To Compete for IT Talent, Industry Must Embrace the Cloud

To compete for top IT talent, the insurance sector will need to evolve.

Jay Rabinowitz, vice president of financial services and insurance at Workday, predicts that IT and data scientists at insurance companies will be poached by technology firms unless the insurance industry leaves behind legacy systems. Rabinowitz recently dug into that prediction — and predicted other industry trends — in an email interview with Insurance Journal.

Q: Let’s talk about your prediction. How did you come to the conclusion that to compete for top talent, the insurance sector will have to leave behind its legacy systems and move to the cloud?

Rabinowitz: Today’s top technical talent has little desire to work with outdated systems and platforms, making it difficult for insurers to attract and retain the experts and innovators needed to survive and thrive in the age of digital transformation. We all know that many insurance organizations still have outdated legacy technology platforms based on COBOL coding or multiple databases. Young professionals don’t want to deal with outdated infrastructure – they want opportunities to be part of something new and innovative, such as cloud-based technology, improved data tools, new programming languages ​​and artificial intelligence.

Modernization helps address the talent shortage in two key ways: First, by creating an environment that provides a better user experience and is more attractive to top talent. Second, by giving talent the opportunity to work with the latest technology so they can learn and keep their skills sharp.

We see and hear from clients, especially CIOs, that technology is becoming a key differentiator for talent recruitment and retention.

Q: Can you point to figures or research that backs up your claim?

Rabinowitz: In today’s talent market, where skilled workers are at a premium, more than ever before, employee experience will be critical to building and retaining a skilled and agile team that wants to do more meaningful work. According to research from the Society for Human Resource Management (SHRM), 64% of survey participants said their expectations for what they want in a job have changed since the pandemic. For many, the pandemic is resetting the expectations people have of their work, and because they spend most of their time at work, they are looking for value and purpose at work.

In addition to IT talent, financial talent is also focused on technology. Workday released research at the beginning of this year that found that a company’s technology strategy is critical to people strategy. Nearly half of the CFOs surveyed (48%) plan to invest in consumer-like interfaces for finance tasks within the next five years to attract future finance talent. Of the CFOs who prioritize it, a striking 99% agree that technology updates will become even more important to attract and retain employees. When mundane tasks are automated and workflows are streamlined to optimize productivity, employees can focus on more strategic tasks and bring greater value to the business.

Q: Why is this potential loss of talent concerning?

Rabinowitz: Insurance companies must be able to attract the next generation of IT talent to ensure long-term success, as they face two obstacles: their existing IT and data science workforce is being recruited to other industries during this hot job market, and they tend to around an aging workforce approaching retirement.

Candidates with insurance technology experience are at a premium. The technologists and data scientists who understand both the technical aspects of a carrier or brokerage environment and the insurance nuances are rare. Without the ability to attract and retain current and next generation talent, an organization runs the risk of not operating their current technology effectively and will – most likely – struggle with any kind of digital transformation. The business also risks lost opportunities for growth if they do not have the right talent to develop a new product line or drive an acquisition. Even more, companies may see employees jump ship to competitors or InsureTech companies that can offer more meaningful work experiences.

Q: What obstacles do insurance companies face in making the leap to the cloud?

Rabinowitz: Cloud transformations can be complex for any organization, but they are especially challenging for insurance companies that have made investments in multiple solutions in an effort to address multiple business needs. The diversity and complexity of these solutions, which are often used in silos, will require time and patience to integrate and optimize the right technology infrastructure.

Insurers can lower their risk and gain better business value from an open and interoperable industry ecosystem that connects tailor-made solutions and addresses industry-specific use cases.

But it is important to remember that perfection is the enemy of good. To drive cloud transformation, insurance organizations need to focus on small progress, analyze what’s working, and get a lens on their customers from their customer service representatives and agents.

Especially in today’s environment, investment dollars are precious. Digital transformation is one journey that insurance organizations must take, but they must also continue to evolve their product offering and their customer service. They need to balance their transformation investment with the need for new innovations, products and partnerships.

About other predictions:

Q: Taking a step back, what insurance-related trend predictions do you have for 2023?

Rabinowitz: Insurance companies that embrace data analytics will have a competitive advantage because they can more accurately offer customers what they need. These organizations will be able to analyze both internal and external data more quickly to make decisions that are key to their business, such as rate changes. Furthermore, organizations can make better recommendations to their customers by using data to better understand the needs of their customers in order to make more customized offers. For example, customers can have their home insurance policy here, their car insurance there and their life insurance there. But can an insurer use insights gleaned from data to offer that customer a bundle that can solve all their needs? I believe that data analytics is the future of the insurance industry.

Q: What is something we will be talking about this time next year that we are not talking about now?

Rabinowitz: Insurance providers have a dirty little secret: the insurance sector is one of the top data-generating industries, spending billions on big data and analytics solutions. But the truth is that companies struggle to make their data work, leaving an extremely valuable organizational asset largely untapped.

However, we are beginning to see that leaving this valuable resource unused is a cause for concern. With increasing weather-related losses, inflation and an unpredictable job market, consumer behavior has never been more unpredictable than it is today. Insurance providers and many other financial institutions will soon realize that they need to start using and analyzing their existing data to help build predictive models for the future – all powered by artificial intelligence and machine learning. Insurance companies have the data to do this kind of modeling—but all too often their technology lacks the ability to analyze the data, and as a result, they underutilize the data they do have.

Insurance providers will need to bring together operational data from other systems such as policy, claims and reinsurance to truly create a comprehensive picture with greater context. Those insights help insurers develop products and offer services that benefit customers, as well as help the business navigate the future. Having access to data and being able to easily utilize the data sources will allow insurance companies to be proactively prepared for the unexpected versus reactive.

Ongoing uncertainty will continue to affect consumer behavior in unprecedented ways, and as a result insurers will need to quickly adapt their business in response to the sudden and unprecedented changes in consumer behavior – and then predict the long-term implications of these behavioral shifts.

Q: What is something people in the P/C industry should be keenly aware of as the calendar turns?

Rabinowitz: The rate of change in the P/C industry is only going to keep changing. In the face of economic and environmental uncertainty and a rapidly changing macro environment, there is no better time to prioritize agility and reinvention. Insurance leaders will be expected to lead the company through challenges, outmaneuver the competition and emerge stronger on the other side. There is no better time than now to streamline and simplify data access and decision making.

CNA, one of the largest commercial property and casualty insurance companies in the US, was on an ERP system that was – in fact – composed of five different financial systems. They moved to Workday to provide their finance function with timely and reliable data, empower their team through self-service and automation, and deliver more agile and accurate forecasting and planning to help drive the business forward. This transformation led to real business results and a real impact on their bottom line, including 30% annual savings on its financial system and 27% improvement in IT efficiency.

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