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Gray matters: Addressing the loss of insurance industry knowledge as aging boomers retire

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Recently my respected friend and colleague, David Notestein, retired after a distinguished career on the company and consulting side. We have collaborated on white papers, client challenges and shared our thoughts about trends in the industry. With him goes insight and perspective that I have rarely seen matched during my career in the industry. It leads me to wonder, who will I bounce my observations and viewpoints off now?

While I will have to seek out others for their views, it occurred to me that the industry is facing the same challenges with respect to its intellectual capacity, particularly in the underwriting arena.

Losing expertise at a rapid rate

According to the US Bureau of Labor Statistics, the number of insurance professionals aged 55 years and older has increased 74 percent in the last ten years; by 2018, a quarter of insurance industry employees will be within five to ten years of retirement.

When these individuals leave the workforce, what will happen to the accumulated knowledge and expertise they will take with them?

As they’re walking out the door, they’re leaving the industry with a younger, less qualified staff to shoulder huge responsibility in a fiercely competitive market. This new, and perhaps perplexing, generation of Millennial employees is about to come of age. And, they’re doing so during a pivotal time for the industry – a time of widespread change as insurance companies learn how to capture, evaluate and monetize the explosion of data brought about by new technologies.

The 70:20:10 Model for Learning and Development is a commonly used formula within the training profession to describe the optimal sources of learning by successful managers. It maintains that individuals obtain 70 percent of their knowledge from job-related experiences, 20 percent from interactions with others, and 10 percent from formal educational events. As underwriting knowledge leaves the industry, so too does their accumulated knowledge as well as their mentoring of the next generation of underwriting talent.

Stopping the loss with cognitive

So, what are you going to do about it? Have you started to harvest the logic and approach of your best underwriters? Are your underwriting files documented in a manner that enables you to capture their decision process? A wise man once said to me “you have to wonder if that’s an underwriter with 20 years of experience, or one year of experience 20 times.” Have you thought about which category your underwriters fall into, and whose experience you really want to capture?

Cognitive computing can help offset the loss of mentoring (the “20” in the 70-20-10 ratio) that has been so valuable to generations of underwriters over the years. It can smooth the learning curve. Cognitive can leverage that accumulated knowledge for years to come and continuously be refined by the data supporting the decisions for current and future underwriting generations.

If you want to learn more about the value cognitive computing can deliver for insurers, read our new white paper, Turbocharged transformation: How cognitive underwriting is revolutionizing the insurance industry.

I’d be interested to know your thoughts about the impending underwriting challenge and how it will impact your business. Please share your comments, or contact me at carl.sherzer@us.ibm.com

 

 

 

1, 2  U.S. Bureau of Labor Statistics

Senior Managing Consultant - Insurance

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