Grappling with the underwriting talent crisis

The insurance industry is at a crossroads, grappling with a multifaceted talent crisis fueled by demographic shifts, technological transformation, and evolving workforce expectations. A recent webinar hosted by Reuters Events and featuring industry leaders shed light on the challenges and outlined strategies to close the talent gap and secure the future of underwriting.

A perfect storm of challenges

Jennifer Kyung, the CEO and founder of NextGen Underwriting set the stage, describing the unprecedented volatility in underwriting. “We have a confluence of events: an aging workforce, significant advancements in data and technology, and generational shifts in employee expectations,” she said. These factors coincide with a time of heightened demands from both the market and consumers.

Jessica Diffin, talent officer at Liberty Mutual Insurance highlighted the urgency of the issue. “Turnover in underwriting has surged to double digits, a stark change from just a few years ago. It’s taking longer to fill roles, and competition is driving salaries higher,” she noted. Adding to the strain is the “silver tsunami” of impending retirements among experienced underwriters.

Beyond workforce attrition and talent crisis, Diffin pointed out an industry-wide image problem. “Younger workers don’t see insurance, let alone underwriting, as a destination career. We need to change that narrative,” she emphasized.

The role of technology: Friend or foe?

Technology, particularly artificial intelligence (AI) and large language models (LLMs) are reshaping underwriting. Anthony Shapella, deputy chief underwriting officer at Sirius, called attention to AI’s transformative potential: “Underwriting generates vast amounts of text-based data, making it an ideal candidate for LLMs. These technologies can automate repetitive tasks, enhance risk assessment, and free up underwriters for higher-value activities.”

Yet, the integration of AI comes with challenges. Shapella warned of over-reliance on model outputs, especially among less experienced underwriters. “Junior staff may lack the instinct to identify when a model output doesn’t make sense. We need to train them to be informed consumers of AI insights,” he stressed.

Wendy Crosley, global director of underwriting transformation and automation at professional services company WTW, echoed this sentiment, emphasizing the importance of adaptability and trust. “AI is a partnership. The underwriter must know when and how to leverage it,” she said.

A new skill set for the future

As technology automates routine tasks, underwriters must cultivate new skills to stay relevant. Crosley highlighted the importance of data literacy, communication, and adaptability. “Underwriters need to interpret complex data, articulate insights to brokers and customers, and adapt to rapidly evolving tools,” she said.

Matt Waters,  head of U.S. middle market at AXA XL, underscored the enduring value of soft skills, describing them as “the art side of the business.” Building relationships, negotiating, and influencing others are still critical, even in an increasingly data-driven environment. “The science of underwriting might level the playing field, but the art of it—how you sell, market, and make decisions—will set you apart,” he explained.

Justin Smith, chief economist at Applied Underwriters, added a cautionary note for actuaries and underwriters alike. “AI will handle many of the tasks actuaries and underwriters currently perform. The challenge will be to adapt, focus on strategic and interpersonal skills, and carve out a role in this evolving landscape,” he said.

Attracting the next generation of talent

The industry’s future hinges on attracting and retaining younger workers, particularly millennials and Gen Z. Diffin outlined the unique value proposition this demographic looks for: purpose-driven work, workplace flexibility, personalized career experiences, and access to innovative technology.

“Millennials want to know how they fit into the big picture. They value social justice, climate action, and mental health support,” she said. With average tenures hovering around two years, organizations must focus on providing clear career paths, mobility, and regular feedback.

Diffin stressed the need for strategic workforce planning. “We can no longer rely on buying talent. We have to build it by investing in skills-based training and development programs,” she said. She also called for leveraging analytics to understand workforce demographics and needs.

Leadership accountability

As automation and AI transform the industry, leadership plays a pivotal role in guiding this transition. “Business leaders must understand technology deeply enough to align it with strategic goals,” Crosley said. This involves not just adopting technology, but integrating it effectively into broader business strategies.

Kyung reinforced this point, emphasizing the importance of transparency and accountability. “Leaders must help underwriters understand what sits behind the models and how automation enhances their work,” she said.

Talent crisis: A collaborative path forward

The online seminar concluded with a call to action for industry stakeholders to work together to address the talent crisis. By reimagining career paths, investing in technology, and cultivating both technical and interpersonal skills, the insurance industry can navigate its current challenges and emerge stronger.

As Kyung aptly summarized, “This is not just about solving today’s problems. It’s about building a sustainable future for underwriting.”

The road ahead is complex, but with the right strategies, the industry can turn its challenges into opportunities and secure the next generation of talent.

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Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].