Insurers will need to adapt to the changing workforce dynamics as the shift to integrating new, innovative technologies within their business accelerates in an increasingly automated world.
The rise of smart technology and intelligent automation is changing the workplace where the automation of more tasks is now possible. Technologies including AI, machine learning, robotic process automation (RPA), telematics and blockchain are now presenting challenges to the status quo across the insurance value chain, as well as having a profound impact on how insurers conduct their operations and engage with customers.
For instance, the surge in acceptance of and reliance on RPA and AI-driven technologies has led to the development of the intelligent digital workforce, AI-powered digital employees or bots, to augment the human workforce.
Whether managing simple and repetitive tasks or a complex series of work processes such as fraud detection and more accurate prediction of mortality risk, the digital workforce is highly adaptable and can play a significant factor when eliminating errors, reducing operating expenses and improving customer satisfaction.
Capgemini, in its report on automation and the future of insurance workforce published in March 2020, looked at various insurance firms globally and identified one thing in common – automation was on the rise. Insurers around the world are increasingly deploying a digital workforce by automating the contact centres, back-end operations and even core operations such as underwriting and claims adjustment. Robots are also being deployed to fill the skill gaps created by millennials not joining the insurance workforce, preferring instead lucrative jobs in the technology sector, the global management consultancy said.
The Middle East case
According to research, nearly 70% to 80% of all rules-based business processes can be automated. Despite this eye-opening statistics, the insurance industry continues to remain heavily reliant on time-consuming and complex administrative activities to sustain its mission-critical workforce.
The insurance industry is one of the most traditional ones in terms of business model or ways of working, “even more in the Middle East”, said Mercer partner, head of careers, Middle East, North Africa and Turkey Nuno Gomes.
Innovation has not been a core business attribute or focus, he said. “Although [the sector was] already in disruption prior to COVID-19, the pandemic is accelerating the need for change and greater adoption of technology. However, with a traditional workforce recruited and developed to perform under non-digitally driven methods, the business naturally suffers from lack of agility, innovation and productivity.”
Amid the COVID-19 outbreak, there has been an obvious shift to a hybrid workforce within the Middle East insurance industry, with more and more employees working remotely, noted Aetna International CEO EMEA David Healy. While the pandemic has been the catalyst for the transition, “it really wouldn’t have been as smooth, or possible at all, if the underlying technologies — be it collaboration solutions like Zoom and Microsoft Teams, cloud services like Salesforce or mobile-friendly applications — were not available and mature enough to support remote workers”, he said.
The is similar to the global trends where many insurance companies have embraced new ways of working – from forming virtual agile teams to emphasising digital channels – at an unprecedented pace, demonstrating their ability to adapt and evolve in response to the travel and mobility restrictions due to COVID-19. In addition, the pandemic has made consumers more comfortable with technology than ever, increasing the importance of digital technologies to support remote insurance advice, policy sales and claims management.
Catalyst for change
The broader availability of relatively low-cost labour to deliver business activities has perpetuated the lack of urgency of digital transformation of the workforce in the Middle East insurance industry, coupled with a slow product innovation landscape, said Mr Gomes. Business survival is not under threat for many insurers in the region, primarily the main players, “but a more digital and global marketplace can, and will, change that”, he noted.
“This provides opportunities for new disruptive players to come through, and coupled with key investments from larger players, it can transform the industry. Additionally, let’s not forget the role of regulators in allowing a more open market to operate, new players to disrupt and driving innovation, while maintaining oversight and governance,” Mr Gomes added.
Mr Healy noted that the industry as a whole has now recognised the need to address process efficiencies and is making strides in this area. “This is supported by data from a 2019 report from KPMG, where basic process efficiency and process standardisation, including process redesign — end-to-end value chain improvement throughout the customer lifecycle was cited by insurers as the top key initiative planned or underway for operational efficiency gains.
“Going a level deeper, the research found that claims (55%), policy service (51%) and underwriting (45%) were the areas insurers would focus improvement efforts on in the next 12-24 months,” he said.
The confluence of these developments provides insurance companies with a unique opportunity to make significant progress in building their digital capabilities and workforce. However, insurers would need to devise appropriate actions such as evaluate remote work and location strategy, recalibrate the employee value proposition, rethink the workforce plan and refine the talent acquisition engine in order to reshape their workforce and also attract more digital talent.
In addition, “it is worth bearing in mind that this is a highly-regulated industry and several of the processes are mandated by regulatory bodies and country laws, to ensure that plan sponsors and members receive the best suited plans and services,” said Mr Healy.
The future of work
To thrive in the years ahead, insurers need to protect their core business, while expanding into new areas, with workforces that are lean, agile and willing to embrace change. Science, technology, engineering, and mathematics (STEM) skills will be critical to realising the potential of digitised processes, big data, algorithms and real-time analytics, according to a report ‘The insurance workforce of the future’ by Accenture.
“Creativity and flexibility will be needed to navigate fast-changing policy frameworks and regulations. And softer skills – from problem-solving to communications – will be needed to boost sales, enable collaboration and deliver personalised customer experiences,” the report said.
As technology continues to redefine jobs in the future economy, there are two key aspects – employer branding and internal talent upskilling and reskilling – that Middle East insurers should consider as more jobs are being remodelled, said Mr Gomes.
He added, “The insurance industry is not the most attractive from an employment perspective, therefore, attracting talent that can be lured by other more attractive industries is a challenging task that insurers will have to fight for. Building a compelling employee value proposition, thinking about what attracts and motivates talent in a new world order is paramount. Some of the workforce of the future may already be part of the organisation, but will require different types of skills and mindset; hence, focusing on upskilling and reskilling is another component that insurance companies should look for.”
COVID-19 has accelerated the arrival of the future of work, said World Economic Forum (WEF) manging director Saadia Zahidi. By 2025, automation and a new division of labour between humans and machines will disrupt 85m jobs globally in medium and large businesses across 15 industries and 26 economies, according to the WEF’s ‘The future of jobs 2020’ report published in October 2020. More than 80% of executives are accelerating plans to digitise work processes and deploy new technologies, while 50% of employers are expecting to speed up the automation of some roles in their companies, the report said. In contrast to previous years, job creation is now slowing while job destruction is accelerating.
In terms of the future workforce in the Middle East insurance industry, Mr Gomes said the region’s workforce in 2025 will have a different skill set and will be performing different tasks. He said, “Jobs should be more interesting and focused on client advisory, data analytics and product innovation. Nowadays, the industry still relies heavily on labour intensive tasks and processes in key aspects of its operation (claims, underwriting, etc) which will change with a greater adoption of technology and automation.
“Jobs won’t necessarily disappear, but the scope of activities will be more analytical, advisory and add value in nature. All in all, it should be a more talented and rich workforce than the current one.” M