Economic uncertainty, coupled with a period of transition in InsurTech, has led to a wave of layoffs for the industry. For InsurTech employees worried about potential layoffs, Steve McOrmond, senior content marketing manager at property/casualty and specialty InsurTech Federato, offered an acronym as advice: ABN, or always be networking.

“You shouldn’t just be on LinkedIn and contributing to the industry conversation when you’re laid off and looking for a new opportunity,” he said. “Always be networking and keeping an eye out for those uniquely great companies, impressive leaders and talented individuals that you might like to work with in the future.”

His advice comes from a place of understanding—McOrmond himself was laid off from commercial insurance InsurTech Chisel AI last year. This happened as the company announced it was winding down its operations in an April LinkedIn post.

“I was very fortunate that the timing of Chisel AI winding down its operations in the spring of 2022 preceded by a few months the worsening economic climate and wave of layoffs we’ve seen since,” McOrmond said.

He added that his new opportunity with Federato came quickly, in part, thanks to networking.

“I was incredibly fortunate to have already made connections with Federato, who had contributed thought leadership to Chisel AI’s blog and annual Underwriting Priorities crowdsourced eBook,” he said. “I only interviewed with three companies before jumping at the chance to join the talented team at Federato—and in fact, Federato was the only InsurTech of the three.”

McOrmond’s experience is becoming a more common one in the InsurTech space. After a period of what Ken Jordan, managing partner of the insurance practice at recruiting firm Smith & Wilkinson, described as “hypergrowth,” he said InsurTech has been undergoing a period of transition.

“InsurTech did ramp up very quickly, and with good reason. Traditional insurance companies had not evolved to meet the specific needs of a changing consumer,” he said. “As with any area of hypergrowth, many would enter and a much smaller number would prevail.”

Indeed, workforce changes and layoffs kept coming last year as several incidents converged, he said.

“We are in a period of economic uncertainty, [and] investors are expecting ROI (return on investment) rather than how many customers have been put on the books,” he said. “InsurTech as a whole is maturing and taking on a partnership mentality versus a disruption mentality.”

InsurTechs NEXT and Thimble both pointed to an increased focus on profitability as they laid off part of their workforce in July last year. Technology company Root Inc., the Columbus, Ohio, parent company of Root Insurance, said inflationary pressures causing historic levels of loss cost increases factored into the reasoning behind its January 2022 layoffs. Other notable layoff announcements came last year from Lemonade in July and Hippo Holdings Inc. in September. Most recently, Corvus Insurance confirmed to Carrier Management that it conducted a round of layoffs at the beginning of this year, affecting 14 percent of its workforce.

“As the company sharpens focus on cyber risk and its unique underwriting capabilities, we have made strategic reductions to parts of our workforce, which is a net reduction of 14 percent,” Corvus CEO Madhu Tadikonda said in an emailed statement. “This decision was not made lightly, and we are deeply appreciative of all the hard work our former colleagues have done and will support them in their next endeavors.”

“Know your worth, be confident and become your own dedicated marketer.”

Ken Jordan, Smith & Wilkinson

He added that 2022 was a strong year for Corvus as it worked to grow its cyber premiums by 80 percent while maintaining a loss ratio below 40 percent. He said this focus on cyber risk will remain in place this year as it seeks continued growth.

“Corvus remains hyper-focused on tackling cyber risk with one of the largest specialized cyber underwriting teams in the industry, enabled by state-of-the-art technology and data-driven insights,” he said. “This year, Corvus will continue to build the underwriting team and platform capabilities while also expanding our European and UK footprint.”

Data science leader Dr. Sam Jain, a former Embroker employee who announced on LinkedIn that his position with the InsurTech was eliminated last year, said he believes the layoffs in InsurTech are due to many in the industry chasing growth over profitability.

“After venture capital dried up, insurance companies, InsurTechs, startups or even unprofitable divisions within larger companies faced pressure from their investors or shareholders to become more self-sufficient,” he said. “With revenue growth facing headwinds because of the impending recession, companies chose to cut.”

Reports in the fall of 2022 said that Embroker executed a round of layoffs, with The Insurer reporting that the layoffs affected about 12 percent of its staff. An Embroker spokesperson declined to comment for this story.

Concerns continue to mount about layoffs in InsurTech, as the industry begins to mature and place more of a focus on profitability, as well as navigating a challenging economic environment in which investors are more discerning.

“I think we’re starting to see a real ‘flight to quality’ as investors and buyers apply their learnings of the past several years and become more discerning about where they put their dollars,” Bill Pieroni, president and CEO of insurance data provider ACORD Solutions Group, told Carrier Management at the end of last year.

He added that the realities of the current economic cycle as well as the hype around InsurTech over the last several years has led to concerns about whether funding has peaked.

“The looming question is: Due to macroeconomic realities, did funding peak in 2022?” he said. “InsurTechs will have to watch closely.”

‘Become Your Own Dedicated Marketer’

This means for employees concerned about layoffs, being proactive is key, Jordan said.

“The first step should be ongoing and occur before any indication of a layoff, and that is networking,” he said. “I can’t stress enough how important it is to be consistent with your external networking efforts so that you’re not finding yourself playing defense in the event of a layoff. Many make the mistake of getting complacent with nurturing external relationships when comfortable in a job.”

Once a layoff happens, he said, employees should make the job search their full-time job, talking to past co-workers and leaders as well as being open to any conversations, even if they don’t directly lead to a job.

“Take any and all conversations because one never knows where they will lead,” he said. “Keep your same daily routine. Plan in-person meetings whenever possible. Try not to obsess, worry or accept needless compromise. Know your worth, be confident, and become your own dedicated marketer.”

Dr. Jain agreed, adding that starting conversations was one of his first steps after his own layoff experience, which he said was the first in his career.

“Initially, I had a lot of referrals and leads internally from the company staff to reach out to other companies,” he said. “That became a cycle of introductions, so those conversations are ongoing right now. In addition, I was able to reach out on my own to other companies where my expertise would be highly valued.”

Another important step is seeking out a recruiting firm that can assist with the job search process, Jordan said.

“Align yourself with a specialized search firm that has a strong reputation in your specific area. Ask your network to provide recommendations and/or direct introductions,” he said. “Strong search partners will be an invaluable tool and resource as you go through your job search process.”

Katie Farquharson, director of recruiting firm Storm2 UK, agreed.

“We are in the best space to introduce candidates to our clients, and once we understand a bit more about candidates and what they’re looking for, we can give them the opportunity to apply for suitable openings,” she said.

When seeking a recruiting firm to work with, Farquharson said it’s important to consider their area of focus and vet them thoroughly.

“When you are looking for a firm, it’s important to look at what they do. We are specialists in fintech, so if you are interested in that space, then we are going to be perfect because we’d be best suited to introduce you to companies in that space,” she said. “I’d also say it’s important to look at reviews as well when you’re considering agencies just to make sure that you’re working with agencies that can represent you in the best possible way.”

Perhaps the most important step in finding a recruiting firm, however, is once again relying on a professional network, Jordan added.

“A Google search will be overwhelming,” he said. “Ask others who they’ve had success with, who they trust, who has the deepest connections within the space that you operate. Failing that, see if there are search firms that attend the industry-specific events that you or your team have traditionally attended.”

Like, Post, Share

As workplace culture and the job search process now includes an increased reliance on technology, experts said networking also means utilizing social media—a strategy Dr. Jain said he found worked well.

“The LinkedIn post I created after my layoff ended up helping in unexpected ways,” he said. “At the bottom of my post, I saw a lot of very supportive comments from my prior colleagues. As they are executives at other companies, this lent a lot of weight to my claims about the impact I had delivered. That led to CEOs of various companies being willing to talk to me on very short notice. So, this definitely had a very positive impact where executives were willing to talk to me.”

“I believe as strongly as ever in the enormous opportunity presented by InsurTech.”

Steve McOrmond, Federato

Farquharson said she sees no harm in this approach, either, as more employers and recruiters are also utilizing social media to seek out candidates.

“I see a lot of candidates when I’m scrolling through LinkedIn who have announced that they’re looking for new positions. I just think that’s good for the recruiters as well because if I had a position that was suitable for them, then they’d come to mind straight away, and I can get in contact with them and see if they’d be interested as well,” she said. “Also, a lot of hiring managers use LinkedIn, so they might see those posts directly, especially if the post has gone viral.”

Jordan agreed, adding the caveat that messaging is key when using social media for job searching or networking, particularly post-layoff.

“Any hint of resentment or sour grapes will turn off a potential employer,” he said. “Show understanding, confidence, even excitement for having an opportunity to start a new chapter. Highlight some specific accomplishments. I’ve seen magic happen from these posts. It shows a great deal of character and resolve, and people tend to want to help others if it’s within their power.”

Avoiding Sour Grapes

Avoiding any resentment or “sour grapes” also places the onus on employers to manage through a round of layoffs with fairness and sensitivity, experts agreed.

“We’ve learned a lot about what doesn’t work in terms of notifying employees of a reduction in force. Announcing a layoff over email or Zoom is cold, impersonal and shows a true detachment from the human impact of the decision,” he said. “While it may hurt, people understand why layoffs happen, and the best thing that you can offer is immediate support. Leverage your own connections, publicly praise specific individuals that you would recommend to others and provide a severance package that allows them to breathe.”

McOrmond pointed to his own experience going through a layoff with Chisel AI, which demonstrated to him what companies can do well in this situation.

“I was incredibly lucky to have a management team at Chisel AI that went above and beyond to help its employees find new employment, setting up a Slack channel for alumni to share opportunities and reaching out to their networks,” he said. “Chisel AI had also built up an incredible amount of goodwill within the insurance ecosystem. We had insurance prospects, clients and partners reaching out immediately to help, looking to schedule interviews with the team or making referrals to others in their networks.”

Dr. Jain said he believes either a six-month notice or severance package and introductions to others in the company’s professional network are the most responsible ways for companies to execute workforce reductions. But ultimately, he thinks layoffs shouldn’t happen at all.

“I mean, the company should have a business plan in place which should have a reasonable hiring plan attached to reasonable business goals,” he said. “Companies shouldn’t be suddenly changing strategic focus from growth at all costs to chasing profitability.”

Surviving ‘Erie Winters’ With Growth and Longevity

For some companies, layoffs don’t happen. Perhaps as impressive as its nearly 100-year history, beginning in 1925, is Erie Insurance’s track record of never laying off an employee.

“It’s something we’ve been intentional about in our history,” said Sean Dugan, the company’s executive vice president of human resources and corporate services. “It’s something that we know is a challenge, but we’ve listened to our employees in coming up with creative ways to not only help them meet our business needs, but for them to also develop and grow their careers with us. So, it’s something we are extremely proud of, and it’s something that is unique and ingrained in our culture.”

Dugan said the company has managed to do this by continuously offering educational opportunities to its employees for growth and development, whether it’s through earning licenses and professional insurance designations or by offering expanded leadership opportunities and talent mobility.

“It has allowed individuals to grow professionally and do so with an eye on the future,” he said.

True to its word, Erie has seen substantial growth since its co-founders H.O. Hirt and O.G. Crawford began the Erie, Pa.-based company in just four months—what Dugan referred to as “an Erie winter.”

“They raised $31,000 in capital that they needed by winning over 90 stockholders with nothing more simple than a handwritten business plan on a 10-cent tablet,” he said. “Fast forward to today from our humble roots in 1925, we’re now a Fortune 500 company with more than 6,000 employees and six million policies in force.”

He said one of the most important factors contributing to this growth is a collaborative, open mindset.

“It’s important that we are collaborative with what we’re trying to do in solving business challenges,” he said. “I think one of the things that sets us apart is that we remain open-minded. I mentioned the importance of listening to the workforce, and it’s probably never been as critical as it is today when we think about the changing needs of the workforce and the changing preferences.”

Letting Go of One-Size-Fits-All

And the workforce is changing quickly, experts agreed.

“We are finally coming to a point where companies are realizing that there is no one-size-fits-all approach to attracting, developing and retaining talent,” Jordan said. “Professional and personal motivators are highly individualized from person to person.”

He added that many employees are seeking a greater level of fulfillment from their jobs as expectations are changing, partially due to flexibility offered during the COVID-19 shutdowns and as new generations of employees enter the workforce.

“We spend a great deal of time working and want there to be purpose,” he said. “We want true connection to others and to feel that our work is making an impact. It is up to employers to shape that narrative to a degree.”

He said that COVID-19 in particular renewed discussion around the role of work in employees’ lives.

“Optimum productivity is not always achieved in a linear fashion, and companies that are more understanding of the unique needs of their employees can inspire greater loyalty,” he said.

For some employees, that means greater flexibility in how and where they can work, Dugan said.

“I think in most recent times, the challenges that have been brought forth in our COVID-19 environment are around what we’re deeming flexible and hybrid work in today’s workforce,” he said. “We intentionally listened to our employees, and we were always focusing on how do we strike the balance between flexibility, productivity and connectiveness of our workforce? Because we believe that is extremely important as a relationship company in today’s marketplace.”

For other employees, changing expectations in a riskier layoff environment mean stability and profitability, Farquharson said.

“Understandably, candidates are really looking for security in their roles, so I tend to be asked a lot of questions about our clients’ funding, the growth that they’re seeing, perhaps if they’ve had any recent layoffs,” she said. “Since COVID-19, nearly every single candidate I speak to will be asking about work-from-home opportunities. A lot of candidates are no longer interested in positions where you have to go into the office, even once or twice a week. People like to have that option to work remotely all the time.”

For Dr. Jain, a reliance on data is also an important consideration.

“In regard to data and data science groups, I want to see a commitment from executives to invest in this space—and this is not just something they want to play around with for a year,” he said. “Not having an exact road map is acceptable, as I can design it. But I want to see a commitment to invest in the data group.”

As employees and employers work together to navigate this tricky landscape, Jordan said that empathy and patience are key.

‘Digital Transformation … Can’t and Won’t Be Stopped’

“We’re all on this rollercoaster ride together, and it’s best to hold the view that most people have good intentions in a totally unique situation,” he said. “We’ve all had to adapt to situations that make us uncomfortable at some level.”

While he said he has seen an influx of new job candidates in this difficult economic environment where layoffs and resignations are ramping up within InsurTech, he doesn’t believe the industry is going away anytime soon.

“When the economy turns, risk appetite goes down for some and people tend to retreat to safe harbors—i.e., more established companies,” he said. “As InsurTech matures and continues to embrace a partnership model, and more consolidation takes place, there will be excellent opportunity for those who have worked in a startup environment, however. The dust just needs to settle a bit. InsurTech is not going away.”

McOrmond agreed that InsurTech will likely hold an increasingly important role in the insurance industry overall due to the industry’s ability to adapt through tough times.

“I believe as strongly as ever in the enormous opportunity presented by InsurTech,” he said. “Digital transformation in our industry can’t and won’t be stopped, and InsurTech startups add tremendous value to underwriting and insurance operations through their innovation and their nimbleness.”