Innovation and what’s driving the industry wide talent deficit
Is the insurance industry sending the brilliant minds elsewhere? Does an industry-wide culture exist that rejects true innovation…..you be the judge.
Apart from a few shining examples, genuine innovation, risk taking and true creativity is clearly lacking when it comes to the investment needed in systems and technology. Insurers can’t attract the brilliant minds in the same way Big Data and Tech companies can because the culture doesn’t embrace innovation the same way.
Talent is the most important part of any organization yet the current (and future) talent deficit in insurance is only moving in one direction as demand outstrips supply. Sure, there are plenty of smart and intelligent individuals achieving exceptional outcomes in broking, re/insurance and MGA’s but they are the exception, not the rule.
How many colleague graduates with a business or technology qualification are choosing a career in insurance? By the very nature of the insurance industry, there is limited reward for innovation, doesn’t encourage risk taking and doesn’t invest nearly enough in people & technology.
A 2019 article posted in The Economist provides some supporting evidence (below):
- No insurer ranks among the world’s top 1,000 public companies for R&D investment – yet dozens of insurers are in that top 1,000
- On average, insurers allocate 3.6% of revenue to IT —about half as much as banks
- In a study of 500 innovation topics across 250 firms, many insurers are working on the same narrow set of ideas
Tough to attract talent to an industry that invests half of what the banks do in technology, or where all competitors refer to innovation for essentially the same set of narrow topics. It can be argued that the big primary insurers may be vulnerable to Big Data and new (large) market entrants like an Apple, Google or Amazon. Billions to invest, innovation leaders and able to attract the sharpest minds.
Search and leadership advisory firms such as Hanover are increasingly being asked by insurance clients to “think outside the box” (and the industry) to identify top talent with transferrable skills and an understanding of risk management. For example, senior leaders in the tech sector have switched to insurance companies in areas such as cyber and technology insurance.
If we look at the way the world has changed in the past few weeks due to COVID-19, one thing that the current crisis has revealed is the growing relevance of e-trading, particularly for renewals. Brokers and underwriters alike regularly complain about the inefficiency of conducting business by traditional methods, and yet until this year the insurance industry appeared no closer to market-wide digital placement than it did five years ago.
The market is overdue for significant disruption (which is coming), but if the industry is able to attract top talent for more evolving hybrid positions (risk & technology) the time for innovative transformation is still available.