Home

Multiple Approaches, New Options: Asynchronous Learning and Other Methods of Education in Reinsurance

by Sloan-C

I. the importance of skill and knowledge development

According to Michael Muth of McKinsey and Company [1] buyers are now expecting services and products that demand greater skills and knowledge on the part of suppliers. In the financial industry, the increased complexity is driving a change: capital is becoming relatively less important, while skills are becoming relatively more important. As in technology, pharmaceuticals and areas of financial services, people are coming to be seen as assets. My industry, reinsurance is making the shift from a provider of a commodity (capital, a low barrier to entry in a world with great amounts of available capital) to become the provider of solutions to problems (based on skills that reinsurers have in their people, a difficult area to replicate and thus a high barrier for potential competitors).

Reinsurance is just another industry where we see this trend: knowledge becomes the critical resource in a technological economy. As the third technological revolution continues (Information Technology, following the previous Agricultural and Industrial revolutions), knowledge will replace natural resources as the asset most critical to economic success. MIT economist Lester Thurow describes how the increased need for knowledge will have an effect on employers and employees [2]:

1. Adult education will be a necessity. "The skills needed to succeed will multiply and change rapidly, few employees will be able to equip themselves with lifelong working skills in the first 12 to 16 years of education."

2. Job training will be wanted by both employers and employees. New technology and ways of doing business are evolving at a blinding rate, and the skills to use them must keep pace. Can technology itself provide the platform for training? What is the necessary training? How do employees know which skills to acquire? How do employers ensure that they have people with the skills they need?

3. Knowledge will become a global equalizer. In a global economy employers can search globally for the lowest production costs and the best knowledge workers, and employees can search globally for the highest wages and the best firms. As this happens, employees' wages will be based on their individual skills rather than on the poverty or wealth of their home economy. "The well-educated living in India are paid close to 'American' wages, while the uneducated in the United States earn close to 'Indian' wages." Skilled first-world workers compete with skilled third-world workers. To keep their businesses with a knowledge advantage, employers will have to help the bottom two-thirds of their labor force in the developed world acquire better skills.

4. The relative earning power of older skills compared with newer skills will change dramatically. Older workers offer experience and the skills of an earlier period, while young workers sell new skills. Over the past quarter-century, as technological change has escalated, the returns of experience have decreased for employees at every educational level. In the new knowledge-based economy, only those at the highest skill levels will receive real wage increases, and experience and past knowledge will be increasingly less valuable. Continuous learning becomes a necessity. An example of this in reinsurance is the lack of training in Alternative Risk Transfer techniques in which new concepts from the capital market are needed to structure or even understand what is being done.

As Patrick Ryan, chairman and chief executive officer of Aon Corp., mentioned in a 1998 speech after accepting the College of Insurance's "Insurance Leader of the Year" award, "As an industry, insurance has not done as well in attracting new talent as other financial services." He sees colleges as the necessary place for our industry to train new talent. But what about in-house, specialized and post-university training?

We often have continuing education mandated for us by the government, or our firms are enlightened enough to see the need of some form of continuing professional development to improve performance. This is a good idea in a knowledge-based industry like ours, but it often turns out to be spending time in a "class" without learning anything. If employees learn things that are applicable to their jobs and helpful in understanding reinsurance, they tend to make fewer errors, enjoy the work more and are much more productive.

II. Survey of the various types of educational methods and media used in Reinsurance

We are living in a world with more and more options of how to get educated. A brief survey of the post-college alternatives that professionals in reinsurance have to choose from includes the following:

1. The most common is in-house classroom training. This approach requires a training infrastructure and organizational effort. It can remove employee groups from their jobs simultaneously, and it can be difficult to meet the needs of the brightest and the slowest in class. However, it is great for creating a sense of team spirit if people are able to socialize and get to know one another.

2. Quite often today, companies are outsourcing much of their development training. Outside seminars have the advantage of being pre-developed, so that courses don't have to be created by the company. Unfortunately, they can be expensive on a per student basis, the quality varies widely, and they cannot be previewed. Often, much of the material covered was already known or was inapplicable for the student. Usually the student is away from the office for a number of hours or days. Outside seminars can also involve expense for travel, food and lodging.

3. Some people go the high-end route by taking accredited college or university courses or full degrees. Today, these can be done in person or by distance learning. They are more thorough, but tend to also be more expensive and time consuming than the previous options. A sub-category of this approach is the classes given by professional societies for their designations, for instance the ARe (Associate in Reinsurance) program offered by the Insurance Institute of America or the ACII appellation granted by the Chartered Insurance Institute in London.

4. Another popular option is through self-study books and self-study kits. They tend to be relatively inexpensive, but actual learning and retention may be less than the other options. Students often need prodding to get started and require more administration to make sure that material is being covered.

5. Reinsurance books are more scholarly and provide excellent reference material, but require a motivated learner. Some books that consist of a number of chapters all written by different authors sometimes have the disadvantage of lacking standardized terminology (i.e., different contributors call the same thing by different names, thus confusing the reader). No feedback is possible.

6. Videos have been done in an effort to educate people about reinsurance. They are inexpensive. It is difficult to skip over parts not of interest to the student. Not a lot of material is generally covered in these videos. No feedback is possible. Not much quality material is available from our industry.

7. In the past, it was generally the mentoring or one-on-one, on-the-job training approach (at times almost like an apprenticeship) that was used most frequently. This approach can be very effective, but the best outcome for this approach depends on the time available, teaching ability, the organization and willingness of the mentor in a fast-paced, high-pressure business environment. Typically this approach ends up expensive, inconsistent, and hard to monitor.

8. No standard training needs to be also included here. Most managers believe that employees will generally pick up the knowledge that they need by osmosis from other people. This is sometimes referred to as being "Thrown to the wolves." As an approach to training it is unreliable. It also can cause employees to have a lack of respect for skills and the job that they are doing. Ad hoc, muddle through training can work for short term emergencies, but is not useful in developing a solid foundation and overview of a business. Sadly, some of the largest organizations still take this approach.

In summary, the current situation in our industry's education/training generally consists of: seminars (both off and on site), education (Colleges of Insurance, business schools and CPCU), reading text-books and in house publications, reading samizdat copies of the previous (a reinsurance broker friend of mine has a collection of duplicated books and papers filling eight large 3-ring binders), and sitting down with someone to get word of mouth explanation. One senior executive at large American reinsurance company describes the situation in his firm to me as, "Typical education: 1) Thirty days of class when first hired. 2) Thrown to the wolves. 3) Seminars annually."

Mentoring was the approach that the firm that I originally started with in the reinsurance industry wanted to use. In actuality, it ended up being no standard training. In going through my own library of material that I was given to help "train" me, I was struck by the number of samizdat copies of chapters from books, or articles or even notes taken in some ancient seminar on a particular subject. These had generally been handed to me in either an official or unofficial capacity by people above me in the organization who knew that I needed to increase my skills and knowledge, but who did not have the time or the ability to explain things properly to me. They were frequently very hard to read because of the number of times they must have been copied before being given to me; they also often lacked proper credit to the source. I also have a large number of old articles cut out of various magazines such as Business Insurance and National Underwriter, or information pieces from organizations and governmental.

1. There is also another approach. It is not specifically designed to do away with any of the above-mentioned approaches, but it is a tool that can be used to more effectively educate a firm's employees by itself or in conjunction with other methods. In reinsurance, this approach began in the late 1980's. Computer Based Training (CBT) is providing education for people using computers as the method for communicating the information, rather than the traditional classroom lecture or book to read. It has been widely embraced by the business community and is beginning to make inroads into higher education. Companies have found that they can cut costs, boost the productivity of their employees and increase their profit margin by using well crafted CBT applications [3], [4], [5].

 

III. Use of Information Technology (IT) software in Insurance and Reinsurance Training

Reinsurance is a field that has highly technical and mathematics heavy attributes. Any advanced subject is difficult to teach in a classroom because of the associated jargon and the limitations of the overhead projector, but with reinsurance, the mathematical nature of the subject makes it imperative that students should be able to do arithmetic/statistical calculations for themselves, something difficult to do in a lecture style presentation. Traditional lecturing allows little interaction with students because students have different levels of understanding. Classes could be either held back by the slowest student or understood only by the brightest. What is often needed is either one-to-one personal learning or one-to-one computer-based learning. If the latter is adopted, the courses must be divested of the text-based limitations of books and lectures. Instead, animation, graphics, interactive question and answer and spreadsheets must be used. It is not simply a matter of putting readings out on a web page to be accessed.

CBT can be provided in a number of ways: directly off of a CD-ROM, from a hard drive or server, over a corporate intranet, or over the Internet (this last method is referred to as Web Based Training (WBT)). It can also be deployed in a hybrid fashion, such as with instructor-led portions of a class (perhaps done over an intranet chat room), supplemented by interactive video on CD-ROMs on the students various workstations (to get around bandwidth problems caused by too much video information having to come over the intranet) and having quizzes taken on screen and graded by software automatically. There are any number of ways of using CBT.

The method of CBT can be either real-time, involving a live instructor, or stand alone, without an instructor. The distance gap is bridged, but the time gap remains with real-time instruction: a student may be far away, but still needs to be available to learn at the specific time that the class is going on. The ability of the instructor to provide answers is also often constrained.

In asynchronous (anyplace, anytime) learning that occurs without an instructor constantly available, students can work around their own schedules for training time, and they can also progress at their own pace. Most of these programs are interactive and multimedia is frequently used. Studies have shown that interactive online methods such as CBT, compared with traditional passive education, may increase a student's interest in the content, increase retention of information, or accelerate learning [6], [7], [8].

Many companies are beginning to look at distance education and CBT as the wave of the future for improving the performance of people in our knowledge-based industry. Today a number of companies have begun to utilize CBT as a part of their in-house training. Usually, courses are prepared by a training department and then out-sourced to a CBT authoring company. One of my acquaintances had this responsibility at one of the larger North American insurance companies. She described it as "harrowing" in the production phase but wonderfully rewarding once students were able to begin using it. "They actually began to show understanding in interacting with the material" which was quickly "translated into on-the-job performance improvements."

To avoid the problems of having to create an in-house set of courses, there are ready-made products. For example, Taurus software can be used either as an auxiliary help to a traditional or online class, or as a complete stand-alone virtual one-on-one classroom. The goal is to get a complete, interactive education in the subject without having to leave your chair. Information delivery is free from any time or distance constraints since people can access the classes any time they desire. Flexible, easily updated CBT is often designed to assist learners to better prepare for exams or class work or to support material covered in books, in-house courses or certain outside seminars.

Many companies in my industry of reinsurance have been slow to utilize educational technology. Yes, presentation software has been used for education of clients or management presentations, but it is generally secondary to a live oral presentation. One would think that an IT-rich industry such as reinsurance, in a world that is increasingly computer friendly, would be among the first to use technology in educating its employees.

Now, market characteristics are forcing change. Continued, lifelong learning and the need for a professional and well-educated work force are essential in an increasingly competitive and rapidly changing world. At the same time technology, particularly the new and emerging educational and graphical software available, is beginning to provide a way to effectively do this training in an efficient and cost effective way.

Unfortunately, some distance learning classes that utilize inter- or intra-nets are clunky and stale. The promise is there, but we are still in the process of accessing the technology now available to actually educate and train, not just elicit rote responses (as is done in some of the newer action oriented games designed to reinforce memorized responses for test taking) [9].

IV. The promise of interactive, asynchronous learning

A. Privacy
One of the most commonly voiced benefits is privacy. Many people avoid continued learning just because they don't want to appear stupid before others. Many prefer to use a computer program that they can use to answer their questions, without anyone else having to know that they even have questions. To be able to use software in a comfortable, private location is very conducive to acceptance of corporate education. The formula seems to be that low anxiety leads to high acceptance and high retention.

B. Ability to Ask Questions
To really understand something you must see why it works the way it does. Asking "Why does this do that?" or "How do those two things interrelate?" can help in comprehension of the important underlying reasons for things being the way that they are. Software that is designed to allow the user to ask the questions (and not just to be an electronic testing device that asks the user the questions) is the next best thing to having an instructor available on call 24 hours a day.

C. Play
"Play" is an aspect of software that is easy to see in the world of entertainment, but we often do not discuss it in the context of business education. In our industry we have used spreadsheets for what-if scenarios. This is a way of learning by doing...safely. To be able to explore--Montessori-like--a body of information is a well-established method of education.

D. Interactive Software
Interactive software--truly interactive--is the umbrella for the above. Now we have more and more interactivity in computer training. Interaction can increase retention of information and speed up understanding of concepts.

E. Self-Paced
"Going at our own speed" is a positive comment often heard from those using interactive software. Having the ability to go back over material previously covered is helpful. This can be done without fatigue or frustration on the part of the computerized instructor until the learner gets to "AHA!"

F. Self-Testing
Self-testing is already largely done by software. A new spin on this is the ability to help learners use the testing to compete against themselves to grasp the underlying principles, not just to have the "correct" answers.

G. Graphics
Appealing graphics (displaying of quantitative information in a more readily comprehended form) and intuitive interfaces are two keys of interactive software.

H. Filtering Information
As we are continually bombarded by information and change, there is a growing need for filtering out unnecessary data and increasing the use of important information. A program designed to bring people through a progressive, step-by-step learning process (in which each point builds on what went before) solves much of the filtering issue. A program that is both visual and interactive can help with retention. Why do we remember some of what we learn and not other things? Think about kids, or what you remember from your own childhood. Moments of terror, moments of fun: but very few moments of boredom are memorable.

I. Multimedia
Multimedia can be memorable and intriguing, since the eye is naturally attracted to movement and the ear to sounds. But it must also be of educational value--not entertainment thinly veiled as training. It is interesting to note that the largest selling encyclopedia today is Microsoft's Encarta. It is frequently described as the best of the multimedia reference materials available today. Use of software has also long been standard for doing research over the Internet, in vast databases and in word searches through electronic libraries.

J. Game Theory
Game theory is frequently used in education. Now business education programs are also making use of game theory ... or just playing games on the Internet. This is another way of injecting a degree of fun into the educational process, so that people are not hobbled by the stiff formality of certain types of teaching materials.

K. Updating Information
Updating information can be done much more quickly online than most other methods. For instance, users who need updated information and business tools can have a new module sent to them and can immediately start training.

We all can see the need at times to be brought up to speed quickly in an area that we need to learn about. This is another aspect that the hyper-competitive environment we are working in forces upon us. Frequently it is managers--not just the newcomers--who are moved into a new area where they lack experience and need the quick, private style that the right type of training software can provide.

V. References

1. Towards Skills-Based Competition in Global Reinsurance, The Review, p. 20, Oct. 1997.
2. Thurow, Lester C., Building Wealth: The New Rules for Individuals, Companies and Nations, New York: Harpercollins, 1999.
3. Cole-Gomolski, Barb, Training Benefits Scrutinized, Link to Profitability Hard to Prove, Computerworld. Available: http://www.computerworld.com/cwi/story/0,1199,NAV47_STO31419,00.html
4. Gubernick, Lisa, and Ebling, Ashlea, I Got My Degree Through E-Mail, Forbes. Available: http://www.forbes.com/forbes/97/0616/5912084a.htm
5. Rothfeder, Jeffrey, Training the "Twitch" Generation, Executive Edge Forbes, pp. 30-36, September 1998.
6. Alex Informatique White Paper, Networked Interactive Multimedia Training. Available: http://www.alex.com/
7. Asymetrix White Paper, Online Learning. Available: http://www.asymetrix.com/
8. Macromedia White Paper, Standards Based Computer Managed Instruction. Available: http://www.macromedia.com/
9. Dillon, Nancy, Can Games be Training Tools? Computerworld. Available: http://www.computerworld.com/cwi/story/0,1199,NAV47_STO32752,00.html

VI. Bibliography

A New, Sober Breed, Reactions, pp. 35-36, Nov. 1997.
Alexander, Steve, A Touch of Virtual Class, Computerworld. Available: http://www.computerworld.com/
Bennett, Frederick, Computers As Tutors. Available: http://www.concentric.net/~Faben1/
Bernstein, David S., and Auerbach, Sarah, 1999 State of the Industry Report, Inside Technology Training, June 1999.
Buss, Dale D., Keeping Them Happy, The Wall Street Journal, 14, 22 June 1998.
CBT Solutions White Paper, 1997 Computer-Based Training Report. Available: www.cbtsolutions.com
Clark, Elizabeth, Distance Learning: Making the Grade? Network Magazine, Sept. 1999.
Cologne Re, Ausbildung:"Der professionelle Risikoprüfer". Available: http://www.colognere.com/CologneRe.nsf/Doc/edurp0-de
Cwiklik, Robert, A Different Course, The Wall Street Journal, R31, 34, 16 Nov. 1998.
Elliott, Michael W., ARe 141 Course Guide, Malvern, PA: Insurance Institute of America, 1992.
Fenn, Donna, Corporate Universities for Small Companies, Inc. Magazine, Feb. 1999.
General Re, Campus Recruiting and Underwriting Training. Available: http://www.genre.com/GRN.nsf/Doc/campus1 - Learn the Basics
Gerathewohl, Klaus, Reinsurance Principles and Practice (2 Volumes). Karlsruhe, Germany: Verlag Versicherungswirtschaft, 1980.
Gottheimer, George M., Re-Manager: Advanced Reinsurance, Berkeley Heights: Kernan, 1998.
Guy Carpenter & Co., Inc., Training, Available: http://www.guycarp.com/training.html
Industry Report 1998, Training, Oct. 1998.
Insurance Pros Take Lessons in Online Education, Insurance Networking, Nov./Dec. 1998.
Jacobson, Don, Nonstop Learning, Dead-End Jobs, Training, Sept. 1998.
Johnson, Paul, Changing Mindsets for Knowledge Asset Management, CBT Solutions, May/June 1998.
Judy, Richard W., and D'Amico, Carol, Workforce 2020, Indianapolis, IN: Hudson Institute, 1998.
Kielholz, Walter B., Skill Management: A Strategic Success Factor in Global Reinsurance. Available: http://www.swissre.com/e/srgroup/ceos.html
Marcus, David L., A Scholastic Gold Mine, USN&WR, 24 Jan. 2000.
Markovich, Lois A., and Masztal, Jaci Jarrett, 1999 SITE Training Benchmarking Study Results, The Journal, No. 1, 1999-2000.
Nass, Clifford, The Person Inside the Box, Training, Sept. 1998.
Paul, Laura Gibbons, The Right Formula for Training, Datamation, Sept. 1997.
Perrenoud, P-Cl, A Reinsurance Manual of the Non-Life Branches, Zurich: Swiss Reinsurance Co., 1986.
Phifer, Ross, Reinsurance Fundamentals, New York: Wiley, John & Sons, 1996.
Pictorial, Reinsurance Basics. Available: www.pictorial.com
RSI, Reinsurance Training Seminars, Available: http://www.rsi-solutions.com/serfrm.html
Schaaf, Dick, What Workers Really Think About Training, Training, Sept. 1998.
Schank, Roger, Virtual Learning, New York: McGraw-Hill, 1998.
Smith, G. Mick, Education Poised to go the "Distance" National Underwriter, 26 Oct. 1998.
Strain, Robert W., (Ed.), Reinsurance, New York: The College of Insurance, 1980.
U.S. Department of Labor, Futurework. Available: www.dol.gov/dol/asp/public/futurework
Von Hoffman, Constantine, What Kind of Training Is This, Anyway? Inside Technology Training, Nov. 1998.
Webb, Bernard L., Anderson, Howard N., Cookman, John A., and Kensicki, Peter R., Principles of Reinsurance, Volume 1, Malvern, PA: Insurance Institute of America, 1990.

VII. About the Author

Douglas Ruml, Certified Financial Manager, Chief Operating Officer, Taurus Training, North America, Ltd., studied at Ohio State, Hebrew and Ambassador Universities, completed his Bachelors degree and began his career in 1984 at Sten-Re Cole, Inc. as a Treaty Broker. He later worked at Cole, Booth, Potter, Aon Re and Merrill Lynch. Douglas completed the Certified Financial Manager program at the Donald Regan School at Princeton, as well as having series 7 (General Securities and Options), series 31 (Managed Futures and Commodities), series 63 (State Agent) and series 65 (Federal Investment Advisor) securities licenses. Douglas directs marketing and support services for Taurus in North America and manages training at ReClaim Technologies. He is one of the Regional Directors for the Society of Insurance Trainers and Educators (SITE), and currently finishing his Masters thesis at California State University.