More than 70pc of insurance companies in a PwC and Insurance Ireland survey said they are experiencing skills shortages across actuarial, digital, technology, risk and more.
The insurance sector has plenty of potential when it comes to technological advances. Data science is opening up new opportunities in the field and many software companies in Ireland are looking to innovate this sector, such as Spire and Covernet.
But a new report from PwC and Insurance Ireland claims that challenges in skills and technology may be holding insurance companies back.
This is based on the findings of a survey carried out earlier this year among 79 insurance companies with operations in Ireland. Of those companies, 70pc said they are experiencing skills shortages, particularly in actuarial, digital and technology, risk and underwriting abilities.
Overcoming these shortages presents a challenge for many, too. Less than half of respondents said they have clear upskilling strategies in place, and a similar proportion said they are finding it difficult to measure the value of upskilling programmes and to retain employees that have upskilled.
The majority (65pc) said that the insurance sector isn’t adapting to changing consumer habits, such as the shift to digital and mobile platforms, but 26pc expressed concern about the speed of technological change.
Technology adoption lagging
So, are insurance companies responding to tech developments? More than one-third said they have no plans yet to create human-machine partnerships such as chatbots, while 41pc believe that automation will reduce their workforce over the next five years.
In terms of tech trends, cyber and data security was cited as a high priority by 39pc of respondents, and 71pc believe that most businesses will have cyber insurance in five years’ time. More than half of the companies said data analytics is the technology with the greatest opportunities for the insurance sector. Others mentioned AI, robotics and IoT.
Darren O’Neill, data analytics partner at PwC, said the survey suggests that insurers in Ireland have “more to do to fully embed some key technologies into their business models”.
“Using automation for the delivery of key repetitive processes can reduce the cost to serve and increase efficiency,” he added. “Insurance business models also need to continue to evolve around the concept of intelligent interaction, where smart devices are embedding insurers in people’s cars (telematics), homes (smart metering) and lifestyles (wearables), enabling policy holders to benefit from real-time equipment and health monitoring and maintenance.
“The ultimate result will be better outcomes for policyholders and lower, more proactively managed risks and claims for insurers.”
Survey respondents highlighted three key areas they’ll be focusing on in the year ahead: leadership and talent development (63pc), cost efficiency (61pc) and digital transformation (57pc).
Climate policies, diversity and remote working
Less than half of the companies cited transitioning to a low-carbon economy as a net opportunity. Less than one-quarter plan to prioritise sustainability in their strategies for the coming year, and almost three-quarters don’t have a plan in place to manage risks associated with the climate crisis.
However, two-thirds said they have environmental, sustainability and governance policies in place. Of those, 77pc said this had been driven by their corporate values. In terms of diversity, 83pc said they have a dedicated strategy in place.
When asked about remote working plans, 89pc of companies said that at least 30pc of their workforce will work remotely in the future. More than one-quarter of these said that up to 100pc of their staff will work remotely. Before the pandemic, just 6pc had been operating on a mostly remote basis, but that figure jumped to 97pc after the outbreak of Covid-19.
Productivity levels have remained the same for 72pc of companies and have improved for 14pc. The report suggests that the biggest challenge, however, is supporting employee resilience and wellbeing. More than three-quarters of survey respondents highlighted this issue, while one-third reported issues around connectivity and technology.
Looking ahead, PwC recommends four key actions for insurance leaders: actively reviewing cost effectiveness and productivity; prioritising people and upskilling; driving digital transformation and innovation at scale; and making a plan to manage climate risks.