Over the next 15 years, 50 percent of the current insurance workforce will retire. It’s a jarring number. This leaves more than 400,000 open positions unfilled, according to the U.S. Chamber of Commerce. At the same time, the industry is experiencing an unemployment rate nearly half the national average, per the U.S. Bureau of Labor Statistics. The combined result of these trends is an unprecedented loss of insurance knowledge — one that is bound to get worse.

COVID taught us that we can operate in a global remote working environment with a high degree of productivity without creating the data security risks that many feared it might. And one solution for relieving the talent crunch is outsourcing basic tasks so that your employees can focus on higher-level work. Unfortunately, traditional outsourcing only fills the most basic support roles and does not go far enough to ensure long-term success.

The reality is that the teams who are winning aren’t simply outsourcing. They’re up-sourcing: delegating increasingly complex and higher-value tasks to a global workforce — either internally or through a trusted knowledge process management (KPM) provider — with the right level of insurance knowledge, process discipline and technological enablement to deliver results.

Insurance Organizations At Risk

Failing to replace lost knowledge can quickly jeopardize the business of insurance.

Underwriters make nuanced, informed judgments where, for many commercial risks, there are simply too many contingencies to create rules-based decision trees that can be easily taught or automated.

For agencies, the increasing complexity of risks requires greater specialization, which is challenging given a lack of technical insurance training.

Insureds suffer chronic underinsurance in areas like business interruption, building ordinance coverage, flood and cybersecurity. This will grow worse as we lose knowledgeable practitioners, placing greater pressure on hiring and training while increasing E&O and reputational risk.

Using KPM to Transform, Grow

There’s no question that you can develop an in-house global workforce, but managing these centers can be costly and dilutive if it is not a core competency. The right KPM partner can offer process discipline and deep insurance knowledge for tasks at a scale that is often more efficient and cost-effective than insurers and agencies could build themselves.

Here are two examples — one carrier, one agency — that represent an “up-sourcing” model for complex workflows:

• Submission-to-Bind. A few points of improvement in bind ratios can represent many millions of premium dollars and positively impact expense ratios. A KPM partner will clear, review and process submissions to quickly eliminate those that don’t meet your criteria, accelerating response rates and allowing for more careful underwriting review.

• Renewals. Account retention is the lifeblood of agency growth and profitability. A KPM partner can take on multiple higher-level tasks along the renewal workflow such as preparing loss summaries, updating renewal submissions and sending to carriers for quotes, checking quotes against submission, and issuing proposals. This can lead to improved revenue per producer and account executive.

Up-Sourcing

The shortage of experienced insurance professionals creates operational gaps that inhibit growth and increase policyholder risk. And while technology and automation can mitigate capacity constraints, true competitive advantage comes from deep insurance knowledge. Insurance domain knowledge is the most finite and rapidly dwindling resource in the insurance ecosystem, and one for which all insurance organizations must find a consistent, reliable and scalable solution.

More insurance organizations are looking for a true KPM partner that can go beyond simple repetitive tasks to handle increasingly complex workflows to elevate the productivity of core agency and carrier professionals. So, while finding insurance talent in the U.S. remains constrained, a global strategy becomes paramount.

*This article was originally published by Insurance Journal, CM’s sister publication.