Navigating the Talent Storm in Insurance Proven Strategies for Retention & Growth in the Digital Age
Table of Contents Introduction
03
When hiring your way out isn’t an option… Section 1
04
Turning talent shortage into opportunity Section 2
06
Keeping the talent you already have Section 3
09
Addressing culture issues & manager expertise 11
Section 4
13
Section 5
15
Section 6
17
Conclusion
Upskilling and reskilling with personalized learning
Overcoming leadership challenges
Moving on from legacy technology
Toward a future-ready talent base Page 2
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Introduction
When hiring your way out isn’t an option… It’s not every day that an entire industry has to reinvent itself. But leaders in the insurance sector find themselves in unprecedented times. Thanks to significant challenges—new and old—reinvention is now a strategic driver for executives in the insurance industry.1
Of which talent management stands to play a critical role.
This won’t come as a surprise to HR professionals trying to source and manage talent. Just finding it is difficult enough: in a labor market only expected to grow 0.3 percent annually over the next decade, eighty-three percent of HR leaders struggle to find adequate talent.2 That’s for an industry in which total turnover was 14 percent for the past 12 months.3 In other words …
Welcome to the talent storm.
Despite the challenges associated with sourcing and retention and disruptive technology, it’s not all doom and gloom. With reinvention firmly on the strategic map for insurance executives, it’s just the right time to rethink talent management.
Let’s face it: even a thriving insurance brand can’t magically conjure new talent in a stagnant labor market. It’s just not there. What talent is available is subject to fierce competition in what’s already a fiercely competitive industry.
The good news is that insurance brands can do a lot more with the talent that they already have. Consider this: replacing an employee can cost 100+ percent of their annual salary. Upskilling or reskilling? Less than ten percent.4
The plan here is to provide you with a comprehensive look at the talent storm facing HR leaders in the insurance industry. We’ll discuss the most pressing challenges facing your organization right now, as well as recommendations for overcoming them. Key themes we’ll be covering: Strategies for overcoming the labor shortage in insuranc Mitigating turnover at various stages of the life cycl Helping employees fill critical future skills gap Building both vertical and lateral career pathway Accelerating digital transformation and literac Empowering managers with support, coaching, and insight Addressing the most common leadership challenge Tailoring more personalized learning experiences for employees 1Total Enterprise Reinvention (Accenture)
2Employment Projections: 2022-2032 Summary (U.S. Bureau Of Labor Statistics); Leadership Vision for 2024: Chief HR Officer (Gartner) 3Q3 2022 US Insurance Labor Market Study Results
4Transforming the talent model in the insurance industry | McKinsey
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Section 1
Turning talent shortage into opportunity The most pressing challenge facing the insurance industry today is an aging workforce. More than 75 percent of the insurance industry’s workforce is older than 35, and professionals aged 55 and older have surged by 74 percent in the last decade.5
As this population gradually leaves or retires, the insurance industry will be left with some 400,000 positions to fill.6 Given the stagnation predicted by the U.S. Bureau Of Labor Statistics over the same period, there won’t be enough talent to meet this demand.
Of course, the talent shortage is only part of the story. Even with the right talent, the nature of insurance jobs themselves is changing due in large part to evolving technology and consumer expectations.
For example, the share of today’s insurance customer that expects 24/7/365 support from their insurance carrier is up 45 percent since 2018.7 They prefer to submit claims via mobile, too, and the share that would switch carriers entirely due to the absence of a user-friendly digital experience is up 80 percent.
75 percent of the insurance industry’s workforce is older than 35 Source: U.S. Chamber of Commerce
Given how rapidly new tech is changing customer expectations, it's no wonder that nearly forty percent of insurance employees think their jobs will be obsolete within the next five years.8
Recommendations for tackling the talent shortage
There’s a lot on the line for the HR professionals tasked with navigating the talent shortage. Typically, talent shortages are accompanied by incremental cost increases (i.e., it takes more by way of salaries and benefits to attract and retain what talent is available).
Customers will ultimately feel the squeeze, too. Higher premiums, in some cases. Reduced quality of service, including longer wait times, fewer options, and less personalized attention. A lack of innovative digital channels and insurance products. All of which can threaten long-term profitability.
5The America Works Report: Industry Perspectives | U.S. Chamber of Commerce
6Ibid.
7Next in insurance: Top insurance industry issues in 2022
8 Insurers can win the war for talent—if they tell their story
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Two core strategies HR decision-makers can use to address the talent shortage:
Invest in Upskilling and Reskilling Programs
Build Diverse Talent Pipelines
Upskilling and reskilling programs can help
Companies with diverse leadership teams
insurance companies to develop their
average 36% higher profits than those with
employees' skills and ensure that they have the
non-diverse teams.10 The key is to identify
skills they need to succeed in the digital age.
which and how many workers are currently on an upward path to fill critical roles.
One way to kickstart upskilling and reskilling is to use workforce analytics to predict, identify,
Use that data to make sure your talent pipeline
and hopefully address skills gaps.9
is as representative as the leadership teams you’re trying to build. You can also use analytics to see gaps in career pathways that might be inhibiting your DEI goals.
Success Story
From Salesforce end-user to application support
Jorge Peraza didn’t know that Pathstream’s Salesforce Business Analyst Certificate would transform his career. But it did. Taking advantage of his employer’s education benefits, Jorge enrolled in the certificate program to deepen his existing Salesforce skill set. Today, he works as a Senior Desktop Support Representative at Sunrun, where he uses his newly acquired Salesforce and business analytics skills daily.
“Many lessons included written content supplemented by a video to reiterate the information. Then, that information is revisited during the hands-on portion, and you apply your new skills in a business scenario. This type of teaching made the knowledge stick.” Read Jorge’s story.
9Ibid.
10“Diversity Wins,” McKinsey (May 2020)
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Section 2
Keeping the talent you already have Even without an aging workforce, the insurance industry has an employee retention problem. The same can be said for nearly every major industry in the country.
The 2023 State of Employee Retention Report found that more than three-quarters of HR professionals say that employee retention is either a top priority or among the top three priorities at their respective organizations.11
Understanding why insurance professionals leave their jobs
If you ask your employees, they leave because they want better work experiences. Or they think they’ll find better management and employee development opportunities elsewhere. Ask HR professionals, and the answers are a bit different.
What do you believe are the drivers of employee turnover within your organization? Compensation and benefits-related issues (63%) Nature of job (tasks, working hours, etc.) (53%) Management-related issues (50%) Employee development-related issues (44%) More remote job opportunities (33%) Culture-related issues (28%) L
ack of data and analytics associated with retention (21%) HR-related issues (19%)
11The State of Employee Retention 2022-23 - HR.com
0
20
4
0
6
0
8
0
Employees and HR professionals agree that inadequate compensation can lead to turnover. Take the insurance sales function, for example. Many frontline reps in insurance work for a low base pay plus a straight commission structure. This puts a lot of pressure on reps to meet the quota. Pair that with a trial-by-fire approach to training, and you’ve got a pretty reliable recipe for high turnover.
11The State of Employee Retention 2022-23 - HR.com
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Another top driver of turnover is the nature of the work itself. Think of the claims adjuster working long hours to manage a high volume of claims. They must attend to many moving pieces and interface with many different people—some of them quite upset—often while traveling a lot. Without strong compensation and realistic advancement opportunities, burnout might soon set in.
Breaking out of the vicious turnover cycle
Turnover tends to create self-perpetuating cycles. Beyond the high cost of replacing top talent in a skint, highly competitive labor market, we must remember who’s left behind once employees leave.
When asked for their top five negative impacts of turnover, 66 percent of HR professionals pointed to the increase in workloads of remaining employees. Another 49 percent highlighted lower morale among the remaining employees.12
More work → lower morale → reduced productivity and turnover → increased recruitment needs
A vicious cycle of turnover, indeed.
Of the following events of employee turnover, which five do you believe most negatively impact your organization?
Increase in workloads of remaining employees (66%) Lower morale among remaining employees (49%) Loss of productivity/performance (48%) Increased recruitment needs (47%) Loss of key employee skills (44%)
12The State of Employee Retention 2022-23 - HR.com
12The State of Employee Retention 2022-23 - HR.com
0
20
40
60
80
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As to how to improve employee retention, there’s work to do. Only 30 percent of HR professionals say their approach to retention is advanced—most (65 percent) are intermediate, beginning, or undeveloped.13 But we do know that organizations that retain employees will have the following in common: 3x more likely to hold managers accountable for retentio 2x more likely to have improved retirement benefits and insurance in the past yea 2x more likely to have introduced or improved WFH stipends 2x more likely to track what employees do after moving o 2x more likely to track turnover cost + time between promotion 2x more likely to have well-trained people managers Case Study
How Amazon Career Choice improved retention To address retention issues among its frontline workforce, Amazon Career Choice partnered with Pathstream to give 300,000+ employees access to a career mobility platform. The solution includes personalized career pathways for hard skills (i.e., data analytics), flexible learning schedules, and hands-on coaching. The results? Outcomes
Outcomes
Outcomes
Internal Mobility
Diversity, Equity & Inclusion
Amazon expanded access to Pathstream to
3x
Employee Retention
employees over the last 24 months
more teams successfully filled hard-to-fill roles with internal talent
increase in retention for participating Amazon Employees
of participating Amazon employees are people of color
Case Study
300,000+
208%
73%
It’s challenging to develop education benefits your employees will want and use. Read Education Benefits for Your Frontline for more on creating attractive education benefits. 13Ibid.
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Section 3
Addressing culture issues & manager expertise “Corporate culture matters. How management treats its people impacts everything—for better or for worse.” Simon Sinek said that, and he’s right. Insurance managers need to take the lead on culture to navigate the talent storm.
Manager engagement is one the most important aspects of building a successful internal talent marketplace.14 There’s just one problem…
Half of employees lack confidence in their manager’s ability to lead.15
What’s more, only 15 percent of organizations say their leaders are “ready to lead an expanding workforce inclusively” 16 percent say their leaders are “very ready to use technology to improve work outcomes and team performance” 18 percent say their leaders are “very ready to develop the right workplace model”16
This lack of confidence reflects a serious culture problem, one that can directly affect employee motivation, engagement, and performance.
As important as culture is for talent management, no culture type is perfect for all insurance companies. The right culture will depend on a number of factors, such as size, industry, and goals.
Each culture type has its pros and cons:
Pros
Cons
Hierarchical
Strong chain of comman Clear roles and responsibilitie Top-down decision-makin Risk-averse
Efficient decision-makin Clear expectations for employees Stable environment
Can stifle innovatio Can lead to employee dissatisfactio Can be slow to adapt to change
Clan
Family-like atmospher Strong sense of communit Collaborative decision-makin Focus on relationships
High employee moral Strong teamwor Loyal employees
Can be difficult to make decision Can be slow to chang Can be nepotistic
Market
Competitive environment Fast-pace Individualistic decision-making
Efficient decision-making Focused on result Competitive advantage
High employee turnove Cutthroat environmen Low employee morale
Adhocracy
Flat organizational structur Loosely defined roles and responsibilities Collaborative decision-making
Innovative Flexible Adaptive to change
Unstructured Difficult to manage
Description
14The Internal Talent Marketplace: Evolution and Future | Deloitte Insights
15Managers Are Cracking and More Training Won't Help | Gartner
16Leading in a boundaryless world | Deloitte Insights
Chaoti
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What strong culture and management looks like
To foster a more conducive environment for internal mobility and inclusivity in the insurance industry, start with management. Managers must be empowered with personalized data and insights about their employees to be effective in guiding decisions and interventions.
Employees will respond in spades. Employees who report to effective managers are more than 15x more likely to be high performers and more than 3x more likely to intend to stick around.17 So make sure to involve them in the process of cultivating your culture.
The higher the worker involvement, the more likely you’ll experience positive outcomes. The Deloitte 2023 Global Human Capital Trends survey found that organizations that co-create with workers are: 1.8x more likely to have a highly engaged workforc 2x more likely to be innovativ 1.6x more likely than their peers to anticipate and respond to change effectively Examples of insurance companies with strong culture & management
Known for its customer-centric culture and its focus on innovation. The company has a number of initiatives in place to promote customer satisfaction, such as its "Name Your Price" tool and its "Snapshot" program.
Known for its strong sense of community and its focus on giving back. The company has a number of programs in place to support its employees and the communities where they live and work. State Farm also has a strong commitment to diversity and inclusion.
17Managers Are Cracking and More Training Won't Help | Gartner
18Service Comes First
Has a number of programs in place to support its customers, such as its "On Your Side" claims service and its "SmartRide" program. Nationwide also invests heavily in its employees, offering a variety of training and development programs.
USAA long ago established its commitment to a service-first culture. The company has since become one of the largest P&C insurers in the country, with more than 36,000 employees.
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Section 4
Upskilling and reskilling with personalized learning Everybody learns a bit differently. Visual learners learn best by seeing information. Kinesthetic learners learn best by doing. Some people are more logical, while others prefer the abstract. Tailor your learning modes to each person’s needs, and you’ll put employees in a far better position to reach their full potential.
Find a way to personalize your learning at scale—for an enterprise talent pool—and you’ll take a significant step toward successfully navigating the talent storm. As an HR professional, you’re likely familiar with these types of learning—four of the most common insurance:
Self-paced learning
Learners progress through the learning material at their own pace.
Learners can choose to learn at a speed that is comfortable for them, and they can revisit material that they need to review.
Adaptive Learning
The learning material is tailored to the individual learner s needs and learning style.
Learners may be given different types of questions, feedback, or learning resources based on their performance.
Blended Learning
A combination of face-to-face and online learning.
Learners may attend in-person classes or workshops, and they may also complete online modules, assignments, or assessments.
'
focused learning activities that can be Microlearning Short, completed in a short amount of time.
Learners can use microlearning to learn new skills, review key concepts, or get a refresher on a topic.
A personalized learning program with the goal of effective upskilling likely combines parts of all four of these learning types—with a few caveats, as noted by Eleanor Cooper, CEO of Pathstream:
“While many organizations offer resources from benefits to mentorship, the challenge is guiding each employee to the right tools tailored to their unique journey. It's about seeing an employee's strengths and potential and providing them with the resources they need at the right moment. This not only empowers the individual but also bridges the gap between where the employee wants to go and where the company needs them to be."
Here, project-based learning makes a lot of sense. This approach gives learners the opportunity to apply their knowledge to real-world scenarios. These might include exploratory data analysis to advanced data visualizations, and business process analysis. Ideally, the project-based module not only helps develop critical thinking skills and problem-solving abilities but leaves learners with viable additions to their work portfolios.
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Toward more intuitive training and learning systems
That effort starts with developing more intuitive training systems. At a fundamental level, a personalized learning system:
Tailors resources for each employee’s unique strengths and weaknesse Reduces information overloa Meets full-time employees’ needs and can be completed on their schedule Provides human touch in the form of support from instructors, on-demand coaching, and personalized feedback
Ideally, the system’s design involves key business stakeholders, so that learning paths and outcomes align with broader business strategy. This can also help align learning journeys to critical roles. That doesn’t necessarily mean senior roles, by the way—a lot of organizational value comes from about 25 to 50 roles, many that are not senior-level.19 It’s this group that needs personalized learning and clear career pathing most. But they need to be engaged for personalized learning to be effective.
They need to feel
They need to trust
that their particular strengths and
that their organization wants them
weaknesses are accounted for.
to develop.
And they need to understand why and how their job may evolve—and how their training paths reflect that direction.
Ultimately, you can provide all the tailored benefits packages, career pathing, and internal development opportunities under the sun. But each individual employee needs to understand how to put these pieces together into something they can meaningfully achieve.
Success Story
Branch Manager uses new project management skills to boost productivity
Spurred by a promotion to Branch Manager, Erick Vivas decided to learn project management skills formally. He found a Project Management Certificate program offered by Pathstream through his employer’s tuition assistance program. On his employer’s dime, Erick learned the foundations of planning and initiating a project, stakeholder, and risk management, and other critical skills he could put to use in his day-to-day work.
Read Erick’s story.
19Nine keys to becoming a future ready company | McKinsey
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Section 5
Overcoming leadership challenges
Naturally, talent development and leadership are closely intertwined. And leadership challenges comprise all of the inflection points we’ve discussed up to this point.
On a given day, it’s HR leadership that must tussle with the dramatic talent shortage threatening to deepen retention issues. Or the evolving working models and employee expectations around them. Disruptive tech, culture issues, and the need for new learning paradigms. If leadership can’t find new strategies to navigate the storm, their organization won’t meet its objectives.
Share of HR leaders that say skills shortages undermine sustained corporate performance: 57 percent.20 Common leadership challenges
From a leadership perspective, the list of challenges is evolving every day: 80 percent of HR leaders say their function today is facing different challenges than what they had to deal with before the pandemic.21 From a talent management perspective, HR leaders must attend to five critical issue areas: iring n oardin ourcing, attracting, onboarding, and retaining top talent for critical insurance role Benefits culture, retention, employee experience and engagement
H
& O
b
S
Performance Managemen Motivating, measuring, and cultivating strong performance Benefits role transparency, accountability, alignment, productivity
5 Critical Issues
Coaching Men orin Developmental relationships that help people grow and succee Benefits goal identification and achievement, engagement, skills development &
Su
t
ccession Plannin Identifying and developing potential successors for key roles within an organization to ensure that organizations have the leaders they need to succeed in the futur Benefits business continuity, morale, customer relationships
i ersi ncl sio Building teams from a range of different backgrounds, experiences, and perspectives and ensuring that everyone feels welcome and value Benefits organizational performance, brand
D v
20Nine keys to becoming a future ready company | McKinsey
21Leadership Vision for 2024: Chief HR Officer
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How do you empower HR leaders to become better talent managers?
As we’ve pointed out above, many senior insurance professionals will soon retire. This retirement wave will only intensify existing leadership challenges, so it needs to be on everyone’s radar. Bottom line:
The time is now to put internal roles on a path toward graduating into these vacant leadership roles.
To do so means providing training and development focused on helping managers better assess skills and coach their employees. It means giving leadership what they need to make sure the right people with the right skills are in the right roles, such as Means for documenting the necessary skills for role AI and predictive analytics to inform decision and monitor KPI A holistic, data-driven strategy for upskilling and reskilling staff
In addition, show employees that they’re valued and that their contributions are appreciated. Many insurance professionals already work hard to meet quotas and job-specific targets. When employees know that they will be recognized and rewarded for their good work, they’re more likely to put in the extra effort.
Finally, know thy blindspots by creating reliable feedback loops. Open channels of communication and a trusting environment are critical to getting honest input from the staff you rely on to succeed.
“80 percent of workers at least somewhat agree that their employer is responsible for ensuring employees are mentally healthy and emotionally well.” Source: WORKPLACE WELLNESS SURVEY
222023 Workplace Wellness Survey
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Section 6
Moving on from legacy technology New technologies are constantly reshaping the financial sector. Insurance is no exception. In what has historically been a risk-averse field, new tech can be disruptive at first. But it has also led to huge efficiency gains and better service.
The onslaught of new tech isn’t slowing down, either. Ninety-three percent of HR leaders agree that the frequency of new “flash tech trends” will increase over the next three years.23 An assessment of roles at leading insurance companies, including underwriting, actuarial, claims, finance, and
"Emerging technologies—like big data, the Internet of Things (IoT), mobile technology, artificial intelligence (AI), wearable devices and blockchain —are revolutionizing the insurance industry and changing consumer expectations and preferences."
operations roles found that 10 to 55 percent could be automated over the next decade.24
Source: CENTER FOR INSURANCE POLICY AND RESEARCH
A new category of InsurTech companies has also emerged. As its moniker suggests, InsurTech is the use of tech to innovate across the entire insurance value chain. Lemonade is a good example: they use AI for underwriting and deliver a “bot-driven” customer experience.25
What this means for talent management (and why it's time to address legacy systems)
Despite this renewed wave of tech disruption, much of the industry still lags behind. Call it riskaversion, or call it a stubborn reliance on legacy systems and manual processes. Either way, it tends to create more problems than it solves.
You’re likely familiar with the signs: the use of on-premises systems, as opposed to cloud. A lack of integration between systems, processes, and organizational units. Manual data entry, report building, and so on. A recent Infosys case study describes a Fortune 500 company with $50 billion in annual revenue that relied on an in-house legacy system for actuarial modeling.26
So why do these and other insurance companies decide to modernize?
Cost. By some estimates, an insurance company can expect to devote as much as 70-80 percent of its IT budget toward maintaining legacy systems.27 Embedded in that cost are all the resources and employee power needed for system support, design, and so on.
There are some not so hidden costs, too
Slow bringing new products to marke Siloed, disjointed, inaccessible customer dat Lack of reliable information and business intelligence
23Leadership Vision for 2024: Chief HR Officer (Gartner)
24Transforming the talent model in the insurance industry | McKinsey
25"Lemonade: Disrupting Insurance with Instant Everything, Killer Prices, and a Big Heart." Harvard Business School Case 520-020, August 2019. (Revised March 2022.)
26Legacy Modernization for Leading Insurer - Case Study | Infosys
27Digital transformation and the legacy of insurance | InsurTech Magazine
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Poor customer service experience Inability to adapt to new working model Adverse effects on employee productivity and wellbeing
The list goes on. But anyone who has worked day in and day out with legacy systems–even for Fortune 500 insurance brands—knows how frustrating it can be.
Don’t get us wrong: modernizing tech infrastructure can be a massive undertaking, especially for enterprise brands. Ask AllState, who built an entire new application on the cloud-based Google Maps Platform.28 Or Citizens Bank, who worked with Amazon Web Services to decentralize its forecasting.29 Coastal Federal Credit Union integrated the Visa Analytics Platform to reduce international fraud loss by nearly 60 percent.30
Clearly, these were complex undertakings. And they’re but a small sample of the many examples of digital transformation happening across the insurance industry. That said, most digital transformations begin with a few core steps
Conduct a technology audi Identify pain points, bottlenecks, and prioritie Select the right vendors and partners Integrate and connect key system Implement change management strategie Measure outcomes and benefit Provide digital skills training
In the end, keep a direct line of sight to your ultimate goal. For many HR leaders, that’s reaching a holistic talent management process that’s seamlessly integrated with existing platforms.
“Forward-leaning organizations are exploring how to use technology in ways that encourage humans both to be their best selves and to do better work.” Source: GLOBAL HUMAN CAPITAL TRENDS | DELOITTE INSIGHTS
28Allstate Case Study | Google Cloud
29Citizens Bank Case Study | Amazon Web Services
30Coastal Federal Credit Union Case Study | Visa Analytics Platform
312023 Global human capital trends | Deloitte Insights
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Conclusion
Toward a future-ready talent base Despite the broad consensus that we’re facing a talent storm, one thing remains true: it’s about people.
From retention strategies and digital transformation, to company culture and leadership, people need to be the center of your strategy design.
More likely than not, it's the people you already have that will lead your organization through this challenging environment. To do so, they need the clarity, relationships, and tech necessary to stay engaged at a high level.
Most importantly, they need to understand the opportunities for growth that lie before them.
What will your organization do to guide them?
Pathstream transforms today’s frontline workers into tomorrow’s future-ready talent. Our extensive work upskilling thousands of frontline workers means we understand better than anyone what hidden transferable skills these employees have and what unique support and training they need to grow at your company.
Contact Us
We’re a trusted career mobility platform for 30+ Fortune 500 companies.
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