The combination of a continued global pandemic, demographic and geopolitical shifts, and a possible looming recession presents uncertainty on multiple fronts. These compounding realities have put into focus the need for innovative approaches to talent pools and recruiting for insurers.
This topic was especially top of mind in our most recent meeting of the Aite-Novarica Innovation Advisory Board. The meeting, as usual, provided some fascinating insights about how insurers are innovating in the face of more change and uncertainty.
New Approaches to Talent
The pandemic and ensuing Great Resignation have caused employees to reevaluate their priorities, both personally and professionally. It is becoming clear that Gen Z and Millennial employees seek more meaningful and purpose-driven work; however, most young people don’t think of insurance as particularly purposeful.
One insurer in our group described their experience appealing to a younger employee base. Changing younger candidates’ negative perception meant conveying that insurers aren’t “greedy, money-hungry companies that won’t pay out claims.” Encouragingly, the message of insurance as a social benefit and safety net was an appealing one to many of the college students this insurer sought to recruit.
Beyond changing the perception of the insurance industry, many carriers are starting to recruit employees earlier in the talent cycle. Companies are thinking of talent like sports recruiting: If you wait until they graduate, you’re too late. Some organizations are beginning to go after candidates as early as high school. Community colleges and local universities can also be great talent pipelines, the advantage being that insurers can influence curriculum and pre-train potential employees before they even begin working.
Many insurers are looking at startups to bring innovation and new technological expertise in house. This process is not always easy on the startups. A founder on one of our tours to Silicon Valley related, “It takes me 40 meetings and 18 months to sell something to a big carrier, but I’ve only got 12 months of cash on hand.”
A growing number of carriers approach onboarding startups with the same due diligence as a larger software company pushing an enterprise licensing agreement (ELA). Yet engaging with innovative startups means right-sizing processes for them. Otherwise, as this startup noted, insuretechs will “starve to death before they can get a deal done.”
Internally, opportunities abound to foster more innovative practices as well. As the world moves into a new hybrid model of remote and in-person work, requiring employees to return to office without a clear reason why will result in resignations. What’s more, employees are staying for shorter “tours of duty,” which should inevitably prompt the question: why? Companies may be able to provide more growth opportunities and encourage longer tenures.
Finally, a great source of internal innovation can come from boomerang employees, i.e., people who have left the company and return. These employees gain experience and exposure at different companies and often bring innovative practices back with them upon re-entry. They also routinely recruit friends to come with them, validating their decision to return.
Venture Capital and Private Equity Activity
Startup activity investment increased during the pandemic at a time when most of the world expected a sharp decrease. This trend has continued as the world enters the third full year of the pandemic, with startups continuing to see large funding rounds and even acquisitions by insurers and established vendors.
With the potential of another recession on the horizon, some startups have undergone mass layoffs. Among these startups are some that have had unicorn valuations. It will be interesting to keep an eye on what this means for venture capital and private equity investment in the space. Certainly, expectations around digital experience, faster access, and consistency will be tailwinds driving innovation and startup activity. Yet demographic shifts, the Great Resignation, and the possibility of decreased economic growth will present some strong headwinds.
These discussions always provide fruitful and productive knowledge sharing. As travel resumes, we have also relaunched our trips to Silicon Valley with insurers to learn from innovative organizations. Please reach out if you’re interested in an upcoming Silicon Valley Innovation Experience or learning about how we help insurers shape their approaches to innovation.