Stuffy insurance firms need infusion of vitality…and Web 2.0

The North American insurance sector is ill equipped to meet the technology needs of a new breed of employees slated to enter the workforce, experts say.

The industry, they say, is also unable to provide users with the type of interactive tools they’re clamouring for.

It’s a situation that needs to be rectified quickly particularly given the looming labour shortage, they note.

Roughly 60 per cent of those in the business are more than 45 years of age and there aren’t enough new employees coming onboard to replace those retiring, according to the “Millennials in Insurance Survey 2008” conducted by KRC Research.

The survey was sponsored by Insurity and Microsoft Corp.

And the immient labour crunch isn’t the only scary part. As baby boomers retire, the dire prospect of losing valuable expertise and knowledge also greatly worries some executives.

“We have a brain drain as part of that retirement,” said Bill Hartnett, director of U.S. insurance industry solutions at Microsoft. “A lot of the accumulated knowledge required to run the insurance business is still in people’s heads.”

If you want to be an underwriter you get assigned to a senior underwriter and work alongside for five to 10 years, and then you get to write your own book.

But the new generation of workers doesn’t expect to have that type of apprenticeship environment, he noted. In fact, they’re probably not going to be working for the same company in five years.

Instead, they see their professional lives as a series of projects, and they’re going to fit their work in around their personal lives, the Microsoft executive noted.

“That has some pretty big implications, especially when it comes to technology.”

The baby boomer generation had access to technology they couldn’t imagine having at home.

But over the past 10 years or so, that’s changed, said Hartnett. Today people often have better technology in their pockets than they would find in an insurance company.

Members of the millennial generation not only use Web search and e-mail, he said, but are heavy users of social networking sites.

Most check these sites on almost a daily basis and are typically not heavy users of e-mail, since it’s become more difficult to manage with so much spam.

Potential employees expect to be able to apply the information they need to do their job using Web-based search tools, but a typical insurance company doesn’t provide for that.

“Most of the information is still in filing cabinets, and that’s not searchable,” said Hartnett. “So that’s potentially a problem for the insurance business.”

The norm today is for most employees to be provided with a company- PC and e-mail address.

Many millennial workers expect to be outfitted with much more – technology such as a tablet or mobile PC, and access to their social networking sites and instant messaging.

This generation of workers also wants access to an in-company portal where they can collaborate with one another.

Most insurance companies fall short, across the board, said Hartnett.

Fact is, he said, many millennial workers see the insurance industry as an old business populated by old people and not very innovative.

And it’s worse in Canada than the U.S. (roughly half of those surveyed in the U.S. would consider a job in insurance, while the Canadian figures were around 39 per cent).

When you consider that 91 per cent of those surveyed felt technology was important to their work, you can see there’s an impeding crisis, he said. “People have made this observation generally about what millennials are going to be looking at,” he said.

“Once you zero in on the insurance industry, you see a picture far more [bleak] than anybody expects.”

Users also expect to have a personal Web portal for all of their accounts, and live chats with their agent, but there aren’t any insurance companies out there doing that really well.

Also, there hasn’t been an instructive business model in the insurance industry that uses these technologies in the same fashion that an Amazon.com or eBay has transformed the retail business.

But, Hartnett believes that’s likely to happen quite soon.

“Someone will come along, and that will change the game for everybody,” said Hartnett.

If an enterprise doesn’t have these tools and capabilities, it’s going to be harder to attract and retain modern workers, said Chris Howard, vice-president and service director with the Burton Group.

“For some companies e-mail is about as modern as they’ve gotten.” We’re seeing large enterprises tiptoe into the Enterprise 2.0 space, but they’re doing it because that’s what users expect.

“My daughter going on 15 has never opened a user manual,” he said. “She knows how to do every sophisticated thing in combination with her phone and computer, and when she gets into the workforce, that’s what she expects to be there.”

The 20-somethings already in the workforce have exactly the same expectations. So companies are starting to look at Enterprise 2.0 technologies, such as some kind of community supported by wikis and blogs inside the firewall where people can exchange ideas.

“Those technologies are relatively easy to deploy, but where companies are really struggling with this is more from a control perspective,” said Howard.

“How free do they really want their employees to be, and what is safe to share within the walls of a company, versus where do there need to be pockets of exclusivity?”

Howard says one reason Microsoft’s SharePoint portal has really taken off is it’s relatively easy to install and administer. But in some ways it’s growing faster than the enterprise is able to wrap controls around it.

Over the next few years, he said, we’ll likely see organizations try to retrofit governance on top of the community that’s already emerged.
So organizations need to determine where they’re going to put limits on Enterprise 2.0, and how they’re going to control it without snuffing it out.

The minute you start watching like Big Brother, he said, and employees are aware of that, they won’t communicate with one another and you’ve completely extinguished the value of the technology.

“There’s a lot of power in social computing and it’s absolutely a commodity outside of the enterprise and users expect it – and they will be highly productive if they have access to it,” said Howard.

“The enterprise simply needs to modernize itself so it knows how to govern it.”

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