Today's workforce is changing. The baby boomer generation – which dominated the labor market for so long – is nearing retirement, and the up-and-coming millennials are poised to take control of the nation's many industries.
As a result, experienced professionals will give way to younger go-getters and the insurance industry could start to see a shift in claim frequency, job openings, technology and pricing. These changes only scratch the surface of the influence demographics wield over businesses. Adapting will allow you and your company to get ready for the new environment looming on the horizon.
Population growth must be addressed
According to consulting firm EY, labor demographics are about to drastically shift. This is due to population growth, as an increase of nearly 1 billion people is expected between 2010 and 2020. This will eventually trickle into the workforce, as evidenced by many global economies already coping with young labor forces. In addition, this trend can also lead to a divide between open jobs and employee skills. So, companies should focus on training and talent growth now, so it won't be a shock when it comes time to hand the company over to the next generation.
Insurance feels effects of aging workforce
Today's workforce is dominated by two main demographics: millennials and baby boomers. The boomers are older now, with many either considering retirement or already there. In relation, a number of companies are about to pass off leadership to the next generation, or are grooming Gen Y for management.
So then, how can you ensure your business is positioned for long-term success? Given the generational divide, many people harbor preconceived notions about millennials. There are questions about work ethic, commitment and expectations. The idea of the "American Dream" is more ingrained with boomers than millennials, and today's youngest members of the workforce have different values.
Risk management moves to forefront
Now, it is all about risk management. Risk impacts how people view their finances, their profession and their insurance. Plus, for the industry itself, an emphasis on this element has resulted in widespread growth.
For insurance agencies, the priority shifts to attracting the best new talent. That could be found in the millennial demographic, which is one of the largest segments today. The younger generation is technology-driven – they communicate via sound bites, mobile devices and the Internet. Where boomers favored face-to-face interaction, millennials want a different experience. Technology will change how talent acquisition takes place, and it will even alter commercial lines and how insurance is purchased.
Above all else, established members of the insurance industry should position themselves as mentors. There is opportunity for recruitment. You can build a relationship as an advisor and cultivate millennials into that future role.
Demographics affect many sectors
A shift in demographics will impact more than just the insurance industry. In fact, three major sectors – manufacturing, healthcare and construction – all cope with similar issues.
For example, the manufacturing industry has gone global. While there are fewer jobs in the U.S., a resurgence is expected. When this occurs, however, there will be fewer jobs. Those that do return will also place increased importance on technology competency and high-level knowledge. Millennials today may be expected to fill those roles, but they'll need the training to do so.
In addition, an older workforce copes with injuries in a unique way. In many cases, they take longer to heal than younger workers, leading to higher costs. As boomers hover around the retirement age, employers may see a rise in workers' compensation claims. Furthermore, the talent gap could result in fewer skilled workers – which can also lead to an uptick in accidents.
No matter what, keep demographics in mind whether you are buying insurance or preparing for long-term business growth. Think about implementing new technology and training methods to attract millennials, and figure out how to meet the varied needs of boomers as they near retirement. Above all else, don't forget that today's workforce is changing.
