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Is Lack Of Skilled Workforce A Reason For Low Insurance Penetration?

Lack of suitable candidates is the biggest challenge employers facing today

Since liberalization of the insurance sector in 2000, the sector has seen phenomenal growth and it today offers huge business opportunity. India currently accounts for less than 1.5 per cent of the world's total insurance premiums. It is the fifteenth largest insurance market in the world in terms of premium volume, and has the potential to grow exponentially in the coming years1.

In absolute terms, number of policies, premiums, players, distribution channels, have all grown, even the penetration has gone up, but compared to other nations India's penetration level is still very low2. In 2015 the government informed Parliament that insurance penetration in India at 3.9 percent was below the world average of 6.3 percent in 20133. It is glaring that despite the phenomenal growth of the sector and the economy, India has the lowest penetration level.

There are few obvious reasons for this dichotomy.  While awareness and reach are the major reasons, the sector today is faced with the challenge of limited expertise and skilled workforce. Skilled workforce is required for risk based underwriting, creating innovative products that will appeal to people, etc. Niche high-end skills in complex and highly-specialised areas such as risk management, credit evaluation and financial engineering are also in demand.

All these leading to an acute need for skills development within the insurance industry. Lack of suitable candidates is the biggest challenge employers facing today. A recent survey estimated that there is a need of at least 21 lakh insurance educated employees by 20254.

Lack of awareness 
The insurance industry, specially health insurance, is a sunrise industry in  India. The growth  witnessed after liberalization was mainly in metro cities where the level of awareness increased significantly. However, awareness beyond metro cities is very low which hinders further penetration. To boost health insurance penetration industry must raise the awareness of the health insurance among people living beyond metro cities.

There is also lack of awareness among our students and young professionals about national and internationally recognized certifications and training on skill development. A recent market research had revealed that awareness level of internationally recognised certifications and training is medium among  young professionals, though there are many firms offering such courses.

Traditional approach to teaching
In India, education plays a vital role in the creation of a skilled manpower and it is the quality of education that decides the quality of human resources. But despite building excellent educational institutions,  the industry is struggling hard to meet the skill requirement. This is because the prevailing education system does not consider the component of skilling in its curriculum, which in turn fails to churn out a skilled workforce necessary for the industry. Most Indian educational institutions continue to follow the traditional approach to teaching that is based on content delivery rather than on knowledge delivery. All these have created a huge gap in what the industry needs and the output of educational institutions.

More than 700 million Indians are estimated to enter the working age group (15-59) by 2022, of which more than 500 million will require some form of vocational or skill training5. Statistics also show that 47 per cent graduates in India are not employable due to lack of English language knowledge and cognitive skills6. This implies that most graduates are in need of additional skills that can make them more employable as per the industry requirements. For skilling to take wings, integration of skill development and education is essential.

Importance of self-learning 
At a time when businesses are focusing on digitalization, it is important for employees to look at self-learning to stay relevant. It is no more the case that companies take you to their campus and train them for 3-6 months then you come back and get job-ready. In today's environment the individual is on-the-job training, go do a big data analytical programme, do something on virtual reality and get certified. They have to be aggressive about their own skill development in order to prove that they can deliver at a time when digital technologies are fast developing.

Requirements/Solutions
A fourth industrial revolution is dawning in the insurance sector with telehealth, mobile health, wearables, artificial intelligence (AI), machine learning, etc changing the business landscape. There will be greater depth and breadth of analytics talent throughout organizations. Though insurers are learning new skills to stay competitive, and using technology to enhance customer experience, they are faced by paucity of talent in building the analytical capabilities necessary for today's business.

To meet the talent crunch, insurers need to effectively use the emerging tech platforms. These platforms hold vast potential for insurers to reinvent their business models.  Both industry and educational institutions must work together to create a ready talent pool. Such partnership will enhance the level of knowledge and skill sets in the industry.

For the ever-evolving insurance sector, a better skilled workforce will adjust more effectively to the challenges and opportunities of the industry they work. To increase the insurance penetration in tandem with the industry growth and to become insurance for all a reality it is increasingly important for the industry to arm its workforce with better skills relevant to the emerging business environment.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


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workforce skill set


Antony Jacob

The author is CEO, Apollo Munich Health Insurance

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