To compete for top IT talent, the insurance sector will need to evolve.
Jay Rabinowitz, vice president of financial services and insurance at Workday, predicts that IT and data scientists at insurance companies will be recruited away by tech firms unless the insurance industry leaves behind legacy systems. Rabinowitz recently dug into that prediction – and forecasted other industry trends – in an email interview with Insurance Journal.
Q: Let’s talk about your prediction. How did you conclude that to compete for top talent, the insurance sector will need to leave its legacy systems behind and move to the cloud?
Rabinowitz: Today’s top technical talent has little desire to work with antiquated systems and platforms, making it hard for insurers to attract and retain the experts and innovators necessary to survive and thrive in the age of digital transformation. We all know that many insurance organizations continue to have outdated legacy technology platforms based on COBOL coding or multiple, siloed databases. Young professionals don’t want to deal with legacy infrastructure – they want opportunities to be part of something new and innovative, like cloud-based technology, enhanced data tools, new programming languages, and artificial intelligence.
Modernization helps address the talent shortage in two key ways: First, by creating an environment that offers a better user experience and is more attractive to top talent. Second, by giving talent the opportunity to work with cutting-edge technology so they can learn and keep their skills sharp.
We’re seeing and hearing from customers, particularly CIOs, that technology is becoming a key differentiator for talent recruiting and retention.
Q: Can you point to numbers or research that back up your claim?
Rabinowitz: In today’s talent market, where skilled workers are at a premium, more than ever, employee experience will be paramount to building — and retaining — a skilled and agile team that is looking to do more meaningful work. According to research from the Society for Human Resource Management (SHRM), 64% of survey participants said their expectations for what they want in a job have changed since the pandemic. For many, the pandemic reset the expectations that people have of their work and, because they spend the bulk of their time doing their job, they seek value and purpose at work.
In addition to IT talent, finance talent is also focused on technology. Workday released research at the beginning of this year that found a company’s technology strategy is critical to people strategy. Nearly half of CFOs surveyed (48%) plan to invest in consumer-like interfaces for finance tasks to attract future finance talent within the next five years. Of the CFOs prioritizing this, a striking 99% agree that technology updates will become even more important for both attracting and retaining employees. When everyday tasks are automated and workflows are streamlined to optimize productivity, employees can focus on more strategic tasks and bring greater value to the business.
Q: Why is this potential loss of talent worrisome?
Rabinowitz: Insurance companies must be able to attract the next generation of IT talent to ensure long-term success as they face two hurdles: their existing IT and data science workforce is being recruited away to other industries during this hot job market, and they tend to have an aging workforce nearing retirement.
Candidates with insurance technology experience are at a premium. The technologists and data scientists who understand both the technical aspects of a carrier or brokerage environment and the insurance nuances are rare. Without the ability to attract and retain current and next-gen talent, an organization risks not being able to operate their current technology efficiently and would — most likely — struggle with any sort of digital transformation. The business also risks lost opportunities for growth if they don’t have the right talent to develop a new product line or drive an acquisition. Even more, companies could see employees jumping to competitors or InsureTech companies who can offer more meaningful work experiences.
Q: What hurdles do insurance companies face in making the jump to the cloud?
Rabinowitz: Cloud transformations can be complex for any organization, but it’s particularly challenging for insurance companies that have made investments in multiple solutions in an effort to address various business needs. The diversity and complexities of these often-siloed solutions will require time and patience to integrate and optimize the right technology infrastructure.
Insurers can lower their risk and gain better business value from an open and interoperable industry ecosystem that connects purpose-built solutions and addresses industry specific use-cases.
But it’s important to remember that perfection is the enemy of the good. To drive cloud transformation, insurance organizations should focus on small progress, analyze what’s working, and gain a lens on their customers from their customer support representatives and agents.
Especially in today’s environment, investment dollars are precious. Digital transformation is one journey that insurance organizations need to make, but they also need to continue to evolve their product offering and their customer service. They must balance their transformation investment with the need for new innovations, products, and partnerships.
On other predictions:
Q: Taking a step back, what insurance-related trend predictions do you have for 2023?
Rabinowitz: Insurance companies that embrace data analysis will have a competitive advantage because they can more accurately offer customers what they need. These organizations will be able to more quickly analyze both internal and external data to make decisions that are key to their business, like rate changes. Further, organizations can make better recommendations to their customers by using data to better understand the needs of their customers to make more tailored offers. For example, customers might have their home insurance policy here, their auto insurance there, and their life insurance over there. But could an insurer use insights drawn from data to offer that customer a bundle that may solve all their needs? I believe data analysis is the future of the insurance industry.
Q: What is something we’ll be talking about this time next year that we aren’t talking about now?
Rabinowitz: Insurance providers have a dirty little secret: the insurance sector is among the top data-generating industries and spends billions on big data and analytics solutions. But the truth is that companies are struggling to put their data to work, leaving a hugely valuable organizational asset largely untapped.
However, we’re beginning to see that leaving this valuable resource untapped is a cause for concern. With the increasing weather-related losses, inflation, and an unpredictable job market, consumer behavior has never been more unpredictable than it is today. Insurance providers and many other financial institutions will soon realize that they must start using and analyzing their existing data to help build predictive models for the future – all powered by artificial intelligence and machine learning. Insurance companies have the data to do this kind of modeling — but all too often, their technology lacks the capability to analyze the data, and as a result, they underutilize the data they have.
Insurance providers will need to bring together operational data from other systems such as policy, claims, and reinsurance to really create a comprehensive picture with greater context. Those insights help insurers develop products and offer services that benefit customers, as well as help the business navigate the future. Having access to data and being able to easily tap into those data sources will enable insurance companies to be proactively prepared for the unexpected versus reactive.
Ongoing uncertainty will continue to impact consumer behavior in unprecedented ways, and as a result, insurers will need to quickly adjust their business in response to the sudden and unprecedented changes in consumer behavior—and then forecast the long-term implications of these behavioral shifts.
Q: What is something P/C industry folks should be keenly aware of as the calendar flips?
Rabinowitz: The rate of change in the P/C industry is only going to continue to change. In the face of economic and environmental uncertainty and a fast-changing macro environment, there is no better time to prioritize agility and reinvention. Insurance leaders will be expected to lead the company through challenges, outmaneuver the competition, and emerge stronger on the other side. There is no better time than now to streamline and simplify data access and decision-making.
CNA, one of the largest commercial property and casualty insurance companies in the U.S., was on an ERP system that was – in reality – composed of five different financial systems. They moved to Workday to provide their finance function with timely and trusted data, empower their team through self-service and automation, and deliver more agile and accurate forecasting and planning to help drive the business forward. This transformation led to real business results and a real impact on their bottom line, including 30% annual savings on its finance system and 27% improvement in IT efficiency.
Was this article valuable?
Here are more articles you may enjoy.