Revolutionizing Retirement in the Insurance Industry: A Comprehensive Approach to Offboarding

As the insurance industry braces for a historic wave of retirements, companies face the challenge of preserving decades of knowledge and experience. By 2028, approximately half of the insurance workforce is set to retire, coinciding with the retirement age of the baby boomer generation. This impending “baby boomer” retirement collapse presents a significant dilemma for companies, as they grapple with the loss of invaluable expertise.

For years, retirement has been viewed as a long-awaited escape from the daily grind. However, many retirees find themselves adrift without the structure and purpose that work provides. This transition can be particularly challenging for insurance professionals who have dedicated their careers to the industry.

The retirement journey for insurance professionals is evolving, requiring a fresh approach to ensure a smooth transition for both employees and employers. Introducing Retirement Journeys, a personalized pathway designed to guide insurance professionals through the transition out of the workforce. Developed collaboratively with each individual, Retirement Journeys prioritize the preservation of institutional knowledge while supporting employees in their transition to retirement.

Understanding the Retirement Landscape

For years now, the insurance industry has been inching toward a historic wave of retirement. From 2024 through 2027, more Americans will turn 65 years old than at any point in our country’s history. About 50% of the insurance industry workforce is in line to retire by 2028, and all of the baby boomers will be past the traditional retirement age by 2030. Many of these professionals are already planning their exit strategy.

Retirement, however, is not always the idyllic journey it’s often portrayed to be. While some retirees embrace the newfound freedom, others struggle with the loss of identity and purpose that comes with leaving the workforce. This is particularly true for insurance professionals who have spent decades honing their skills and expertise in the industry.

The Challenge for Companies

The retirement of experienced professionals poses a significant challenge for companies. Losing key employees means losing valuable knowledge and expertise, which can have far-reaching implications for business continuity and succession planning. Companies must find ways to retain institutional knowledge while supporting retiring employees in their transition to retirement.

Introducing Retirement Journeys

To address the challenges of retirement in the insurance industry, a new approach is needed. Retirement Journeys offer a comprehensive framework for guiding employees through the transition process. Developed in collaboration with each individual, Retirement Journeys prioritize the well-being of employees while safeguarding the continuity of the organization.

Key Components of Retirement Journeys

Cultivating a Safe Culture: Retirement Journeys begin with open conversations and detailed plans, fostering a culture where employees feel comfortable discussing their retirement plans. By involving employees in the decision-making process, companies can ensure a smooth transition and retain valuable knowledge.
Employee-Centric Approach: Once an employee decides to retire, the next step is to explore various pathways that align with their preferences and goals. Whether it’s reducing working hours, transitioning to a different role, or adjusting schedules, employees are given autonomy in shaping their retirement journey.
Engaging the Entire Team: Retirement Journeys benefit not only the retiring employee but also the entire team and organization. By gradually transitioning responsibilities and roles, companies can mitigate the impact of retirements and provide opportunities for career development to other team members.

Case Studies

One retiree reduced their working schedule gradually over several months, allowing the organization to absorb their knowledge and responsibilities seamlessly.
Another employee shifted to a contractor role, providing valuable expertise until their retirement.

The Benefits of Retirement Journeys

Retirement Journeys offer a fresh approach to retirement in the insurance industry, enabling employees to embark on the next chapter of their lives with confidence while safeguarding the continuity of the organization. By engaging the entire team in the retirement process, companies can ensure a smooth transition and bridge any knowledge gaps that arise.

Conclusion

The retirement of experienced professionals presents both challenges and opportunities for the insurance industry. By embracing a comprehensive approach to retirement, companies can navigate this transition effectively while preserving institutional knowledge and supporting retiring employees in their journey to retirement.

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Commercial P&C Insurance

Commercial Office Space Set for a Strong Comeback

The sustained increase in demand for office space across the nation since late 2022 suggests that the market has moved past its lowest point, according to insights from the real estate technology platform, VTS. Demand for office space began to rise in late 2022 and continued into early 2023. Since then, the office market has experienced a period of stability and growth, supported by favorable economic factors, indicating a market rebound. This conclusion is drawn from the VTS Office Demand Index (VODI), which tracks unique new tenant tour requests for office properties in key U.S. markets. The VODI serves as an early indicator of future office leasing activity. According to the index, demand for office space has grown consistently over the past 12 months, closing the second quarter with a 17% year-over-year increase and a 34% rise from the VODI’s lowest point in December 2022. A significant shift in office-based employment patterns further supports the belief that demand for office space has stabilized. After reaching its peak in August 2022, office-based employment declined by 3.9% in early 2024. However, this trend has since stabilized, and employment growth has remained steady. Additionally, a recent decrease in work-from-home rates has fueled the renewed demand for office space. “They say you can only recognize a market bottom after it has passed, and the office space market is no exception. Following what we now see as the bottom, the national demand has gradually increased, though it remains susceptible to economic challenges,” said Nick Romito, CEO of VTS. “However, the growth observed in VODI over the past 18 months, coupled with positive trends in the office-using workforce, suggests that the market has reset, and the worst is behind us.” It’s important to note that this national trend does not impact all local markets equally. Cities like Los Angeles and New York City have seen healthy growth in office space demand, while markets such as San Francisco and Washington, D.C., have experienced prolonged stagnation. In Los Angeles, office space demand surged in the second quarter, briefly surpassing pre-COVID levels, driven by an increase in the average size of office spaces sought by tenants. New York City followed a similar overall pattern, though with some softness in the second quarter. Conversely, San Francisco’s demand for office space remains unpredictable, largely due to its tech-focused workforce, which continues to favor remote work more than other industries. “Markets heavily dependent on the tech sector, like San Francisco and Seattle, are on a markedly different post-COVID recovery path compared to more diversified markets like Los Angeles and New York City. It may take some time before we see office demand in San Francisco and Seattle return to pre-COVID levels,” added Ryan Masiello, Chief Strategy Officer at VTS.

Cyber Liability

Global IT Outage Puts Business Interruption Insurance in the Spotlight

In July, a global IT outage had a significant impact on business interruption insurance policies, overshadowing the effects on cyber insurance coverages. “This incident wasn’t a result of a malicious attack, which is why typical cyber insurance policies may not have been activated,” explained Peter McMurtrie, a partner in West Monroe’s insurance sector, in an interview with PropertyCasualty360.com. “Where coverage was applicable, factors like deductible amounts, waiting periods, and coverage limits played a critical role in determining the extent of exposure,” McMurtrie noted. “Standard policies for small businesses were less likely to offer coverage, while more complex policies for mid-sized companies and Fortune 500 corporations may have included broader triggers for non-malicious outages caused by third-party software issues.” The outage was triggered by a software update on July 19, 2024, by cybersecurity firm CrowdStrike, which affected organizations worldwide using Microsoft Windows. This interruption had far-reaching consequences, including disrupting hospital systems, media outlets, financial institutions, delaying thousands of flights, and halting daily business operations. McMurtrie emphasized that while the initial impact of the outage was similar for both large and small businesses, the ability to recover operations and whether insurance covered the loss of business income varied. “Larger companies are more likely to have advanced disaster recovery plans that ensure service redundancy following unexpected outages,” he added. “Their insurance programs also tend to cover a wider range of incidents.” According to Microsoft, the CrowdStrike update error affected over 8.5 million Windows devices globally. The incident highlighted the interconnected nature of our global ecosystem, including cloud providers, software platforms, security services, and their clients. “It’s a stark reminder of the importance of prioritizing safe deployment and disaster recovery across the tech industry,” the company said in a blog post. McMurtrie pointed out that the outage’s widespread impact was largely due to its effect on organizations that are critical to societal infrastructure—sectors like agriculture, airlines, banking, energy, government, healthcare, manufacturing, and retail. “Insurance companies base their risk appetite on their ability to understand and price risks appropriately. This becomes increasingly challenging with emerging threats,” he said. “However, I anticipate that insurers will respond by clarifying policy language, refining risk selection criteria, and possibly developing new products specifically designed for this evolving exposure.”

Revolutionizing Retirement in the Insurance Industry: A Comprehensive Approach to Offboarding