Assessing Labor Market Pressures in the Insurance Industry
As critical insurance roles age out, organizations need better coverage for filling gaps.
The insurance industry benefits from being able to develop the local workforce, fill talent gaps with foreign-born workers, globalize some areas of business, and continue its rapid progression in adopting AI technologies. However, demand for insurance services is projected to grow, and the prime-age workforce for insurance-specific roles is declining. Without quickly focusing on upskilling the local workforce, especially in compliance and quality assurance, workforce gaps will continue to increase and organizations may risk costly inaccuracies, disappointing sales cycles, or dissatisfied customers.
Risk Factors
1.70
Occupation Risk Score
Prime-age workers in insurance sales agent roles are leaving the labor force quickly—approximately a net loss of 38%, a trend to expect over the next 10 years as more workers occupying these roles approach retirement. Insurance claims appraisers, adjusters, examiners, and investigators are also quickly exiting the workforce, at about 25%, and underwriters exiting at 21%. Customer service representatives are in high demand across insurance companies, and the good news is that the prime-age workforce in these roles is nearly flat—so companies must explore upskilling and reskilling paths to fill the roles at greatest occupational future risk.
2.50
Market Risk Score
The insurance market supply risk is slightly lower than other adjacent industries, but still calls a call for organizational leaders’ attention. While many companies must operate in high-risk metropolitan areas, like Los Angeles, Calif., New York City, N.Y, and Chicago, Ill., many companies are exploring or have established presence in areas seeing a lesser pace of prime-age workers exiting the labor force, such as San Antonio, Tex., Omaha, Neb., Lexington, Ky, and Lansing, Mich. Additionally, many insurance companies operate in smaller regional offices, where suburban locations can benefit from accessing the prime-age workforce.
1.00
Industry Risk Score
The insurance industry benefits from being able to develop the local workforce, fill talent gaps with foreign-born workers, globalize some areas of business, and continue its rapid progression in adopting AI technologies. However, demand for insurance services is projected to grow, and the prime-age workforce for insurance-specific roles is declining. Without quickly focusing on upskilling the local workforce, especially in compliance and quality assurance, workforce gaps will continue to increase and organizations may risk costly inaccuracies, disappointing sales cycles, or dissatisfied customers.
1.81
AI Skills Gap Score
While many critical roles in insurance have significant exposure to AI, indicating these roles are quickly adopting these technologies, claims adjusters, examiners, and investigators are lagging behind. AI has the potential to shorten claims processing and alleviate manual claims work to focus on higher-skilled work. Further, AI can assist in predictive modeling to assess losses and future risks. However, these technologies must be used by workers who have been closely upskilled, with a focus on compliance, accuracy, and quality assurance, requiring analytical and problem-solving skills.
Insurance Organizations in the Fortune 1000
In the Workforce Risk Outlook, Lightcast found little correlation between workforce risk exposure and their Fortune 1000 ranking. C-suite leaders must align their workforce strategies with their quadrant position, as opposed to assuming their revenue makes them immune.
High Risk/High Scale to Address: Organizations in this quadrant face significant risk of being disrupted in their industry, but also have the financial resources to reduce their risk if they are proactive. These organizations should invest in AI-driven underwriting and claims processing, expand data analytics capabilities, and develop talent pipelines through partnerships with universities and fintech firms to future-proof their workforce.
High Risk/Lower Scale to Address: Organizations within the riskiest quadrant are lower on the competitive ladder and have less resources to address their incoming risk. These organizations must prioritize upskilling employees in digital tools and risk modeling, transferring knowledge from retiring specialists, and forging strategic alliances to access new talent pools without significant overhead costs.
Lower Risk/High Scale to Address: Organizations in this quadrant may not face immediate workforce shortages, but should remain proactive to maintain and reduce their exposure to risk. Investing in insurance tech solutions, strengthening cybersecurity capabilities, and implementing flexible work structures will help attract and retain top talent while improving operational efficiency.
Lower Risk/Lower Scale to Address: Organizations in this quadrant, if they are proactive, have a chance to be the disruptors. Specifically, they can disrupt industry competitors in the High Risk/High Scale quadrant. These organizations should focus on digital-first insurance models, use AI to develop personalized coverage options, and attract a tech-driven workforce to compete against traditional industry players.
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Solving Insurance Workforce Management
Talent Analyst
Strategies to Expand Regional Market Reach
To tackle labor shortages, increased service demand, and regional talent competition, insurance companies need to broaden sourcing strategies, especially when competing for tech talent. Real-time data on regions with skills from adjacent industries, higher unemployment rates, or graduates from schools in applicable fields expand sourcing pools and guide both remote work strategies and options for regional offices. Benchmarking compensation against these markets ensures attractive offers, while also alleviating wage pressures.
How Global Insurance is Targeting Untapped Talent
A global insurance company uses Talent Analyst to structure its job architecture and skills taxonomy to map to the markets in which it operates to inform talent sourcing and location strategy. Global labor market data has pinpointed lower-competition areas, as well as competitor pay bands across geographies. By using College Analyst, it has identified top schools that produce graduates in skills-aligned fields for early-career recruiting. Standardized roles, skill paths, and pay transparency has unlocked the enterprise’s ability to source talent more broadly and upskill more strategically.
Talent Transform
Strategies to Pave the Way for Early Talent
Insurance companies must act with urgency to address workforce gaps by prioritizing skills development, particularly in compliance and customer-facing roles. Investing in upskilling programs to grow analytical and problem-solving skills related to AI ensures that a limited labor pool can accelerate routine tasks and focus on higher-value work that AI cannot perform. Competitiveness hinges on retention, so employees must feel invigorated by their skills growth, compensation, and teamwork; a key strategy is to foster mentorship from employees approaching retirement to those progressing in their careers.
How Liability Insurers are Mitigating Skills Gaps Risks
A liability insurance leader is revamping its approach to career growth. To streamline employee development, it needed to integrate a skills-based approach with an outside-in strategy. Talent Transform is providing the insights to align job titles, descriptions, and skills with the external market, enabling the company to identify critical skills gaps, refine its talent management process, and optimize compensation, hiring, and development against competitors. This competitive workforce strategy is maintaining its strong position in attracting, retaining, and growing top talent among rapid workforce changes.
