Insurance transformation: People

The European insurance market was facing major challenges from all sides – regulatory change, digital disruption, hybrid working and shifting customer expectations – well before economic conditions deteriorated during the Covid-19 pandemic. Forty percent of CEOs worldwide believe that their company will no longer be commercially viable in ten years if it stays on its current course¹ - There’s no time to lose!

Now, the pressure is greater than ever to meet regulatory requirements such as ESG, transform and deliver enhanced propositions, improved productivity and deeper customer engagement. Addressing these imperatives successfully depends on companies’ ability to leverage the skills and knowledge of their people in all areas of the business.

Successful insurers are those who recognize that talent can no longer be an afterthought: if they neglect their people strategy, companies stand little chance of delivering their core business strategy. We have identified five key trends² that have an impact on the types of skills required in the insurance industry:

1
An erosion of trust in institutions of all kinds
2
An increasing expectation among customers that insurers should go beyond their basic risk-transfer obligations and offer end-to-end solutions³
3
Digital innovation and adoption that are reshaping the risk landscape
4
The growing impact of climate change, which is intensifying physical and transition risks
5
A more digitized, data-rich economy that is allowing organizations to share and collaborate in new ways, within and across industry boundaries, to create new value propositions

Insurers’ capacity to benefit from these trends will be determined in large part by their strategy for developing and managing their people under three key headings:

Agility
Strategic workforce planning
Leadership and culture

By concentrating on these topics, insurance companies can make their workforce a major success factor in their overall transformation program.

Agility

To make the most of hybrid working, the rapid changing expectations of customers, and the new capabilities that digitization requires insurers to develop, they need to scale the agile mindset and way of working effectively across their organization, so their employees can harness their skills to respond rapidly and flexibly, delivering maximum value to customers, stakeholders and society.

Achieving agility across the organization means putting more emphasis on leaner structures, such as multidisciplinary teams rather than hierarchy, running more cross-functional groups and doing short iterations, with a ‘continuous learning’ mindset, instead of sticking to rigid, long-term blueprints. Meanwhile, organizations need to embrace a culture of trust and decentralized decision-making.

But there is no ‘one-size-fits-all’ approach to achieving agility. To ensure a successful transformation, four key points are crucial:

1Purpose

Start with a clear purpose and link the day-to-day work of employees to an overarching strategy and mission of the organization. This will enable a sense of belonging for employees, which is especially important in hybrid working situations where people need to feel connected to stay engaged. In this context, insurers should define what agility means to their organization.
2Enablement

Create a shared end-to-end agile mindset, where employees aim to solve problems together. Insurers can achieve this by empowering employees to establish a shared responsibility of ‘us’ instead of ‘me’. Bringing agility to life also requires some hard skills and competencies (beyond those of a Scrum Master) and lots of coaching on the job.
3Fostering game-changers

Find and empower unofficial leaders within teams. These ‘game-changers’ will help insurers accelerate their transformation and empower the shared mindset.
4Leadership support

Make sure that leaders support the vision, this means helping them understand what the shift means for their leadership styles, the culture of the executive team and the importance of leadership in transforming an entire organization. It’s crucial to define the vision, completely stand behind it, embrace it, refer to it and defend it in everything leaders do.

Strategic workforce planning

Fifty-two percent of CEOs think that labor and skills shortages will impact their profitability to a large or very large extent over the next 10 years.⁴ This demonstrates the urgency of creating a strong workforce strategy that helps organizations take action today to prepare for tomorrow's work, workforces and workplace. Insurers need to start now by identifying the ‘dream team’ that will bring to life their strategy and business model. The question is: Do you really have the workforce strategy you need for tomorrow?

Recruitment and retention

Insurance leaders worry that the difficulty in recruiting and retaining talent is holding back innovation and degrading the customer experience.

Reskilling and upskilling

According to PwC’s global study Hopes and Fears 2022, 30% of employees are concerned that their job role will be replaced by technology in the next three years.

Our Workforce diagnostic and maturity model, based on our research and extensive experience in designing and implementing future workforce strategies, can assess your readiness in five distinct areas: planning, purpose, talent, technology and organization.

Insurance leaders worry that the difficulty in recruiting and retaining talent is holding back innovation and degrading the customer experience. In the long term, customer experience will never be better than employee experience, so it is vital that your employees feel connected to the company’s purpose and experience that it offers them the right combination of opportunities and rewards.

The things that make people join or decide to stay vary from one company to another and from person to person. To understand their motivations, measuring employee preferences related to the employee value proposition regularly will provide invaluable insights to streamline the reward strategy. Analyzing the results will allow companies to create a tailored employee reward and benefits plan that, if necessary, can specifically address the preferences and needs of key personnel. Alongside this exercise, insurers also need to set out a vision and purpose for the company that resonates with employees’ values, and to promote a culture that allows individuals to feel that their contribution is valued.

According to PwC’s global study Hopes and Fears 2022, 30% of employees are concerned that their job role will be replaced by technology in the next three years. Furthermore, 39% said they are concerned about not getting sufficient training in digital and technology skills from their employer.

There are two ways to prepare people for the work of the future: reskilling (learning new skills for new roles) and upskilling (enhancing skills for existing roles). Both are crucial for recruitment and retention – especially in three key areas for the insurance sector:

Digital: Digitization creates new workflows, roles and positions, which offer the opportunity to make the organization more efficient and to unlock value from digital assets. But it also creates the risk that people get left behind or that they take their new skills elsewhere because the transformation is too slow for them. Insurers need to involve employees in digital transformation from the start, train them and make sure new skills can be used on the job accordingly.
Human skills: People with strong communication and cognitive skills cannot be easily replaced by machines yet. Skills such as conflict management, problem solving and teamwork are also vital to the future of an increasingly hybrid organization and should form part of the development agenda.
ESG: Financial institutions play a major role in the implementation of ESG and are expected to be leading the charge. Moving beyond meeting the reporting requirements means defining a purpose for a company’s ESG transformation and anchoring it into all aspects of business strategy. Upskilling and reskilling, supported by better measurement and communication of the ESG progress, can help employees understand ESG goals and play an active role in reaching them.

Leadership and culture

Insurance leaders will need to manage transformation at an unprecedented rate in the coming years. Upskilling leaders is critical, given the pace and breadth of change. Failure to support leaders to lead from the front will potentially carry a heavy cost. Now is the time to set out an ambitious strategic leadership agenda. Additionally, for sustainable impact, it is critical to align culture with strategy and operations. Once all three are in sync, organizations as a whole can thrive and flourish. We highlight four tools that insurers can use.

Developing and sharing a change vision with employees starts a process that makes senior leaders the owners of the message. A coherent narrative helps to set a clear direction of travel and motivate employees to buy into the change and the outcomes it will deliver. Additionally, building a change vision and story that touches upon the societal relevance of the organization helps keep employees engaged and on board. In fact, 75% of employees want to work for an organization which contributes positively to society.⁵

A leadership capability framework tailored to the individual organization specifies the attributes its leaders will need and provides a way to benchmark progress and align individual growth to organizational change. Such a framework serves as a tool to foster significant mindset shifts in the workforce. At PwC we have a framework that specifies what we believe to be the differentiating capabilities for our day, and we call these the six paradoxes of leadership:

Globally-minded localist
High-integrity politician
Humble hero
Strategic executor
Tech-savvy humanist
Traditioned innovator

Leaders’ role to navigate leading change as well as run the business simultaneously whilst owning the change vision is no mean feat. Supporting them with a leadership development program in alignment with the transformation goals will help them be the flywheel insurers need. It can help to leverage informal mechanisms such as behavior, attitudes and mindsets to accelerate the transformation. It can foster a growth mindset to improve innovation, or behaviors that encourage trust and improve customer satisfaction. The goals are varied but should be guided by the overall business strategy.

Culture is commonly defined as ‘the self-sustaining pattern of behaviors that determine how things get done.’ Culture is what brings the strategy and operational side of organizations to life. It is therefore crucial that the strategy, operations and culture of an insurance company are aligned and in sync with each other. At PwC we have created the Cultural Thumbprint, a tool that assesses your current culture, your aspired culture, the coherence between your culture and strategy, and how employees experience your workplace and leadership. These are invaluable insights that offer a clear view of the road ahead. Together with organizations we can define and create a unique journey that addresses what is necessary to close the gap. Through laser-like interventions that evolve culture, improve leadership, enhance workplace experience and create a better strategic coherence, company culture can truly become a competitive advantage.

Find out more about Culture Thumbprint

Create your path to a future-ready organization

No transformation program can succeed without people being on board. What are the next steps to make insurance companies and their people future-ready?

1
Start with a vision for change and a coalition of the willing to make it happen.
2
Build an integrated roadmap that links directly to the strategy. Include a two-speed approach containing quick wins as well as big tickets to maintain momentum.
3
Expect change fatigue. Use the assets of your culture (whether it be care or risk awareness) to keep employees engaged on the vision and purpose.

This is the fourth article of our series of detailed deep dive articles on the transformation of the insurance industry. Also check out the other articles on cost, distribution and capital as well as the other upcoming blogposts on technology and ESG.

The authors would like to thank Vanessa van de Wiel and Paul-Mattias Reitsma for their contribution to this blog article.