Is increasing IT putting downward pressure on employment?
We recently commented on the rise in IT budgets in 2010 and the possibility that the ‘new’ money might be spent outside the IT departments with BPO, cloud technologies, and the like. Joe McKendrick in Insurance Networking News looks at the same budget trend and wonders if it is having equally disquieting implications for employment in insurance companies generally.
McKendrick notes that IT spend in insurance generally is continuing to increase on a real dollar basis as well as on a per premium dollar basis. He also notes reports from Dr. Robert P. Hartwig, of the Insurance Information Institute which shows that employment in the US P&C industry is at its lowest level since the date began to be collected in 1990.
McKendrick suggests that insurers may be relying more on technology than employees to fuel growth plans in the current soft market. Hartwig’s most recent report (March 4, 2011, not available to McKendrick at the time of his article), adds his voice to this opinion. Commenting on employment in P&C insurance over the two decades, Hartwig writes: “The peak occurred in July 1999 (515,800) and the downtrend that began then overcame the hard market early in the first few years of the past decade and was likely fueled by technology and productivity improvements and lately by a very soft premium market.”
There was a downturn in the latest reporting month – January 2011. The January losses seem to be occurring with knowledge workers in insurance companies (claims adjusting showed a sharp decline) as well as with agents and brokers. Hartwig notes that these data are not seasonally adjusted and subject to further revisions from the US. Bureau of Labor Statistics and brokers.
Since we have been working in technology (when the computers were as big as the brontosaurus walking the streets outside), there has been a maxim: “Technology doesn’t eliminate jobs, it just changes them.” Is this still true?