Take time to find the talent to implement innovation

Finding and hiring qualified data scientists may be a challenge for the workers compensation sector as it moves to continue incorporating innovative technology into its operations, experts say.

While comp insurers generally understand how critical innovation is to their businesses and are making significant investments, the vast majority do not have personnel dedicated to innovation, according to a September 2018 study by A.M. Best Co. Inc. While more than a quarter of these insurers had cross-functional teams focused on innovation, only 9.1% have a dedicated innovation team, while 21.2% did not.

“Even where we see some reason for optimism in terms of the insurance industry and the utilization of innovation, the fact that you still had 21% even on the workers comp side that had no specific personnel at this time focused on innovation told you that we’re still in some ways at the beginning stages of recognizing how impactful innovation can be, and that there are still some management teams that have been slow to recognize the need to utilize some of these tools to help them move forward in this marketplace,” said David Blades, associate director in the industry research and analytics department of the Oldwick, New Jersey-based ratings firm. “You can think about those being key targets for consolidation on a going-forward basis.”

Many companies currently outsource data evaluation and predictive modeling functions, experts say. The Best survey found that 15.2% of workers comp insurers outsourced to a service provider or consultancy.

“Talent’s an issue,” said Sam Friedman, insurance research leader for the Center for Financial Services with Deloitte Services LP in New York. “You don’t just pop open a box and read the instructions. You need people that know what you’re doing. You need people either on-site, or you can outsource this to people who are experts in this kind of data analysis and can help you turn it into actionable insights rather than just raw data. That should be an interesting challenge and could theoretically be an obstacle.”