Global industry report highlights critical need to upgrade and upskill in growing digital reality
While the lockdown measures and distancing protocols put in place during the COVID-19 outbreak continues to fast-track insurers’ adoption of digital underwriting and marketing tools, that does not negate the crucial role that life insurance professionals play in the business. In fact, according to a new report, companies should invest in their talent more than ever.
In a new paper titled The Future of Life Insurance, McKinsey highlighted the acceleration of many early-stage digital and omnichannel trends that has occurred this year. Since the onset of the pandemic, it said insurance companies have been pushed to adopt digital-hybrid solutions that integrate robo-advisors, video conferencing, and web chats.
But rather than displacing frontline professionals, the report said insurers must embrace their role in “the integration of physical and digital channels,” particularly with respect to reaching customers. Customers can be directed to the channel or agent that best serves their needs, the report said, adding that agents should be armed with advanced analytics on their customer base along with centrally provided digital leads.
“[A] recent McKinsey survey found that ‘generating leads’ and ‘building initial client relationships remotely’ were the two biggest challenges faced by agents,” the report said. “At the same time, these agents were spending disproportionately more time on customer service and administration than before.”
To improve their distribution models, McKinsey said life insurers will have to engage in multichannel, personalized customer interactions and proactively contact customers who are likely to lapse. Cross-selling through that strategy, it said, could reduce customer acquisition costs by up to 50%, generate 5% to 10% of new premiums, and cut customer churn by up to 30%.
“The path to growth in the next decade will require new talent and bolder strategies,” the report said, highlighting the need for life insurers to extract more value from their current assets as well as targeted mergers and acquisitions.
With potentially 44% of insurance work potentially being automated by 2030, McKinsey said that tech- and digital-savvy workers will increase in value. For customer-facing agents positioned to help consumers with their evolving financial and coverage needs, emotional, interpersonal, and social skills will also become more critical.
“However, these workforce shifts will not eliminate jobs—our research indicates net new jobs will be created due to advances in automation—but instead change the nature of the work,” the report said.
Life insurance companies need to move forward, and they’ll be starting from a lagging position. Citing its own and others’ previous research, McKinsey said the financial-services sector trails others in volume of digital and tech talent, and 80% of millennials say their knowledge of the insurance industry is limited. A quarter of the employees in the industry, the report added, believe themselves to be within five to 10 years of retiring.
To fill the talent gap, the report said life insurers can reframe their societal purpose in light of COVID-19 and “recent social unrest,” which may help with talent recruitment and retention efforts. Upskilling and reskilling employees must also be a priority, it said, citing a survey of global executives where 75% said it should account for at least half of their skills gap solution.
“Life insurance companies that prioritize those efforts and develop operating models capable of responding to changing demands will distinguish themselves from peers and position themselves at the forefront of ‘future-proofing’ their workforces,” the report said.
