What can we do for the insurance workforce that’s being displaced by AI?

What can we do for the insurance workforce that’s being displaced by AI?

2.Aug.2017
Ben Decker

Disruptive technology—in particular artificial intelligence, or AI—is having an impact on numerous industries—including the financial services and insurance industry. The January 2017 BBC article titled “Japanese insurance firm replaces 34 staff with AI” reported that Fukoku Mutual Life Insurance had acquired an AI system that could accurately and quickly calculate coverage payouts. The firm projected that by replacing 34 employees with AI, it would achieve a productivity increase of 30 percent and annual savings on salaries of approximately $1.2 million.

How much of the financial services and insurance workforce will be displaced by AI?

It’s impossible to predict exactly what capabilities AI will develop in the long term. Currently, however, AI-enhanced bots are already able to automate a wide range of repetitive and/or lower skilled tasks. According to the report “A Future That Works: Automation, Employment, and Productivity” by the McKinsey Global Institute, in finance and insurance, the technical potential for automation of data processing is more than 40 percent; plus, there’s significant potential for data collection. Logically, since bots are reliable, accurate, and much more affordable than people, they’ll soon eliminate the need for humans in a large number of tasks.

Implications for brand and reputation

There’s no doubt that investing in AI systems makes a lot of financial sense. Yet when this means that people will lose their jobs, there’s also the potential to lose a significant amount of business. Here’s why:

  • It can have an adverse impact on a company’s customer base. Employers in the finance and insurance business need to treat their employees like customers—usually because they are customers. However, when employees are laid off and replaced by machines, the odds are high that the majority will take their business elsewhere. When it comes to enterprises that could lay off between 30 and 40 percent of their workforce, that’s a substantial amount of business going to the competition. Additionally, layoffs of this magnitude are also likely to impact a company’s brand, which can impact the number of new clients it’s able to attract.
  • It can affect a company’s employer brand. Layoffs are red flags for talent—even if they’re not necessarily looking for a life-long career with a specific firm. Furthermore, former employees are very likely to share their negative experiences with others on sites like indeed.com and glassdoor.com. As a result, the company’s EVP suffers, and it becomes more challenging to attract and retain quality talent for higher-level positions.

Supporting displaced workers

To prevent these scenarios from happening in an era where damage to a brand can be irreversible, employers are best advised to provide some form of support for displaced employees. There are two main options:

  • Outplacement services. While these are traditionally reserved for C-suite executives, offering résumé services, employment labs, networking events, and upskilling can be beneficial for lower-level workers as well.
  • Developing workers for higher-level in-house positions. By identifying high-potential talent and offering them the necessary training to qualify for higher-level positions, employers can secure future talent.

In both cases, employers should give some thought regarding how to include a certain amount of training regarding the interface of humans and AI in the workplace, since this will be a critical skill moving forward.

Conclusion

The writing’s on the wall: A large segment of the financial services and insurance industry’s workforce will soon be displaced due to AI and automation. Employers need to proactively prepare for the change that’s coming by factoring outplacement services into their resource planning and creating programs to develop high-potential talent within the organization. Because only by providing these employees with quality support to find new employment can companies uphold a good employer brand and a solid company reputation and, as a result, maintain and grow their customer base.