Insurance Industry Facing Talent Shortage

Because most younger people have dismissed insurance as a possible career choice, opportunities abound. Shutterstock

The insurance industry is currently facing a significant talent shortage. Chief among the reasons is a fear that generative artificial intelligence (Gen AI) will make insurance jobs obsolete. It’s a fear that pervades many legacy career opportunities.

In addition, many employees have left their jobs in search of more fulfilling work and better work-life balance, a trend that has affected other industries as well.

Further, a wave of retiring baby boomers is set to have an outsized impact on the insurance industry.

On the positive side, Gen AI is breaking through old hurdles and barriers, requiring a completely new assessment of business operations, and creating vastly improved operational performance and excellence. Focusing Gen AI on the administrative side of insurance is reducing costs and improving productivity, enhancing risk management, and reinventing and redefining what is possible in insurance.

Younger Generations Aren’t Interested

In today’s job market, younger generations often perceive traditional industries such as insurance as less exciting and offering fewer growth opportunities than sectors like technology. Young high performers are focused on building long-term skills.

As in other industries, AI is causing anxiety and changing attitudes in the insurance industry.

Several months ago, PricewaterhouseCoopers (PwC) conducted its global “Hopes and Fears” survey of more than 56,000 workers.

The results revealed that 40 percent of respondents who have used Gen AI in the past year feel it will fundamentally change their profession in under five years.

And in December 2024, an EY survey of 1,000 U.S. workers who are at least somewhat familiar with AI revealed even more alarming results. Of the respondents to that survey, 75 percent are concerned that AI will make certain jobs obsolete. An alarming two-thirds said they are worried that AI will replace their own jobs.

As new technology continues to transform the insurance industry, workers know they must be able to do something different in the future. The immediate effect is a disincentive to apply for jobs seen as threatened by Gen AI.

Gen AI Replacing Traditional Roles

The insurance industry is leveraging Gen AI in innovative ways to improve efficiency, accuracy, and customer experience. Gen AI can analyze vast amounts of both structured and unstructured data to identify patterns and provide risk-based pricing recommendations. This approach optimizes underwriting decisions.

AI-driven systems can expedite claims processing by detecting anomalies and seeking to minimize fraudulent claims. By generating examples of fraudulent and non-fraudulent claims, Gen AI can train machine learning models to better detect and prevent fraud.

AI-powered chatbots and virtual assistants are able to handle customer inquiries, provide real-time information, and assist in the claims process. All in all, this is improving customer satisfaction, while at the same time reducing the human workload.

Gen AI can generate marketing material, provide product descriptions, and create custom communications with tailored content. It can create synthetic data from existing datasets, which it then uses to improve the performance of predictive models.

Baby Boomers Retiring

A large part of the current insurance workforce is nearing retirement. Bureau of Labor Statistics projections indicate that nearly 50 percent of the current insurance workforce will retire within the next 15 years.

That will leave more than 400,000 open positions unfilled.

This is a significant shift. Baby boomers, many of whom have held leadership and expert positions in the insurance industry, are retiring en masse. This transition will bring challenges and opportunities. The departure of seasoned professionals may create a gap in institutional knowledge and experience.

A New Era Will Need New Talent

The industry requires new skills—especially in areas like technology and data analysis—that many current employees may not possess. Insurers are exploring solutions such as process automation, up-sourcing complex tasks to a global workforce, and creating more compelling career paths to attract and retain talent.

A new era of risk means new technology to deal with it. Risk resiliency remains relevant, but not much progress is being made, given new and more catastrophic natural disasters and increasing claims.

The insurance industry’s immediate response to this is to raise the cost of insurance. Clearly, however, traditional business methods and technologies for assessing and managing risks are no longer working.

Modern insurance is hamstrung, struggling with an out-of-sync business operating model and poor technology foundation. Legacy processes and their built-in business assumptions need to be revamped into entirely new operating models and technologies.

Insurers need to leverage technology and redefine and optimize business models. A new technology paradigm shift will enable agility, scale, innovation, and operational optimization, to align with these new risks.

Areas to Watch

Four areas in the insurance industry will see heightened interest and customer demand over the next few years. These are areas on which you may want to focus if you’re interested in an insurance career:

Usage-Based Products: Telematics devices installed in vehicles track driving habits such as speed, distance traveled, and braking patterns. Through data analytics, insurers analyze collected data to determine risk levels and adjust premiums accordingly. Personalized premiums allow drivers with safer driving behaviors to benefit from lower insurance costs, while high-risk drivers may face higher premiums.

Parametric insurance: This specialized form of insurance covers a variety of threats and is designed to address the challenges posed by disasters and other new emerging risks such as cybercrime. Unlike traditional insurance, parametric insurance pays policyholders based on a specific loss-causing event such as an earthquake rather than on the actual loss resulting from the event.

Specialty insurance: Tailored to meet unique or niche risks, specialty insurance addresses risks and circumstances that standard insurance policies may not adequately cover. This type of insurance offers tailored solutions for businesses and individuals with exceptional needs, ranging from high-value assets to niche industries.

Supplemental and worksite benefits: New sales for workplace life insurance, disability insurance, and supplemental health products have increased significantly, according to new data from the Life Insurance Marketing and Research Association’s workplace benefits sales surveys.

So What’s in It for You?

Because most younger people have dismissed insurance as a possible career choice, opportunities will abound, but the workers will be few.

The insurance industry—which has been dominated by seasoned professionals who are nearing retirement—is about to see a major shift. The retirement of aging baby boomers will open up new jobs for younger workers in a field that is on the cusp of a technological revolution.

And most people haven’t even noticed. Why not consider taking advantage of this opportunity?

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