The pros and cons of tech job cuts for the insurance industry
In the post-pandemic economic crunch, technology companies worldwide are announcing hiring slowdowns, freezes, and in some cases, widespread layoffs.
What a difference a few months can make. In 2021, the global tech sector was enjoying sky-high valuations – some of which were arguably sensational and entirely unjustifiable. This led to tech companies announcing ambitious expansion plans and huge hiring goals.
The high did not last long. Through 2022, tech firms have responded to the global economic downturn by slashing jobs. In the United States, 30,000 workers in the tech sector have been laid off so far this year, according to a Crunchbase News tally – and the theme persists in other tech-heavy markets around the world.
When the economic outlook is gloomy, one might think it would be the early-age tech start-ups to take the hardest hit, but several giants – including Netflix, Meta, Salesforce, Robinhood, Lyft (the list goes on) – have also felt the sting and have made notable trims to their headcounts.
Unfortunately, the insurtech sector has not been immune to these trends. IB news editor Jen Frost has been reporting on insurtech layoffs in recent weeks. Among those impacted so far are Next Insurance, which plans to cut roughly 150 jobs from its headcount of around 800, and protection business Asurion, which could layoff as many as 750 people from its global workforce. Zego, Policygenius, Thimble, Root Insurance, Sidecar Health, Coterie and others have also reportedly made layoffs since the start of this year.
I have mixed feelings about these tech layoffs. I think they present both challenges and opportunities for the insurance industry, and insurers must be strategic when playing their next hand.
On the one hand, insurtech layoffs are bad news for the industry. They suggest that the industry does not have the desire or the financial stability to prioritise technology and innovation. While those already in the industry may know that’s not true, that’s what insurtech layoffs could look like to an outsider, and that’s not the message the industry wants to portray.
The truth is quite the opposite. In recent years, an astonishing amount of money has been pumped into the insurtech arena to help the insurance industry catch up with its more innovative peers in financial services, such as the banking industry. Insurers have made significant progress, but the industry will only go so far if the insurtech talent is the first to go during times of financial hardship.
On the other hand, I do believe that mass technology layoffs (beyond insurtech companies) could also present opportunities for the insurance industry. Insurers are always talking about attracting new types of talent to the industry, with skillsets that compliment those coming out of traditional insurance and risk management degrees.
The insurance industry needs experts in data and analytics, artificial intelligence (AI), robotic process automation (RPA), coding, software development, cybersecurity, and cloud management. The demand for these skills is constantly growing, and luckily for the insurance industry, the current labour market is ripe with people looking for these opportunities.
Tech talent is absolutely critical for the future health and sustainability of the insurance industry, and it’s right there for insurers to grasp if they play their cards right. Now’s the time to sell the industry in a more positive light. Insurance is a noble sector with excellent job security and career growth opportunities, good compensation, and endless opportunities for innovation.