A unique confluence of events is making it tough for insurance companies to hire and retain enough technology professionals. Fortunately, insurers can counter this perfect storm by adopting several important tactics.
So said panelists during a breakout session of DXC Connect Insurance Executive Forum, an invitation-only forum held earlier this year for executive leaders in DXC Technology’s insurance customer community.
Three Powerful Forces
Three powerful forces are threatening the insurance industry’s ability to acquire and retain talent:
1. Aging systems and aging workers: All of the top 10 insurers in 2020 were still running mainframes, according to data-integrity vendor Precisely. Quite a few of these systems run applications written in Cobol, a programming language that’s now 65 years old. While mainframes can still serve the business, they’re expensive to run and maintain, and they can be difficult to connect with modern web- and cloud-based systems.
At the same time, many older IT professionals — the very workers who know how to maintain these mainframes and Cobol applications — have either retired or will retire soon. There are now more Cobol programmers in retirement than there are in IT departments, according to NPR.
Replacing those older workers won’t be easy. For one thing, younger IT pros find the insurance industry decidedly unsexy. For another, even among younger IT pros who want to work in insurance, few are eager to learn an old programming language like Cobol.
Panelist Karen Monks, principal analyst at industry watcher Celent, cited a recent Korn Ferry report predicting that by 2030, more than 85 million jobs across industries could go unfilled because there aren’t enough skilled workers to fill them. “Technology seems to be one of the areas where you’re going to have the greatest talent shortage,” Monks said. “How do you deal with that?”
2. AI uncertainty: Artificial intelligence is beginning to transform the insurance industry. A 2023 KPMG survey finds that nearly six in 10 insurance industry CEOs (58%) feel confident they’ll achieve a return on their AI investments in five years.
The question is, how? Will insurers use AI support the decisions of human workers? Or maybe take on entirely new tasks? Also, what kinds of training will insurers need to provide to enable their workers to use AI productively?
At this stage, we don’t know. For an industry built on carefully calculated risks, this creates a great deal of discomfort, legal concerns and uncertainty.
“Is AI going to be a promotion for everyone?” asked panelist Evan Metter, the human capital advisory leader at audit, tax and advisory service provider KPMG. “AI is not going to take people’s jobs. But the people who are good at AI may take the jobs of those who don’t embrace it.”
3. Advancement opportunities for diverse workers: While many insurers run diversity, equity and inclusion (DEI) programs aimed at recruiting professionals from diverse backgrounds, most of their senior executive positions are still filled by non-minority employees. Of 168 senior executives at the top 10 U.S. insurance companies and brokers by market value, only three are Black, according to Reuters.
Retention becomes a challenge, with many of these workers leaving for other, more diverse industries. “Diverse workers are coming in,” Metter said, “but if they don’t advance they often leave the organization.”
Compounding the situation, insurers must deal with all these challenges while keeping their regular operations fully ongoing. “It’s like building the bus while we’re driving the bus,” said panelist Dedra Herron-Slack, a senior manager of service delivery at DXC.
Tactics for Success
The good news: Insurers can adopt several tactics to get back on course:
- Fix hiring and focus on skills: Determine which areas of the business are most in need of new talent and which skills are required. Then evaluate how well the company presents these opportunities to potential hires, and look for ways to refine job requirements to attract more candidates. “The big shift we are all going to live through is a shift away from the currency of job codes toward skills,” Metter said. "What skills do I need, and do I have those skills? Do you build, buy, borrow or do you bot?”
- Re-hire retirees: Many retirees say they miss their old jobs and the engagement with colleagues. Rehiring former employees, even if only on a part-time basis, can be a win-win. The insurer regains valuable skills around legacy technology. The former employees regain income the excitement of working on projects with new teams and, for some, a sense of purpose.
- Fine-tune training: Even insurers with the best hiring and onboarding processes can’t buy all the talent they’ll need. But insurers can train. To begin, determine which of your areas have a talent shortage, whether that’s claims, customer service, underwriting or anything else. Then consider adopting two dynamic tactics: pairing new employees with those who are more seasoned, and creating mixed-skilled teams that take advantage of a wide range of skill sets and help each other develop expertise in new areas.
- Partner with others: Leading insurers find partnering to be a powerful way of getting tomorrow’s IT professionals interested in the insurance industry today. “Having a partnership with a university or a startup company can help train the insurance employees of the future,” Monks said. “If your company is part of an open ecosystem, it gives you potential future hires.”
- Consider managed services: Transfer legacy systems to a partner and let them manage them for you. Then move resources, including staff, to other core functions within your organization. This also lets insurers tap into larger talent pools with resources close to the development and support of those systems.
- Improve the employee experience: Remote work has changed the way people collaborate, and it’s also changing the insurance industry’s culture. Older approaches to building teams no longer work, and new ways are needed.
Also, many insurance managers feel overwhelmed by their jobs. They have more work to do than ever, leaving them with less time to train and develop new skills. New approaches are needed here, too. That might include developing a mentor program, offering clearer guidance on opportunities for advancement and making new investments in talent that can support infrastructure technology.
- Get better at diversity: It’s not enough to recruit employees from diverse backgrounds; insurers also have to offer them opportunities for advancement. This can be combined with other tactics. For example, the University of Mississippi, in partnership with the Council of Insurance Agents & Brokers, recently launched an insurance certificate program for students from historically Black colleges and universities.
“People need to see people who look like them,” Herron-Slack said. “We need to broaden our labor pool by looking wider and deeper.”
- Teach listening: With virtual working environments and a heavy reliance on instant messaging, communications can suffer. “We don’t really have conversations anymore,” said Herron-Slack. “We need to bring back and encourage listening — listening to understand and listening to learn.”
Sailing through this perfect storm will be neither quick nor easy. But you don’t have to do it alone. DXC Technology is here to help.
With over 40 years of innovation in the insurance industry, DXC is the No. 1 provider of core insurance systems with more than 13 million policies under administration. Our customers include 8 of every 10 insurers listed in the Fortune Global 500. We’re here to help you, too.
Do more: Explore DXC’s insurance software and BPS.