Much of the financial industry is taking big risks to disrupt the whole concept of money with everything from virtual banking apps, cryptocurriencies and exotic derivative contracts. Even the insurance industry, a whole sector devoted to avoiding risk, is edging into innovative business practices to attract a new generation of customers.
But if insurance leaders are going to join its faster-moving financial peers, they are going to have to convince an important group that they’re committed to innovation: insurance sector employees. A new Korn Ferry survey shows that the number of insurance employees who believe their firms are delivering high-quality products has fallen considerably. At the same time, less than half of those employees think their firms are using new technologies or creative approaches to improve the business.
“Insurers are being called upon to be more agile—to learn quickly and react to the unexpected,” says Mark Urban, a Korn Ferry associate client partner and author if a new whitepaper on the topic. “However, according to employee engagement data we collected, leaders are having a tough time responding to these challenges.”
Korn Ferry surveyed more than more than 68,000 employees in the insurance sector. In 2013, 75 percent of employees felt their firms were managed effectively run well, in 2015 that number was down to 68 percent. More disconcerting was that less than half of the insurance firm employees believed that their firm was innovative in how work is done, 10 percentage points lower than what employees in the broader financial industry felt. Urban and colleague Robert Abramo wrote a paper, “Workforce challenges as insurance companies go digital,” to help improve employee engagement as the sector undergoes a digital transformation.
It is a big shift for an industry that isn’t known for embracing change. Indeed, many parts of the insurance industry are still highlighting how doing business online can be cheaper, an innovation that would have sounded compelling in the mid-1990s. But some insurers are tiptoeing in, including making investments in data analytics to help streamline underwriting or giving customers wearable technology that monitors their behaviors and providing rewards for healthy lifestyle choices.
But Urban warns that a digital transformation in insurance isn’t just about investing in new back-office technology or designing a new customer-facing app. If insurance companies view “going digital” as simply their next technology upgrade, they will likely miss the opportunity to achieve game-changing results,” Urban says. Indeed, he says, insurance leaders with that mentality run the risk of severely hurting their organization’s future ability to compete. “If insurance leaders are willing to unleash the organization’s talent to design and implement the digital strategy, there is a greater probability of achieving transformative business results,” Urban says.