To compete for the best IT talent, the insurance sector needs to evolve.
Jay Rabinowitz, vice president of financial services and insurance at Workday, predicts that IT and data scientists at insurance companies will be poached by tech companies unless the insurance industry abandons legacy systems. Rabinowitz elaborated on that prediction in a recent email interview with Insurance Journal — and forecast other industry trends.
Q: Let’s talk about your prediction. How did you come to the conclusion that in order to compete for top talent, the insurance sector needs to ditch its legacy systems and move to the cloud?
Rabinowitz: Today’s top tech talent has little desire to work with outdated systems and platforms, making it difficult for insurers to attract and retain the experts and innovators necessary to survive and thrive in the age of digital transformation to be. We all know that many insurance companies continue to have outdated technology platforms based on COBOL coding or multiple isolated databases. Young professionals don’t want to grapple with outdated infrastructure—they want opportunities to be part of something new and innovative, like cloud-based technology, enhanced data tools, new programming languages,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 is helping address the talent shortage in two 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 up to date.
We see and hear from customers, particularly CIOs, that technology is becoming a key differentiator for talent recruitment and retention.
Q: Can you cite any numbers or research to support your claim?
Rabinowitz: In today’s talent market, where a skilled workforce is in high demand, more than ever, employee experience is paramount to building—and keeping—a skilled and agile team that strives to do more meaningful work. According to a study by the Society for Human Resource Management (SHRM), 64% of survey participants said their expectations of what they want from a job have changed since the pandemic. For many, the pandemic has reset the expectations people have of their work, and because they spend the majority of their time at work, they are looking for value and purpose in work.
In addition to IT talent, financial talent also focuses on technology. Workday released a study earlier this year that found a company’s technology strategy is critical to its people strategy. Almost half of the CFOs surveyed (48%) plan to invest in consumer-like interfaces for finance tasks in the next five years to attract future finance talent. Of those CFOs who prioritize this, an impressive 99% agree technology updates are becoming even more important to attract and retain employees. When mundane tasks are automated and workflows streamlined to maximize productivity, employees can focus on more strategic tasks and create greater value for the business.
Q: Why is this potential talent drain worrying?
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 staff are being poached into other industries in this hot job market, and they tended to do that with an aging workforce nearing retirement.
Candidates with insurance technology experience are particularly in demand. 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 emerging talent, a company risks not being able to run its current technology efficiently and would most likely struggle with any type of digital transformation. The company also risks lost growth opportunities if it doesn’t have the right talent to develop a new product line or advance an acquisition. Additionally, companies may see employees moving to competitors or InsureTech companies that may offer more meaningful work experiences.
Q: What hurdles do insurance companies face when making the leap to the cloud?
Rabinowitz: Cloud transformations can be complex for any business, but they’re especially challenging for insurance companies that have invested in multiple solutions to meet different business needs. The diversity and complexity of these often siled solutions requires time and patience to integrate and optimize the right technology infrastructure.
Insurers can lower their risk and derive 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 good. To drive cloud transformation, insurance companies should focus on small increments, analyze what’s working, and take a look at their customers from their customer service representatives and agents.
Especially in today’s environment, investment funds are precious. Digital transformation is a journey insurance companies must take, but they must also evolve their product offering and customer service. They need to balance their transformational investments with the need for new innovation, products and partnerships.
On other predictions:
Q: To take a step back, what are your insurance-related trend projections for 2023?
Rabinowitz: Insurance companies that turn to data analytics will have a competitive advantage because they can more accurately offer their customers what they need. These organizations will be able to more quickly analyze both internal and external data to make decisions critical to their business, such as: B. Tariff changes. Additionally, organizations can make better recommendations to their customers by using data to better understand their customers’ needs and tailor offerings. For example, customers could buy their home insurance here, their car insurance there, and their life insurance over there. But could an insurer use insights from data to offer this customer a package that meets all their needs? I believe that data analysis is the future of the insurance industry.
Q: What will we be talking about this time next year that we’re not talking about now?
Rabinowitz: Insurance providers have a dirty little secret: the insurance industry is among the top data-generating industries, spending billions on big data and analytics solutions. But the truth is, organizations are struggling to leverage their data, leaving an enormously valuable corporate asset largely untapped.
However, we are beginning to see that there is concern about leaving this valuable resource untapped. With mounting weather-related losses, inflation and an unpredictable job market, consumer behavior has never been more unpredictable. Insurance providers and many other financial institutions will soon realize that they need to start using and analyzing their existing data to create predictive models for the future – all supported by artificial intelligence and machine learning. Insurance companies have the data to perform this type of modeling – but all too often their technology lacks the ability to analyze the data and consequently they don’t exploit the data at their disposal.
Insurance providers need to bring together operational data from other systems such as policies, claims and reinsurance to create a truly comprehensive picture with greater context. These insights help insurers create products and deliver services that benefit customers and help the business navigate the future. Access to data and the ability to easily tap into those data sources empowers insurance companies to be proactive in preparing for the unexpected rather than reactive.
The ongoing uncertainty will continue to impact consumer behavior in unprecedented ways, and as a result, insurers must quickly adapt their business to the sudden and unprecedented changes in consumer behavior – and then forecast the long-term impact of those behavioral changes.
Q: What should people in the P/C industry pay particular attention to throughout the calendar?
Rabinowitz: The pace of change in the P/C industry will continue to change. With economic and environmental uncertainty and a rapidly changing macro environment, there is no better time to prioritize agility and reinvention. Insurance leaders are expected to lead the business through challenges, outmaneuver the competition and, on the other hand, come out stronger. There’s 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 US, was using an ERP system that consisted of – in reality – five different financial systems. They switched to Workday to provide their finance department with timely and trusted data, empower their team with self-service and automation, and provide more agile and accurate forecasting and planning to drive the business. This transformation resulted in real business outcomes and a real bottom line impact, including 30% annual savings in the financial system and 27% improvement in IT efficiency.
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