General Insurance Industry Insights – News, Trends and Skills in demand
by Becky Hyndman
WHAT’S HAPPENING IN GENERAL INSURANCE?
The Australian General Insurance industry is undergoing significant transformation, driven by technology and regulatory change.
On the customer side we are seeing technological advances improve the customer experience particularly during the claims process. For the insurers themselves, introduction of artificial intelligence is aiding their ability to predict and manage claims more effectively.
Regulatory change is set to become a significantly higher priority for the entire insurance industry as the recommendations of the Hayne Royal Commission are set out.
In the Claims area we are still seeing some large insurers, such as Allianz, offshoring roles and functions while others like QBE have brought a large portion of claims back onshore. The motivation behind it is to improve efficiencies in process and costs but the balance needs to be right.
Advances in technology are also having an impact on the claims function with Artificial Intelligence in particular moving to imbed itself into the process. Gallagher Bassett recently published an article about its use of chat bots in its “pre-claim engagement”. Whilst the technology is set to enhance the experience for claimants, the likelihood of some claims roles becoming redundant in the future is inevitable. According to Gallagher Bassett, complex case management, customer service and creative problem solving will still require the human touch and as such people will still be needed to deliver quality service to customers.
The claims area is generally candidate short which may be attributed in part to the lack of clear career progression in this area of Insurance discouraging candidates. Good claims candidates can be easily placed with our clients.
With the Royal Commission turning its focus to the Insurance sector, we are seeing a lot of attention on the claims function of key insurers. We will be interested to see the outcomes of the RC and the impact that it has on the hiring requirements across the industry.
There is a lot happening in broking at the moment with the industry on the precipice of both regulatory and technological change.
The fallout from the Royal Commission could see the demand for experienced brokers increase in the market as people seek expert advice on the best policies for their needs.
The market is hardening in construction and property due to cladding exclusions resulting from incidents like the Docklands fire in Melbourne and the Grenfell fire in London. It is becoming increasingly difficult for insurers to cover these commercial properties which impacts all involved in the construction industry and property buyers. Brokers that can specialise in this area and work with insurers that are willing to provide this cover will be in demand.
The consolidation of the general insurance market doesn’t show signs of slowing with the announcement of the Marsh & McLennan acquisition of JLT in September. Early statements from Marsh President and CEO Dan Glaser suggest Australian staff should expect headcount reductions in the local market as the two organisations are merged. It is expected that we will see some candidate movement from both companies during this period of uncertainty.
With the ever increasing need to utilise technology to improve process efficiency and reduce costs, the underwriting function is starting to see the introduction of cognitive intelligence (CI) technologies.
Deloitte, forecasts a potential future scenario where cognitive technologies are so pervasive that underwriting becomes much more automated than today, perhaps leading to the emergence of third-party underwriting specialty providers.
An article by IBM noted that “a 1% increase in the productivity of underwriting likely corresponds to a 1% increase in revenue growth” supporting the importance of technology in improving profitability.
As technologies become more advanced and productivity increases, underwriting roles are likely to evolve, particularly in the high volume, low margin sectors. We are seeing underwriting managers look for other skills such as data analytics, portfolio management and business development in addition to technical underwriting capabilities when building their teams for the future.
WHERE ARE THE GROWTH AREAS?
Cyber Insurance is still a relatively new product but is seen as one of the largest growth areas in insurance and reinsurance. A report by The Geneva Association looks at risk associated with cyber insurance and assesses its ongoing sustainability. The report notes that cyber risk premiums continue to rise and although the loss ratios compare favorably with other product lines there is a risk that a major cyber incident could present accumulated risk for insurers. As this area of insurance is in its infancy, there is limited historical data for insurers to work with. The pressure will be on underwriters to grasp the full extent of the risk exposure.
Deloitte’s 2018 Insurance Industry Outlook report further supports this, highlighting the complexity of cyber insurance and the ability of insurers to crack the code. “A big part of the problem has been the difficulty of underwriting a constantly evolving risk, along with the dearth of historical data. To capitalize on the growing demand for coverage and to avoid losing business to alternative risk-transfer vehicles, such as cyber bonds, insurers might need to underwrite based on each applicant’s risk management maturity, perhaps confirmed for bigger accounts by independent third-party assessments.”
EVENT: ANZIIF is holding a cyber insurance event to address this topic - The Great Debate - Are the concerns regarding aggregation of losses from a cyber attack overstated? Click HERE for more details
Internet of Things
The Internet of Things is forecast to deliver a raft of opportunities for General Insurers with home insurance policies. It is predicted that there will be 600 million smart home devices in homes globally by 2021 which could revolutionise the insurance offering particularly around home insurance. Deloitte reported that “smart home sensors could monitor indicators of possible problems—such as wall strength, pipe or plumbing fissures, faulty wiring, or even home invaders. Alerts can be sent to homeowners and insurers, as well as trigger automatic shut-off valves and notifications to local service providers who can pre-emptively intervene prior to major incidents”.
Strata presents a significant growth area for underwriters and brokers. Residential and commercial strata developments are continually popping up in major cities and expert brokers and underwriting agencies can benefit from this and add value to customers. There are currently 270,000 Strata Schemes, encompassing 2,000,000 lots in Australia and growing (Source: Strata Community Association). With the growth comes new challenges and emerging market risks such as terrorism and environmental issues which previously weren’t factored into standard cover.
With this boom in strata property growth and ownership there comes increased opportunities for brokers and underwriters as strata insurance is mandatory in Australia.
Brokers with expertise in strata are in demand to offer technical advice to Strata Managers with less expertise and understanding of the complexities of the risk exposures.
WHAT SKILLS ARE IN DEMAND?
There is an ongoing need in the market for strong technical claims staff and brokers. Companies need to start investing in developing the new generation coming through into these areas to ensure a consistent pipeline of talent. This is easier for larger organisations that can support the development of industry newbies but can prove a challenge for smaller business’ however we are seeing our clients investing in the next generation of talent to the industry.
As mentioned earlier in the article, as claims and underwriting roles become more automated organisations are seeking candidates who have the ability to transition into the roles of the future. For insurers these roles will be focused on technical underwriting, business development and data analytics. For claims in particular, human involvement will be required in the management of complex, unusual and contested claims. In both areas IT support roles will be in demand.
For candidates the message here is to become as technically skilled in your area as possible and try and have more than one string to your bow to stay relevant.
SALARY EXPECTATIONS – ARE SALARIES ON THE RISE?
Across the board salaries are steady with no significant changes being observed. Clients continue to hire and generally have a good understanding of the salary expectations for the right talent.
Candidates in ‘producing’ roles who can demonstrate a clear track record of growth command higher salaries than those in ‘servicing’ roles.
Factors such as years of experience and product specialisms have a significant impact on the salaries offered by clients for roles in Broking and Underwriting.
Overall the General Insurance recruitment market is very buoyant. At this stage we have not seen any effect on hiring decisions as a result of the Royal Commission. We anticipate the market conditions to remain solid through to the end of the year.
Becky Hyndman is Principal Consultant - General Insurance & Broking at Ensure Recruitment