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How AI Will Define Insurance Workforce

Prior to COVID-19, the U.S. boasted historically low unemployment and a roaring economy. Nearly every industry was expected to face a severe talent shortage within the next 10 to 20 years. But then March hit, and the world turned upside-down.

Since then, the pendulum has swung in the other direction. The current unemployment figures are reporting as many as 10.7 million people are out of work, and, despite this sudden abundance of available workers, staffing issues remain — they’ve just become more complex.

To navigate this wildly fluctuating environment, companies will rely on data for decision-making about hiring, training and countless other matters that affect the bottom line. This will require tools, like artificial intelligence (AI), to make sense of data and to adjust quickly amid uncertainty.

The best way to examine AI’s value in today’s uncertain world is to look at how it can work within a specific industry. Doing so makes it possible to show practical applications from which lessons can then be applied to other industries.

Commercial Insurance: A Case Study

Like other industries, commercial insurance faced a significant hiring crisis pre-COVID-19. The average claims adjuster remained in the industry for just four years — about the time it takes to gain full expertise — and those workers who stuck with claims have inched closer to retirement. So, this multibillion-dollar market is at risk of losing much of the human brain trust that enables current systems to run, as new workers cannot be hired, trained and retained fast enough to balance the scales.

Fast forward to today. Commercial insurance looks markedly different. The types and volumes of claims are changing. For example, claims related to COVID-19 contact or work-from-home circumstances are rising quickly, as are post-termination claims, while traditional claims have dropped.

At the same time, access to traditional healthcare has been in flux. To combat the limitations on available providers, telehealth solutions have exploded, opening up a whole new set of providers that claims reps need to become somewhat familiar with to facilitate claims accordingly — claims that bear a greater potential for fraud and litigation, which cost companies millions of dollars each year.

In short, almost everything about claims operations has changed — and, like many other industries that have been traditionally slow to adapt to new challenges, commercial insurance faces real hurdles.

The Importance of Data and Intelligence

Data is the key to overcoming dramatic changes within a relatively static industry. Maintaining a pulse on what’s happening across a business, or with a specific claim, and how it relates to things experienced previously is important; spotting trends early is vital. Organizations require data to determine if their plans and practices are working — and, if they are not, data should be used to drive intervention and adaptation.

But thousands to millions of data points alone won’t save the day if an organization doesn’t have the capability to understand what the data is telling them. What is the context? How are points connected? If a trend continues, what will be the effects six months or two years from now?

AI systems unlock the meaning of data to make it useful, pinpointing where organizations need to make adjustments. In commercial insurance, AI could allow for expanding provider networks to offer better, faster access to care. To actually expand networks using quality providers, systems need to tap into more data to learn which providers have achieved the best outcomes on which types of cases.

What is particularly exciting about implementing AI in this rapidly changing environment is that interpretations of data are not fixed. Machine learning capabilities are constantly refining and updating insights so that organizations — and their people — can respond accordingly.

See also: How AI Transforms Risk Engineering

Designing the Future Workforce

So, if data analytics and AI become staples in modern business, how do they solve the human resource problem? What do they mean for the future workforce? The answer is threefold.

Data determines what your hiring needs actually are: In a world that is changing so quickly, your business might not need as many people specialized in a certain area, whereas new opportunities or divisions may emerge. Your business may be forced to alter its offerings to match customer needs. Data is the guide; it lets you home in on exactly what skills are required.

AI guides training: Because AI is able to analyze so much data so quickly, new hires are able to access the information and prompts they need to do their jobs well as soon as they need it. There is not as much feeling around or dependency on senior colleagues. This is not to discount the value of experience, but it means that workers can reach a competent level much faster; what they lack in experience and intuition is replaced by data-driven insights and standardized practices.

AI augments jobs: AI solutions take care of many of the rote tasks workers are routinely bogged down with today. As a result, employees can focus on making more efficient, informed decisions; they can actually use their brains more. AI flags potential errors or problems so that they can be addressed before they escalate. Reps can focus on delivering compassion at a time when people need it most.

While COVID-19 has fundamentally altered the future workforce, tools like AI help get it back on track. In leveraging it effectively, organizations will become nimbler and more responsive to conditions while employees are more knowledgeable and effective.

Insurance 2030: Implications for Today

It can be difficult to think about the future when the demands of the day are so pressing. The pandemic and events of 2020 have caused seismic shifts in society, affecting everyday patterns, lifestyles and business operations. Adapting strategies and plans to the pandemic’s evolving realities has been at the top of many insurers’ priority lists. Yet, in the midst of this turmoil, many P&C companies have been engaging in long-term strategic planning exercises. And some of the emerging themes are surprising.

SMA has conducted a number of scenario-planning workshops with insurers and MGAs – starting before the pandemic but continuing through 2020 and into 2021. These sessions, envisioning scenarios for 2030 and their implications for the company, are sometimes conducted at a company-wide level, sometimes for a single line of business and at other times for a specific area like distribution. These sessions are always educational and enlightening, revealing strategic options and exposing company gaps. The most surprising aspect of scenario planning is often how this type of thinking can actually drive near-term operational priorities. One of the most interesting themes that typically emerges revolves around people – especially the workforce.  

Many dimensions can be explored when contemplating longer-term strategies to compete in the world of 2030 … or 2025 … or 2022, for that matter. Business models, products, distribution, underwriting, claims, participating in new ecosystems, combatting new competitors and many other areas can be considered. There are important developments and strategic options for all of these areas. However, we have observed that, in virtually every session, the evolving workforce becomes a central theme – even for those that did not explicitly intend to take the workforce into consideration.

Often, projections on AI and connected-world technologies dominate the conversations. The potential for insurers to gain access to real-time data about every physical thing they insure is compelling – and leads to a vision of how the industry can leverage expertise on risk to help customers significantly reduce accidents and incidents while responding rapidly with new capabilities when something bad does occur. This creates a ripple effect in actuarial, underwriting, policy service, claims – and essentially every other area of the business. Yet, in the midst of exploring the opportunities and gaps related to advanced technologies, the role of industry professionals and the evolving workforce rises as a critical success factor.

Strategies related to the future workforce take on several dimensions.

Roles

Central to the roles of agents, underwriters, adjusters and other industry professionals is interaction with technology. Higher levels of automation and AI tools for insight shift the roles of these individuals in significant ways, even generating the need for brand new roles.

Retirements

Before the pandemic, the industry was already in the early stages of a wave of retiring seasoned professionals. The pandemic has changed the retirement trajectory, and more are seeking early retirement. The rise of the millennial generation continues and must be a significant factor in workforce planning.

Worksite Flexibility

The rapid shift to work-from-home has forever altered work patterns and employee desires. P&C insurers did remarkably well in adapting, practically overnight, to a remote workforce. While some are eager to be back in the office, there are just as many or more who are now expecting the flexibility of choosing to work either at home or in the office.

See also: Insurtech 2021: Reset vs. Resume

Recruiting, Training, Retaining

The combination of role evolution, retirements and worksite flexibility change the game for the HR community. There is a growing recognition that the competition for talent will be different because location becomes less of a concern for many companies that are adapting to remote workers. In addition, the skills needed in a digital/AI world will be different than those required today. This is not to discount the value of deep insurance expertise – that will be more valued than ever. It is also important to value personal relationships and attributes such as empathy in the claims arena. But the big picture is that the way that employees will be recruited, trained and retained will be quite different – and organizations need to be starting on that journey today.

Companies are finding that these types of scenario-planning approaches can be a great way to spur innovation and get individuals out of old patterns of thinking. In addition to the workforce discussions, there are always very important implications and ideas related to many other dimensions of the business. Often, the most valuable outcome is to bring together individuals from across the business to build new internal relationships and share ideas across silos. The mix of people involved can be intended to advance cultural change but can also result in the sharing of practical ideas that improve the business in the short term.