March 3, 2015

The (slight) Millennial gender gap

gender gapMillennial business attitudes vary slightly based on gender

Millennials’ aspirations and attitudes toward skills, leadership qualities and the desirability of employment in specific industry sectors vary, but only slightly, based on the gender of the respondent, Deloitte’s 2015 Millennial Survey finds. The real gap is in how much they desire to hold the top position in their company.

Men tend to seek senior positions more than women (64% vs. 57%), with the gap growing to 12 points when they are asked how likely they are to seek to become the leader or most senior executive at their organization, Deloitte says.

Women rate themselves on par with men in financial, economic and general business knowledge and higher than men in academic knowledge and general business skills, such as professionalism, teaming and communication. But when asked about leadership skills, a small gap emerges, with 27% of men saying they are strong in this area compared to 21% of women. Though the gap on leadership self-rating varies by country, in no place do significantly more women than men say they have strong leadership skills upon graduation from college. Moreover, in several countries, men are much more likely than women to say leadership is a strength they possess: Peru (20-point gap); Italy (19); Germany (13); South Korea (13); South Africa (12); Switzerland (12); Japan (11); Mexico (11) and France (10).

They also vary in what they consider to be leadership traits, with 46% of women saying employee reward and development is a trait compared to 39% of men. Thirty-three percent of women say having a meaningful purpose is a leadership quality, but just 28% of men agree. Men (at 38%), however, say an organization’s ability to create innovative products and services is indicative of leadership, compared to 33% of women.

The gaps correspond to different priorities millennials say they would hold as senior leaders, with women placing more emphasis on employee well-being and general development and men being more likely to focus on short-term financial goals and personal rewards.

Sluggish investment returns pressure other performance benchmarks

dollar's flow in black holeSagging investment performance for property-casualty insurers has put the screws to other carrier operating segments to take up the slack. Underwriting and premium growth are natural go-to operations, but can they make up for what could be continuing anemia in the capital markets?

A panel of experts at the January 2015 Property/Casualty Insurance Joint Industry Forum took a look at the issue and identified several challenges for the year ahead.

The first is what is predicted to be a persistent low-income environment for investments. For example, though last year’s investment returns look fairly solid at about 8%, the same cannot be said for the future. As bonds hit maturity, that money has to be reinvested, but the fixed-income opportunities that are out there are not going to produce those decent gains. Rates are low and don’t show any sign of rising any time soon, and equities markets are volatile. Projected capital investment returns are not commensurate with the risk that’s being taken, V. J. Dowling of Dowling & Partners said on the forum panel.

If premiums fall along with that reduction in investment income, insurers will start feeling the pressure on their reserve status. Matthew Moser from A. M. Best identified the squeeze on reserves as a prime reason for the company’s negative outlook for commercial lines carriers. Personal lines, he said, are not experiencing quite the same downward pressure, though large personal lines insurers are experiencing their own challenges, according to another speaker, Brian Sullivan of the Auto Insurance Report and Property Insurance Report.

Midsize insurers that have figured out how to weave in third-party systems to increase their through-processing agility and boost their access to and application of big data are gaining on the industry behemoths, he says. Smart technology investments that focus on claims and policy management system upgrades, potentially through cloud technology rather than in-house infrastructure, could level the playing field a bit.

Industry disruptors are emerging, the panel agreed. That includes new sources of reinsurance financing and new carrier infrastructure models. Moreover, the lack of catastrophes over the past decade can’t be counted on, panel members said. The period of minimal catastrophe losses won’t last forever, Robert Hartwig, president of the Insurance Information Institute, reminded participants.

Millennials reveal attitudes on leadership

leadershipMillennials, those born after 1982, want companies they join to focus on improving society, according to Deloitte’s 2015 Millennial Survey. They are interested in job creation, profit generation and innovation, and 60% say they chose their employer based at least in part because the company provided a sense of its own purpose. Businesses identified by millennials as having a sense of purpose are closely linked to a significantly higher reporting of financial success, employee satisfaction and recruitment, Deloitte found.

Those surveyed also identified a need for renewed or revamped leadership. Millennials want leaders to focus on the long-term future of the organization, employee well-being, employee growth and development, and the company’s contribution to local communities and the broader society in which it operates. They also place less emphasis on personal income and rewards and short-term financial goals. Treatment of employees is considered a bellwether and is this generation’s most important consideration when deciding if a company is a leader.

Profiles of senior executives, a company’s scope or scale, and its overt charitable activity matter little to this demographic. Leadership as defined by millennials focuses on a set of traits; the top five are named here in order of importance, highest to lowest: strategic thinking, being inspirational, having strong interpersonal skills, having vision, demonstrating passion and enthusiasm, and exercising decisiveness. That decisiveness, however, becomes unpopular if it is characterized as autocracy, and the positive emphasis on profit generation turns sour if the company is seen as being driven by financial results.

Deloitte says its findings are a “valuable alarm” that should awaken companies to the need to alter the way they engage millennial talent.

CEO Dan Epstein Named to IBA Magazine’s Hot 100 for 2015

IBA hot 100ResourcePro’s CEO Dan Epstein is one of 10 leaders from New York-based companies to be named to Insurance Business America magazine’s 2015 list of Hot 100 people in the insurance industry.

The annual list is one of the industry’s highest distinctions, recognizing [Read more...]

Millennials require a digital touch

Millenials need to connect digitallyIf you want to hire, sell to, or in any way reach individuals born between the years of 1980 and 1996, the Millennial generation, you need to develop your digital presence.

A website, though necessary, simply isn’t enough, and the website that you have may be of marginal value if it isn’t integrated to multiple platforms. A recent Applied Systems report on the Millennial generation provides some pointers on a digital direction your company can take.

According to Goldman Sachs data cited by Applied, 44% of Millennials communicate opinions about services, products and brands using text messaging, while instant messaging and social media are used by 38% each. Just 16% use blogging to communicate their consumer opinions.

Not only do they share their own opinions via these methods, they look to family and friends for theirs. They also want in-person interactions, either over the phone or face-to-face, when they get to a certain point in their insurance experience, Applied found. Their purchases of auto insurance were split between online (35%), in-person (37%) and over-the-phone (25%) methods. For homeowners insurance, Millennials said they like to communicate with an advisor via phone, online, in person and through mobile apps or texting—in that order of popularity.

Your company’s marketing and CSR strategies now have not only bountiful avenues of communication but also myriad platforms to integrate. At-a-touch, fast-loading links that work on laptops, tablets, smartphones and, someday soon, in-home smart appliances must also function on multiple brands in multiple formats. Call centers that waste consumers’ time are in competition with immediate-response live-chat advice, and hold-time Muzak might underperform against informational and educational snippets presented to clients as they wait on the phone, other industry experts note.

Applied found that Millennials have grown up with almost unlimited choices and expect a lot of options so they can choose what fits best at the moment. If your technology is limited, expect your response from this next (and largest) buyer and employee segment to also be shackled. On the other hand, those who capitalize on Millennials’ technological literacy can expect to gain on more parochial competitors.

 

Drone applications buzz feds

droneErie, USAA, State Farm – all names of insurers asking the federal government for permission to use unmanned aerial vehicles (UAVs), popularly known as “drones,” for commercial operations. The Federal Aviation Administration has banned most commercial drone use, but insurers are hoping to receive exemptions.

Insurers foresee an array of uses for drones, including claims assessments in areas of widespread damage or inaccessibility, surveys and inspections, risk assessments, underwriting and loss prevention.

Insurers have requested approval to use unmanned aircraft system (UAS) technology on their own property for research and development, but Erie, for example, also wants to use drones in commercial and residential policyholder operations, and USAA wants to operate the vehicles at disaster sites.

While the FAA had received 167 requests for exemption from drone prohibitions from various businesses, just 13 exemptions had been granted as of Dec. 10. None are insurers.

The FAA’s most recent comprehensive report, from September 2013, offers a broad view of where the agency plans to go in its regulation of UASs, but just this December the regulator indicated it is going to miss the September 2015 deadline for safely integrating drones into the national airspace plan – and delays could extend to 2017 or beyond. Several European countries, Australia, Canada and Japan allow limited use of drones, with some restricting the UASs to five pounds or lighter. But safety issues are different in the U.S., the FAA says, adding it receives about 25 reports a month from aircraft pilots and others of drones flying near planes and airports.

Allstate announced this month its participation in a consortium dedicated to studying and advocating for drone usage in the insurance and construction sectors. The group, called Property Drone Consortium and led by EagleView Technology Corp., is a newly formed collaboration of insurers, construction industry leaders and supporting enterprises, including the Insurance Institute for Business and Home Safety. It aims to develop hardware and software solutions within the first year, build relations with relevant industry and government groups, establish industry standards for data formats, and promote industry expertise on UASs.

Hiring the next generation

The millenial When you think of the Millennial generation, those born between 1980 and 1996, what comes to mind? How about “meaning” and “early adopters”? Does “expectations” or “immediacy” seem like a good fit? Those are just a few of the characteristics that define the next generation of insurance industry employees. Here are some others that Applied Systems discovered in a survey of Millennials: focus, collaboration, positivity, multitasking and connectivity.

Now how does the number 75% strike you? That’s the segment of the workforce that Millennials will comprise by 2025. It’s time to get your sales systems and hiring practices aligned to this demographic constituency so you attract the very best of this group and keep them.

Your internal processes may have to be reshaped to include faster response, more-personalized reward systems (not just money), greater openness to multitasking and stronger commitment to work-life balance. Your technology will have to allow for interface among multiple devices at the speed of touch, and systems will have to be designed (or redesigned) for at-a-glance comprehension and user convenience. Not only will most of your employees be Millennials, most of your clients will be, too. Those who take steps today to make inroads with this demographic niche could cement a foothold.

Using Millennials’ technological literacy is a good first step at educating them in insurance and risk management so they can be successful in the industry, but it is not enough. To attract the best and brightest, you will need to demonstrate to them that your firm has what they want in terms of culture. Applied found they want room to grow and enough internal mobility to keep their interest, they want to enjoy work, they want flexible hours and remote work options, and they want to communicate.

From your phones to your web presence to your internal processing systems, HR relations, print marketing and career development programs, you need to commit to a combination of adapting your business to Millennials and showing them you have a dynamic business culture.

Connecting with the Next Big Buyer: The Millennial

Millenials are constantly connectedIndividuals born between the years of 1980 and 1996, the Millennial generation, bring a unique set of values and expectations to the market that require an overhaul of your service standards.

The insurance industry is under pressure to remake itself in the face of the technological revolution, and today’s agents and brokers must somehow remain personally connected while maximizing remotely controlled relations. Millennials, or Generation Y, are a major source of prospective sales in both business and personal lines, and they are your future agency leaders. Applied Systems took a comprehensive look at what the next generation wants and expects and how your agency can meet those demands.

Constantly Connected

A defining characteristic of Millennials and those to follow is their digital savvy. Touchpad relationships and high-speed answers and actions are the norm, so waiting 24 hours for a response is worse than alien; it’s ludicrous. Working, communicating, purchasing, researching—all of these are subject to expectations of immediacy and accuracy, and coming up with a wrong answer or a slow response is a deal killer in most circumstances. They just don’t have time for you. But they do have time to squawk about your failure on social media.

They use social media, which by the way is more than just Facebook, to blurt out their instant opinions and experiences—both positive and negative—so first impressions matter. All this makes them a key factor in your marketing strategy.

They are largely happy to conduct business without meeting in person. The study found that, of Millennials who had car insurance, 60% used a remote purchasing method—35% bought online; 25% used the phone. Just 37% had a face-to-face purchase experience. If you don’t have a quality, aggressive online presence, you are missing out on a bulky consumer segment. Millennials also like to conduct account maintenance online, so having self-service software that gives clients instant access to insurance information and account actions at all hours of the day and night is crucial.

Interestingly, the concept of “trusted advisor” is still very important to Millennials, Applied found. That means an agency’s website and call center need to provide consumers confidence and congeniality. Has your webmaster even considered these two concepts? Your marketing strategy also needs to reflect those two principles—you’ve got to display competence as well as friendliness at every customer touch point.

Millennials turn heavily to friends and family for referrals and opinions, Applied Systems found, using text messaging and social media. Since this generation relies so heavily on friends and family, it might be time to up the status of your business referral plan in your marketing strategy—and measure the attempts and the results.

Your digital relationship with Millennials needs to be “consistent, convenient and personalized at every stage of their buying or service journey,” Applied says. It’s time to take a new look at marketing and service from the perspective of the next buying generation and see if your technology is keeping up with your current and prospective clients.

Productivity and profitability insights from “best practices” agencies

Best practices agencyWe’re always interested in how agencies are performing and operating—we have, after all, made it our business. So we are closely watching the periodic results released from the Independent Insurance Agents & Brokers of America (Big “I”) Best Practices Survey.

In this report, the Big “I” analyzes the performance of 217 of the top insurance agencies in the country. It provides a timely and useful benchmark for evaluating agency operations. In particular, the report gives us a few different ways to look at profitability. For the sake of discussion, we’ll focus on the bracket of surveyed agencies with revenues between $5 million and $10 million.

Even within this cream-of-the-crop group of agencies, there can be a 30 percent difference in measures of profitability. For example, let’s consider the spread per employee, which is the difference between revenue per employee and the compensation per employee. This is an excellent metric of productivity because it measures employee contribution to the business before overhead. At average agencies, the spread is $64,733. At agencies with +25 percent profit, the spread is $89,868. That’s a 32 percent difference.

Also interesting are the figures for the Rule of 20. Assigning points to agencies based on organic growth rate and EBITDA margin, this looks at growth and profitability in balance. A score near or above 20 means a company will have a good return for shareholders. Average agencies surveyed had a score of 20.3; agencies with +25 percent profit had a score of 27.7; agencies with +25 percent growth had a score of 29.5.

Though the Rule of 20 formula is weighted to prioritize organic growth, growing the EBITDA margin is a solid strategy for improving the score during a soft insurance market or economic downturn.

In both the case of spread per employee and the Rule of 20, improving employee productivity can improve how an agency measures up. If you improve the output per employee based on improving operations efficiency and effectiveness, it’s “cheap” money that doesn’t require a huge investment or downsizing.

This is only a sampling of the ample data provided (you’ll have to purchase the full report for that), but these numbers demonstrate an essential truth—that the most profitable agencies have the most productive employees.

But, of course, there are many ways to understand the data. Tell us what you took away from the report, especially as it pertains to profitability, employee productivity and IT—tweet us @ReSourcePro with your thoughts.

How business leaders can become storytellers

Storytelling in Business is an art.

With their “God made a farmer” Super Bowl ad, Dodge told viewers a story about their brand values: hard work, dedication, reliability. They used words and images that composed a story about the all-American farmer paragon to show us what they and their products stood for. This appeals to consumers’ emotions, not logic.

In fact, few successful Super Bowl spots simply discuss product benefits. Instead, they tell you a story that supports a brand’s values, vision and mission. One of mankind’s oldest habits has become a choice tool of business leaders. Skilled storytelling has always been a way to convey important messages, but only more recently has it been recognized as a critical strategic business tool.

Storytelling applies to more than marketing and advertising. Leaders can use storytelling within organizations in much the same way Dodge did. A good story can help employees relate to the company’s mission, vision or values and inspire them to support these abstract yet definitive characteristics.

Storytelling also humanizes brands. From the Aflac duck and his many adventures to PEMCO’s gently self-deprecating Northwest Profiles, storytelling allows customers to see their insurers as human, relatable and entertaining. People want to do business with people (or water fowl) to which they can relate.

Writer and producer Golan Ramras spoke on storytelling at the recent ReSource Pro Innovation Advisory Council gathering in Berkeley. He emphasized that stories are powerful, build people’s desires and inspire them to act, and he shared crucial dos and don’ts of storytelling in business:

-    Do make sure the story you tell is positive and has a hero.

-    Don’t be afraid of metaphors, anecdotes and current events.

-    Do make challenges and obstacles personal.

-    Don’t oversell or include too many details about your company.

-    Do tell a story about results and about your customers.

-    Don’t lean on cliches and corporate-speak.

Remember that storytelling is an art—once you have learned the basic rules, feel free to throw them out judiciously.

Using storytelling as a business tool has become easier, thanks to the ready availability of a variety of media. Leaders can choose exactly the right way to get their messages across: written narratives, video, animation, comics, photo essays, etc. Relating a simple anecdote about a successful sales tactic can be incredibly effective.

Write the best story to communicate mission, vision and values. Give customers someone to relate to. Use the right medium. Tell more stories about your business. It’s a consummately human way to communicate with customers, clients, employees and partners.