Pleasanton, CA – It is the decades old question, will advancement of technology lead to greater unemployment? For centuries, this fear has been so great that English economist Lord John Maynard Keynes even coined a term for it: Technological Unemployment.
However, if we look at the creation of better technology for sewing back in the 18th century or the creation of the tractor in the 20th century, amongst hundreds of other examples, we see that job needs are reallocated to other things to accommodate for the logical progression of technology. Barring any divine intervention, such as government interference, technologies improve and human kind makes adjustments and new needs are created.
The fear of automation and technology has existed for centuries, and the development of these technologies have, in fact, been altering human jobs. This fact, however, does not spell doom and gloom for the future of the human workforce; rather, the emergence of new technologies and the shift it causes in the workforce does not deplete jobs, it simply changes them, most often for the better.
For instance, in her article about machines taking human jobs, Rachel Nuwer (2015) says although people feared librarians would become obsolete as Google gained momentum, the opposite actually happened and librarians were in higher demand, though now equipped with new skill sets. She quotes, “If it’s possible for a machine to completely replace a human, then yes, I’m superfluous…But if I’m the person who can now manage that machine, then I become more valuable.”
Like so many other industries, the insurance industry also fears the growth of technology and the loss of human jobs. However, as history has proven, technology holds plenty of promise and enlightenment for the insurance industry. Quadrant Information Services, for one, has been a significant component in balancing the emergence of technology, especially in the face of “Big Data.” Big Data, as it is known, has been one of the largest growing developments for insurance. Car insurance companies, for instance, used to price policies based on 10 to 20 rate bearing factors alone (age, gender, ZIP code, driving record, etc.).
With recent advances like telematics and wearable technology, however, companies are now able to gather a much larger database with a higher level of granularity for those rate bearing factors—credit scores, fraud data, reputational data, etc.—driving the number of relevant variables into the thousands. Hence the term, Big Data.
This access to information is growing larger each day as technology offers more and more ways to assess risk, but the industry still requires people to make sense of the massive impact that all of this data contains. In other words, insurance companies have benefited from technology by gaining access to all this Big Data, but now they need a way to make sense of it.
For over 25 years, Quadrant Information Services has generated national price comparisons for insurance companies and consumers and in doing so has created a new culture in response to technological growth. There are now new insurance employees throughout the country charged with analyzing pricing, competitive posturing, predictive forecasting and demographic specifics – all of which a direct result of this new found Big Data.
With new pricing analytics solutions, carriers can now match their pricing and their competitors’ pricing to things like the network of social media providers, and they can underwrite insureds based on countless elements never before available. This newfound access to Big Data and the tools needed to analyze it open new job profiles and thus new employment opportunities: marketers can now analyze possibilities and look for new customers, actuaries and analysts are freed from clunky, administrative number -crunching, and strategists gain more time to evaluate and plan—which makes them more valuable to their employers, not less.
Technology has automated the way data is collected, but the industry still requires people to analyze that data and come up with strategies to plan and grow. Deloitte economists Stewart, De and Cole (2015) examined 140 years of data to prove that technology is not destructive, but instead can actually increase employment: “The stock of work in the economy is not fixed; the last 200 years demonstrates that when a machine replaces a human, the result, paradoxically, is faster growth, and in time, rising employment.”
The automation of the insurance industry resultantly leads to better business practices. Technology frees people to focus on what is most important: saving consumers money, facilitating growth, and increasing employment. Companies that have integrated big data and the analytics tools like those of Quadrant have proven more competitive through implementing greater efficiency, meeting the needs of customers, and saving money by predicting the behavior of insureds and thereby providing better service.
The plow led to the tractor, the seamstress to the sewing machine, and the 1930s theory that Lord Keynes coined “technological unemployment” is as false then as it is now. The fear of losing jobs to technology is in part driven by the belief that these relatively rapid technological changes will be met by a slow-to-react, status quo-seeking population. On the contrary, the world is quickly adopting new technology and reaping the profitable rewards, as evident in the adoption of Big Data, one of the most powerful basic business tools to come along in years.
There is no doubt that the growth of technology will continue to alter the insurance industry as we know it, but as long as we continue to adopt these changes and find ways to channel them into better business practices, technology and the future are nothing to fear.
Nuwer, Rachel. “Will Machines Eventually Take on Every Job?” BBC. N.p., 6 Aug. 2015. Web. 20 Apr. 2016.
Stewart, Ian, Debapratim De, and Alex Cole. “Technology and People: The Great Job-creating Machine.” Deloitte LLP (2015).