The Insurance Industry’s Talent Crunch: Attracting and Retaining Gen Z

The last three years have exposed a growing challenge for insurance carriers: attracting, hiring, and retaining young talent. Despite the passing of the so-called “Great Resignation,” the insurance industry continues to face significant workforce challenges.

The Bureau of Labor Statistics projects that while the total number of claims professionals will decline by 5%, the industry will face approximately 21,500 job vacancies each year over the next decade. If current trends persist, the rate of new hires simply cannot keep pace with retirements and other departures.

This growing talent shortage is compounded by a rise in the severity of claims and by the industrialization of plaintiff litigation. As veteran employees leave the workforce, the industry loses invaluable expertise. That creates a ripple effect of challenges for claims management organizations. Unfortunately, existing systems and practices are not well-equipped to address this problem. Members of Generation Z bring fundamentally different goals and expectations to the workplace, shaped by their coming of age in the digital era. That calls for new ways of approaching the talent shortage.

Gen Z, which makes up one-third of the world’s population, has distinct workplace preferences. A striking 77% prioritize work-life balance, while 92% emphasize the importance of mental health in the workplace. This generation is heavily mission-driven, gravitating toward employers that embrace corporate social responsibility and whose core business activities contribute to the betterment of society in ways that are easily and intuitively apparent.

Those of us who work in the industry understand quite well that insurance contributes to our well-being on a broad scale. Workers’ compensation carriers, for example, help injured employees recover and return to normal as rapidly as possible. Yet our highly impactful mission often goes unnoticed by the public, who often regard the industry as being outdated, callous, and impersonal. The recent tragic murder of UnitedHealthcare CEO Brian Thompson—and the shockingly muted reaction from some quarters—serves as a stark reminder that such negative perceptions can be harsh and persistent.

Our industry needs to do a better job of telling the real story. Workers’ compensation insurance, for example, has had a transformational impact on employees around the world. A century ago, workplace injuries were frequently life-altering events that could leave entire families destitute. Today, job safety is a priority because insurance carriers understand and assess risk and because we incentivize behaviors that mitigate risk. That reduces the incidence of health and safety problems for everyone, and when workers do suffer an injury, insurance carriers prioritize a rapid and complete recovery. Highlighting these kinds of contributions will help us bridge the gap between negative perceptions and positive realities.

To attract Gen Z talent, insurance carriers must meet potential hires on their own terms. Mission-driven alignment is critical, but there are additional factors to consider.

Remote work, for example, gained significant popularity in the wake of the COVID pandemic, yet Gen Z employees tend to favor in-office work where they can enjoy face-to-face interactions with fellow workers.

They strongly prefer to work with modern tools and technology as well. Today’s younger workers value a good user experience (UX), for example. That’s bad news for many employers in the insurance industry, especially if they fall on the trailing edge of the technology adoption curve. Mainframe applications and green screen terminals are still standard fare in many insurance organizations.

By modernizing core systems, offering a fully integrated collaborative experience, and adopting forward-looking tools like machine learning and generative AI, insurers can provide a more enticing experience for their Gen Z employees.

Transforming your organization into a talent magnet requires deliberate effort. Here are four key strategies:

• Clarify core values: Define your organization’s mission and ensure it is evident in every interaction, both internally and externally. Communicate those values in everything you say and do.
• Empower employees with modern tools: Invest in advanced core systems, integrated collaboration platforms, AI-driven insights, and generative AI technologies to enhance both efficiency and engagement.
• Articulate career paths: Provide clear, well-communicated opportunities for professional growth and progression.
• Develop strong training and mentoring programs: Create structured onboarding and development programs to nurture talent and pass on industry expertise.

AI is transforming the insurance industry with tools capable of addressing both operational and talent management challenges. AI-based claims guidance, for example, reduces operational burdens by automating repetitive, mundane tasks and analyzing large bodies of information. It also enhances recruitment and retention because it makes work more fulfilling. AI takes on many of the most tedious tasks that could not have been automated in the past. That allows employees to focus on making prompt, meaningful, data-informed decisions and to bring a human touch to claims management.

AI plays an especially powerful role in delivering better outcomes for injured workers. Naturally, that’s a win-win. It improves the lives of the people we serve and their families, but it also reduces losses. Additionally, AI improves fraud detection, allowing insurance carriers to avoid costs that ultimately flow down to policyholders in the form of increased premiums.

By leveraging AI, insurance organizations can streamline operations, improve employee satisfaction, and deliver superior service to their customers. These innovations are key to becoming a workplace of choice for the next generation of insurance professionals.

Like most long-term trends, this emerging talent shortage has the potential to creep up on many employers in the insurance industry. That need not be the case, however. By modernizing technology, aligning with Gen Z’s values, and embracing a visionary approach to AI, insurance carriers can position themselves as aspirational destinations for the emerging generation of employees.