Lingering skills gap could hinder underwriting, claims transformation

When it comes to talent recruitment, why is there often a lingering gap between the legacy skills still being emphasized in most insurer job postings versus the new “exponential” capabilities likely needed to maximize return on investments in alternative data, advanced analytics and emerging technologies? And how might that skills gap be closed to accelerate transformation initiatives?

Those were among the most frequent questions raised by insurers recently interviewed for underwriting and claims transformation research conducted by the Deloitte Center for Financial Services. Concerns were often cited by respondents about how to effectively recruit and train individuals to fill upgraded roles in parallel with changes spurred by robotic process automation, artificial intelligence, and other technologies being deployed to collect and analyze data.

Let’s examine these questions one at a time.

What is an “exponential” insurance professional?

Deloitte’s transformation reports define “exponential” professionals as those ready, willing and able to work with new types of data and technology, embrace higher-level roles and responsibilities as well as learn additional analytical and soft-management skills. Those in underwriting and claims unable to make this transition will likely have a hard time remaining relevant in an increasingly automated, analytics-driven industry.

However, our research also emphasized that alternative data (such as real-time telematic information captured by sensors) and new technologies to make sense of it all should supplement and augment — but not necessarily replace — underwriters, adjusters, fraud investigators and related insurance professionals. Instead, these tools should relieve staff from many labor-intensive yet lower-value tasks while freeing them up for more important analytical and stakeholder management work.

For instance, underwriters should ideally be devoting more time to bigger picture portfolio management and more complex applications. Claims personnel should be able to pay more attention to suspicious loss patterns and individual dispute resolution. Ultimately, the goal should be to improve both top- and bottom line outcomes as well as overall customer satisfaction.

To accomplish this transition, exponential underwriters and claims professionals should have:

1. The training and skills to manage and audit automated results on a case and portfolio level;
2. The judgment to quickly determine which tools and data might best serve a particular application or claim;
3. The ability to strike a balance between automation of routine work and the ongoing need for human engagement with customers at moments that matter most, and;
4. The opportunity to provide value added services internally and externally, such as claims and underwriting working more closely together to assess how coverages are playing out in the market.

Why is there a gap in the exponential skills likely needed and the actual skills usually being sought by many insurers?

To study what types of skills are being sought when recruiting underwriters and claims professionals, more than 125,000 insurance company job descriptions posted between 2016 and 2021 were analyzed from Deloitte’s Human Capital Data Lake. Text analytics determined the frequency of over 700 key phrases associated with specific skills listed, both traditional and exponential. Our analysis revealed some potentially critical gaps, such as relatively few descriptions including knowledge of and experience in data analysis and various emerging technologies.

While all insurer professionals won’t necessarily have to become full-fledged data scientists or IT wizards, most should likely have a working knowledge of both disciplines to take full advantage of all the new information at their disposal and the tech tools to help them make data more actionable. They should also be prepared to communicate how algorithms in general work, as well as explain AI-derived decision-making to internal and external stakeholders.

For example, many should be able to work with data scientists and IT experts to incorporate their experience about how underwriting and claims processes work into RPA and AI enhanced systems. They should also be prepared to do regular quality checks and audits to determine whether algorithms are operating not just as they were designed,  but in synch to reflect real world dynamics — such as whether prices generated by straight-through processing reflect evolving market developments.

Some insurers reported this apparent disconnect in skills recruitment was likely a simple matter of updating job descriptions and communicating more effectively with human resource departments and recruiters about the exponential skills now required. “Low-hanging fruit” was how one insurer described solving the problem.

Others indicated this might reflect a jurisdictional issue that could prove more difficult to resolve. For example, a few noted that even if they wanted to hire data scientists, that job category was restricted to the company’s data science team, where resources are shared among functions rather than dedicated to claims or underwriting.

Some said keeping job listings more basic was intentional, as they prefer to filter questions about advanced skills into the interview process, asking candidates about familiarity with new types of systems and the kinds of exponential capabilities they should possess or at least be eager to learn.

A few cited concerns about possibly “scaring off” candidates with more traditional backgrounds by asking for “too much, too soon” in terms of exponential skills. This was noted as a particular problem at companies trying to retain enough staff to keep legacy operations running amidst a rising tide of retirements and an increasingly competitive job market.

However, another way to look at this is that by not including familiarity with alternative data, AI, and advanced analytics in outreach efforts, insurers may actually risk “scaring off” the very candidates most sorely needed to boost transformation efforts. Those who already have exponential skills and experience or are at least eager to acquire and develop them might be prompted to seek employment at competing carriers that appear to be more cutting edge, where they believe their advanced expertise and enthusiasm to learn and grow is more likely to be satisfied.

How might the skills gap be closed to bolster transformation efforts to exponential levels?

Many of the chief underwriting and claims officers participating in Deloitte’s research said they sought to hire the best candidates they could find in an ultra-competitive talent market, while recognizing most will need training in exponential skills — a factor also in play as companies seek to bolster the capabilities of existing personnel.

One carrier referred to their “ideal” recruit as “raw clay — comfortable with the new data and technologies out there, and able to be molded into well-rounded underwriters.” With the proper training, such candidates could fill the emerging exponential personas Deloitte’s research report on underwriting identified — including data pioneers, deal makers, portfolio optimizers, and risk detectives.

Others said a bigger talent challenge than recruitment is convincing existing personnel to make the transition to new technologies and roles, particularly in counteracting the “fear factor” of those concerned about being replaced by automated systems. These insurers emphasized the importance of transparency in terms of where people will fit in the new digital workplace, exactly what will be expected of them, how their jobs and roles will likely change, and what the company is prepared to do to help them succeed.

Finally, many conceded that while not all of their people may be interested in or capable of becoming “exponential,” their goal is to identify, recruit, and develop enough trailblazers to drive insurers to the next level with data and technology — ideally before they are eclipsed by more proactive competitors.

For more information, download Deloitte’s full research reports on exponential underwriting and claims transformation. We also published two NU Claims articles on “The Art of Mixing Human Interaction and Technology in Claims Transformation,” based on our exponential claims report. (Access part one and part two on these links.

Former NU Property & Casualty Editor in Chief Sam J. Friedman (samfriedman@deloitte.com) is now the insurance research leader at the Deloitte Center for Financial Services. Follow Sam on Twitter at @SamOnInsurance, as well as on LinkedIn.

This piece is published with permission from Deloitte. See www.deloitte.com/about to learn more about Deloitte’s global network of member firms.

See also:

• Attracting and retaining the next generation of claims talent
• Why innovative job training matters to today’s workforce
• Insurance professionals need practical training now more than ever