Can Insurance Carriers Stem the Bleeding from Tech Layoffs?

In January 2023 alone, Amazon laid off 18,000 people; Google laid off 12,000 people; Microsoft laid off 10,000 people; and Salesforce laid off 7,000 people. And these are just the major headlines of a month that saw over 100,000 employees laid off across the tech sector. If any of these talented tech employees are looking for a new industry to call home, they may find a soft landing with insurance carriers looking to invest in technology and modernization. 

Insurance carriers are feeling pressure to modernize 

The insurance industry has a reputation for being recession-proof, but it also has a reputation for being old-fashioned and slow to evolve. As customers and employees alike continue to demand a more seamless and high-tech experience from the businesses they interact with, legacy insurers face mounting pressure to invest in their digital experience. 

What does digitization mean for an insurance carrier?   

Insurance carrier digitization refers specifically to: 

• Using digital tools to keep track of customer and claims data
• Automating internal processes to create a better employee experience
• Enabling customers to self-service their policies through digital portals 
• Using technology to assess risk more accurately and make better underwriting decisions

Each of these aspects of insurance carrier digitization helps an insurer remain competitive in a world where consumers and employees expect a frictionless experience. However, they also come ‌with costs that many insurers have been hesitant to invest in as of now. 

What are the costs of insurance carrier digitization? 

For insurance carriers, investing in the modern infrastructure needed to undergo digitization may consist of any or all of the following: 

• The initial purchase and implementation price of technology, hardware, and software
• Hiring additional staff to manage both the digital transformation process and the resulting solutions after they’re implemented
• Training existing staff on using a new process or solution
• Lost productivity during the downtime associated with an implementation or transition period
• The cost to maintain and periodically upgrade the new technology

Some of these costs may not exist at all, depending on the type of technology an insurance carrier adopts. However, even the idea of some of these costs can be too much, and keep insurance carriers from starting the digitization process. 

What are the benefits insurance carriers can get from adopting modern technology? 

Despite the perceived costs, there are plenty of benefits insurance carriers can reap by investing in modernization. These include: 

• Time and money savings through increased operational efficiency
• A better customer experience as employees are freed from tedious work to spend time focusing on customer relationships and needs
• An improved employee experience which contributes to employee recruitment and retention
• Better data security by using products with up-to-date encryption and security measures
• The ability to scale quickly without needing additional technological investments or sacrificing security or compliance 

The tech industry is scaling back and letting hundreds of thousands of employees go

The tech industry is hitting a snag, as evidenced by historic tech layoffs in the news. Reasons for this include many tech companies realizing that they’ve been over-hiring in recent years and now need to adjust their workforce levels accordingly. 

Why did tech companies hire so aggressively? 

When the entire world went online overnight because of COVID-19, tech companies seized the opportunity to meet consumer and business demands for digital products. Businesses that had never before needed technology for particular use cases suddenly did. Think: Zoom, Slack, Microsoft Teams, etc. Every digital productivity and communications software became a must-have for nearly everyone. This meant tech and software companies needed to hire technical and non-technical talent at breakneck speeds to keep up with the demand for their products. 

Why are tech companies cutting their workforce so dramatically?

With a return to more of a pre-pandemic lifestyle, consumer and business demands have shifted back toward in-person services, leaving tech companies with more people than they need. Even though many companies maintain a primarily remote workforce, they’ve already implemented the bulk of the tech infrastructure they need. There isn’t a constant demand by brand new customers for products they need for the first time. 

The insurance industry is facing a talent shortage 

While tech may seem to have an overabundance of talent vying for jobs, the insurance industry isn’t in the same position. The Great Resignation, The Great Retirement, and The Great Reshuffling have left this stable industry competing for a very small number of experienced workers. At the same time, the industry’s reputation doesn’t help it attract fresh talent from other industries (or new graduates just finishing school).

In contrast to many other industries, the insurance sector has remained relatively stable in recent years. According to the Insurance Information Institute (III), there were over 2.8 million people working across insurance agencies and carriers in 2021 – a net increase of over 500,000 people from 2012. Unfortunately, the average age of workers in the insurance industry is 44.7 years. This average (which doesn’t seem that high compared to a 42.3-year-old average across all U.S. employees) masks the worrisome fact that there are more insurance professionals in the 55+ age range than in any of the younger age ranges measured by the U.S. Bureau of Labor Statistics. 

As these workers retire, they’re taking with them a wealth of knowledge and experience. This is a major concern for the insurance industry, as it’s proving difficult to replace these industry vets. According to research by The Jacobson Group, reported in Insurance Business Magazine, there were 367,000 open but unfilled roles in the insurance and financial services industry in 2022. Simple put, insurance companies are hiring, but they can’t find enough candidates for the jobs. 

How can insurance carriers benefit from tech layoffs? 

The influx of tech talent laid off from other industries provides an opportunity for insurance carriers in several ways: 

• Insurance carriers can create new internal technical roles for managing or even developing their own modern technological solutions. 
• Carriers can also fill roles left open by retiring insurance staff, even in a non-technical capacity, if they can entice these laid-off workers to transition into new types of jobs.
• Since the tech industry tends to be composed of younger, highly educated individuals, insurance companies have an opportunity to bring in non-traditional and diverse perspectives that can help move them into the future, whether that’s technologically, culturally, or otherwise.

One prominent insurance company has already announced its intention to take advantage of newly-available technical talent. In a January 2023 Insurance Journal article, Allstate reports that it’s making investments in technology like artificial intelligence and telematics, and plans to scoop up talented software developers, engineers, and others to create its next generation of internal and customer-facing technology. 

Use technology to make the insurance industry an attractive career for a new generation

Even though February is designated as Insurance Careers Month, for those of us working in the industry, every other month of the year is, too! 

We’ve written before about how different generations have vastly different experiences when working in insurance. We’ve also written about how adopting technology is going to be pivotal for insurance companies that want to stay competitive with both talent and customers. Whether it’s through automating claims or supporting a hybrid workforce, investing in modern technology is no longer optional. 

At AgentSync, we help insurance carriers (and agencies, MGAs, MGUs, and pretty much everyone in the distribution channel) streamline compliance management. Adding AgentSync to your tech stack comes with plenty of benefits and very few of the perceived costs of digitization. If you’re interested in learning more,