Insurers and Reinsurers should embrace remote working staff:
With thin margins, poor industry results/high CAT activity, and issues returning capital efficiently to shareholders, it’s time to embrace technology. Insurers and Reinsurers should embrace remote working staff, as should others in the value chain (brokers/intermediaries). In this overcapitalized industry, those who can embrace expense savings will see it in their returns or stock price.
Although rent and real estate are smaller parts of G&A than employee costs, it is still a large part of the expenses. And your employees are assets, rent isn’t. In today’s economy, the knowledge worker environment, the talent of your employees is a huge asset. This remote work environment might help you attract top talent. This will be embraced by employees of all generations and will be seen as a great retention or recruiting tool. But an interesting way for the industry to close the talent gap with Millennials.
Working from home doesn’t have the same Taboo as it did early on. The productivity gains from working from home are tremendous, if done right. Technology has the ability to have virtual offices, email, mobile phone, FaceTime or video conferencing, as well as any other productivity reporting tools to ensure individuals are achieving productive output. Not all functions within an organization are mobile accommodating, and/or physical presence is still needed to host clients, but the difference between having 4 floors in a building in NYC/San Fran/Chicago vs. 1 floor will be nice savings.
More productivity will result: no birthday cakes, coffee/water cooler breaks, cigarette breaks, and any time not spent commuting can be redeployed to productivity. Employees will get back valuable time in their lives and won’t have as many work/life balance issues. Employees who are interested, with the time saved from not commuting, can go to the gym or improve fitness. There are countless studies about healthy workforce and productivity gains (plus decreased health insurance costs).
Managers will have to shift with the times and understand, manage remote employees. This will take some getting used to, but the first movers will see the biggest gains – especially in financial results and talent recruitment/retention.
Investors will benefit as expense ratio savings for prime NYC real estate will be enormous – long term. Allowing investors to redeploy capital elsewhere and employers to employ more people and get more productivity.
This is a good way to combat the expense savings promise from InsurTech. If the challenge from InsurTech is the expense ratio is too high, and not enough cents out of the dollar are going to claims. Well here is a great way to combat that claim. Put more cents to claims.
Also, when some of these InsurTech companies are looking to get acquired or talent is looking to join incumbents, this is a must have. It will be a challenge to get the old conservative culture of insurance and new fast paced culture of InsurTech to blend well. It will require remote offices or workforce.
Currently, the easiest spot to start is in treaty reinsurance, treaty reinsurers travel often and are already “remote”, the biggest shift would be around the need to have them in the office. They should be spending more time with key clients and brokers in lieu of an office.
Let’s see who the first to embrace this shift will be. There are some out there already who have this type of culture, but again first movers will see the biggest advantage.
Be a pioneer and lead, that’s where the benefits are. Blue ocean strategies can provide the best upside.
Comment below if you already have this culture or know of insurance companies with similar culture.