and be prepared to move to find the right role at the right salary level.

“Candidates with professional qualifications such as ACII and ACILA are still highly sought after, as are underwriters with strong relationships with brokers in the regional markets. Trading skills will always be valuable. Underwriters in specialist technology markets, for example life science and biotechnology are currently in demand”.

The days of life long careers with one company might be behind us but for those with the right skills and an eye on the future the message is that you shouldn’t despair when it is your turn to have that awkward conversation that starts with ominous words “Your role is under review”.

McNamee’s top tips

• Build up good relationships with two or three specialist recruiters. They will often be aware of opportunities which are not publicised, as well as knowing which companies are likely to be expanding.

• Make sure you highlight transferable skills and ensure you are up to date with the latest technology.

• Obtain professional qualifications and keep learning as many new skills as you can.

David Worsfold

David Worsfold

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