With the insurance industry facing turnover as a result of retirement amongst Baby Boomers, boardrooms are placing additional focus upon succession planning. The forces of disruption, among them automation, artificial intelligence, changing customer expectations and industry realignment, necessitate that leaders be well versed in digital skills and big-picture strategy, while the importance of traditional skills such as risk assessment remain vital to viability. What does the future look like? What aptitudes should be sought in new leaders? Where will these candidates come from? Answering these questions involves a closer assessment of the forces at work.
The Digital Revolution in Insurance is Here
“Forget about attracting talent, keeping up with rapid change, or complying with a myriad of regulations” writes Jason Contant for Canadian Underwriter, “what’s really keeping insurance executives up at night is scaling artificial intelligence (AI) for their business.”1
A recent study by Accenture found that, while the vast majority of insurance executives recognize the importance of scaling AI, the progress they have made in doing so varies wildly. Perhaps unsurprisingly, those who are furthest along the path have reaped the most rewards.
“Scaling the exponential power of AI across the enterprise is a journey,” the report said. “Those that learn the lessons on each path will reach a place where the business is seamlessly fused with intelligence that boosts productivity and effectiveness. The result: industrialized growth through unassailable competitive strength in everything from organizational effectiveness to brand perception and trust.”1
Services vs. Product: Changing Expectations in the Insurance Marketplace
The paradigm shift is not specific to the insurance industry, but reflective of broader societal shifts. According to Mark Duffey, a new generation of consumers are more interested in services than products. As Duffey, the co-founder and president of Everest Funeral Package LLC, writes for the Globe and Mail, it’s simply a matter of keeping up with the times.
“Consumers want to be able to access the insurance industry with the same ease and simplicity as everything else in our lives today – hailing a ride with Uber or using Waze to help navigate traffic. As we look at how we serve our clients, we need to ask ourselves a question: “How is what I am offering my clients making their lives better?”2
Leadership Qualities for the Future of the Insurance Industry
As the industry makes strides into the future, it becomes clear that digital expertise is an important quality for potential leaders to possess. Success will require not only a technical understanding of tomorrow’s innovations, but an ability to cut through the clutter and understand their strategic implications.
And just as technology is evolving, so to is the very nature of leadership itself. According to a study on insurance leadership conducted by Ernst & Young, an increase in the pace of change, paired with a decrease in trust for authority, has ushered in a new kind of leader whose ability to communicate and collaborate are essential.
“The old ways of developing trust are unlikely to work: top-down communications, relying on brand, using hierarchical thinking. But all is not lost. The old ways are quickly being replaced by clarity of purpose and explicitly principled decisions. These things are good for attracting talent and customers.”3
With the pace of change unlikely to slow, long term plans go out the window, placing a premium on leadership that can facilitate teamwork while reacting to shifting market forces.
Despite these changes, insurance continues to be rooted in risk, which means that a steady hand remains essential. Larger commercial underwriters still rely on individuals with decades of in-depth experience to assess risk when underwriting complex commercial/industrial ventures, be it a sawmill, ski hill or brewery. The importance of industry knowledge must not be lost in the race toward the future.
Succession Planning in Insurance
The very business model of the insurance industry necessitates a certain degree of conservatism. The resulting reputation for careful action can be off-putting to the wildly innovative. The need for leaders in possession of both a forward thinking digital mindset and an understanding of risk and underwriting poses a challenge. With this in mind it becomes important for companies to groom potential future leaders on an ongoing basis. While star candidates for c-suite positions can be found in competing companies or from outside the industry, the best way to ensure talent is by hiring and developing with succession planning in mind.
1 Contant-222, Jason. “What Insurance Executives Fear Will Make Them Go out of Business in 5 Years.” Canadian Underwriter, November 29, 2019. https://www.canadianunderwriter.ca/technology/what-insurance-executives-fear-will-make-them-go-out-of-business-in-5-years-1004171196/
2 Duffey, Mark. “Five Leadership Tips for Transforming the Insurance Industry.” The Globe and Mail, March 22, 2018. https://www.theglobeandmail.com/report-on-business/careers/leadership-lab/five-leadership-tips-for-transforming-the-insurance-industry/article38314345/
3 “A Leadership Crisis for Top Insurance Groups.” ey.com, January 2018. https://www.ey.com/Publication/vwLUAssets/ey-a-leadership-crisis-for-top-insurance-groups/$File/ey-a-leadership-crisis-for-top-insurance-groups.pdf