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Underwriting

Sep 20, 2021

The Insurance Industry’s Generational Talent Dispersion [Part 2]

Steve Buonpane

Steve Buonpane

Co-founder & CIO

Part II: The Insurtech Wave

The Great Resignation - a term first used in 2019 - is seemingly here. Employee turnover rates have been particularly high in 2021 across a number of industries, including Financial Services with 24% of the sector’s workforce expected to change jobs by 2022. This is a staggering figure, considering voluntary retention targets of 85-90%.

In Part I we explored the cross-generational impact of retirement rates, corporate bonus structures and stock buybacks, and how these factors are leading to reduced career opportunities and a widening wealth gap for Millennial and Gen Z employees. These aren’t the only reasons for high turnover rates, of course, and qualitatively there is evidence of how increased levels of ‘self-reflection’ as a result of the pandemic is causing many to reconsider their careers.

According to recent career research by Amdocs, Gen Z and Millennial employees are leading the way in current and expected turnover.

graphic-genz

While these turnover rates are unsurprisingly highest for Millennials and Zoomers, these two cohorts aren’t just leaving the workforce altogether obviously. As it pertains to this dispersion within the insurance industry specifically, many employees are leaving one big organization for another big organization - and if you’re reading this I’m sure you’re aware of a few examples of this in just the last 3 months. There is also a growing employee shift towards the non-traditional insurance sector - which will only pick up momentum heading into 2022.

Here in Part II we take a quick look at the rising insurtech sector.

The global insurtech industry - from healthcare to personal lines to P&C - has garnered significant investor interest in recent years and is expected to grow at a CAGR of 48.8% over the next 7 years. Established insurtech companies as well as the growing number of startups are tackling any number of inefficiencies across the industry’s value chain.

The growth in this sector is a function of the insurance industry’s need to modernize and to digitize, and this quest is certainly not limited to VC-funded thirty-somethings in Silicon Valley as the traditional players are focused on these customer and employee demands as well.

A by-product of the growing number of startups is the attraction of younger talent in the form of Millennials and Zoomers. In part because young people are less risk averse, but also because the opportunity to grow, learn, lead and own is so much more prevalent than what exists currently in the traditional job setting. Will Thorne, Head of P&C Ventures at Scor, recently highlighted insurtech hiring trends and the growth in job creation, along with the benefits of having cross-functional insights between tech engineers and conventional insurance roles.

Spend just a few hours within any insurtech company and you will immediately notice a few stark differences compared to the 1980's-decorated rows of cubicles still donning many office environments today, both culturally and practically:

  • Speed. Most, if not all insurtechs aren’t mired in legacy systems and processes, and are leapfrogging older companies in terms of the tech it can deploy both internally and externally. The natural infrastructure supports rapid problem-solving and quick decision-making.

  • Collaboration. The internal interactions alone are more efficient and collaborative (I’ll tell you more about this in our Slack channel) - which bodes well when trying to modernize an industry that has traditionally been siloed around product and function.

  • Diversity. The diversity in talent and leadership is prevalent in background, age and gender. Fresh perspectives from disparate professional and personal cultures will lead to better industry products, services and experiences.

While there is growing momentum in the insurtech sector as it pertains to talent and investment, I also want to be careful about dissuading any young professional from working at a traditional insurance or financial services company. Insurtech is not the panacea for all of the industry’s challenges, and there is a lot to be learned from organizations with strong training programs, established infrastructure, big balance sheets and deep levels of industry experience within the leadership ranks.

Do you want to learn how to underwrite? I can promise you that digitized models spitting algorithmic numbers back at you to the point you’re underwriting as a glorified data entrant is not the way.

There is also a greater semblance of risk in working for startups and younger companies, which by definition cannot offer the same levels of job security and stability as the traditional and established organizations can. However, given the Big-Corporate and macroeconomic dynamics that exist today - especially for the cohort of young emerging talent who are ready to take on more - what’s happening in the fintech and insurtech space offers those ‘stretch role’ opportunities that are diminishing within the traditional sector. The learning experience in being a part of building something from an early stage, operating with more autonomy, accountability and flexibility, while truly being able to commensurately grow equity with the business growth offers an exciting opportunity for many.

The insurtech market is “hot” and I will be the first to tell you that a few of these companies and startups are overvalued at current investment levels. Yes, there will be more losers than winners, however don’t mistake “overvalued” with “lack of value” because this industry is on the precipice of a number of innovations that will forever change the landscape of how we operate in the insurance sector.

I’m fascinated with how the next few years will play out in our industry, and specifically how the Millennial and Gen Z talent fare in terms of professional growth and industry leadership. Regardless of the risk associated with working for a startup, the level of firsthand experience and knowledge gained in shaping the future of insurance opens the door for a world of new potential career growth opportunities.


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