The industry has long been concerned about its limp pulling power and ageing demographics – with an estimated 500,000 of a roughly three million US workforce coming up to retirement, and a similarly lopsided situation in the London market. But the pandemic – and the associated mass walkout dubbed the “Great Resignation” – has upped the ante.
Carriers report that in the US in particular many 50- and just-turned-60-somethings have taken early retirement. In addition, Aon partner Jeff Rieder, who heads consultancy unit Ward, puts insurer staff turnover at 12% to 15% versus 8% to 9% about a decade ago, while Vertafore’s 2022 US insurance agency workplace study found that insurer churn rose to 20% in 2021, from 11.9% in 2017.
This is happening amid a period of acute hiring need. Aon-Jacobson’s August US insurance labour market study found that 63% of property and casualty (P&C) companies had added staff since July 2021 and 71% of P&C companies plan to do so in the next 12 months, mainly because of increased business. However, survey respondents also reported record recruiting difficulties, with technology, actuarial, analytical, and claims roles the hardest to fill and getting harder.
Audry Torrence, vice president at headhunters Stephens Rickard, contrasts the current situation with the “gold watch” culture of yore.
“In the insurance industry we are all dancing and people are changing partners more rapidly. The rising tide of the dearth of employees and the tremendous thirst for professionals has lifted compensation across the board.”
Rising salaries are a huge concern, compounding other sources of inflationary pressure. Vertafore’s US survey cited money as the main driver of staff moves, and Aon’s Ward has found that companies are increasingly making mid-year adjustments to retain employees. On a recent webinar Rieder also noted incidents of companies hiring straight off CVs or just 15-minutes into an interview.
The pandemic has speeded up the pace of change and lanced the boil of presentee-ism forever and that can only be a good thing.
Insurance Information Institute (Triple-I) CEO Sean Kevelighan, says that the tight labour market is “top of mind in every boardroom, alongside climate risk and the overall economic situation”.
The UK insurance labour market is similarly febrile. Data provider Vacancysoft found record-high vacancies in the first quarter, led by non-life insurance, and recruiter Hays in its 2022 survey found 85% of insurance employers had experienced skills shortages in the previous 12 months, and 75% had increased salaries.
Greg Collins, CEO of broker Miller and sponsor of the London Market Group (LMG) talent and diversity workstream, calls the current wage cycle unsustainable. “We are in an arm’s race around salaries – in 45 years this is as great a movement as I have ever seen,” he says. “We are all poacher and gamekeeper, hanging on to our very best and trying to attract the very best at the same time.”
Remote Working
Pandemic-spawned remote and hybrid working has had positive effects but also unintended consequences for recruitment and retention.
In the US, Vertafore calls remote working “the new employee benefit”, and at a recent Triple-I event The Hartford chief information officer Deepa Soni noted that more flexible working arrangements have increased employee retention.
Over in the UK Collins agrees, particularly of those with caring responsibilities.
“The pandemic has speeded up the pace of change and lanced the boil of presentee-ism forever and that can only be a good thing,” he says.
However, he also notes that back-office workers operating remotely are finding it harder to move into client-facing posts.
Students and professionals, particularly young professionals, are really asking for a lot of transparency and accountability when it comes to diversity, equity and inclusion initiatives and they want leadership to be committed to them.
It’s also clear that remote/hybrid working needs to be carefully calibrated to ensure younger workers in particular aren’t left isolated, mentor-less and, depending on their homes, even in physical discomfort.
And while remote/hybrid working certainly makes the world an employee’s oyster, companies, particularly in the vast US, are struggling with the salary implications. Should that worker in the mountains of Wyoming really get pay aligned with their Connecticut head office?
Headhunter Greg Jacobson said on the Aon-Jacobson webinar that US companies are now striving to introduce cost-of-living banding by area. He also noted that remote/hybrid working has made jobs requiring relocation to small towns extremely difficult to fill, hitting the mutual sector particularly.
Coming Together
A degree of frustration remains over some companies’ unwillingness to end the internecine battle for talent and work collaboratively.
Six-year-old Insurance Careers Movement, which has signed up more than 1,000 global organisations, is one initiative seeking to remedy the situation.
Other industry associations are also doing their bit to broaden and deepen the talent pool.
In the UK, the LMG’s actions include summer work experience for school students, and its London Insurance Life website, which in September will relaunch with new tools to appeal to the TikTok generation, and a type of “clearing service” for unsuccessful candidates. The LMG is also working with careers services at around 20 universities to boost insurance’s visibility.
In the US the Casualty Actuarial Society (CAS) in 2020 responded to the lockdown-related cancellation of internships by creating a virtual summer programme . More recently, its “Be an Actuary Day” became a “Be an Actuary Month”, attracting about 400 high school students.
High School Hires
When you remove barriers that typically are in front of under-represented groups like a degree you open the doors to a whole other talent pool. It is one of the best, if not the best, outreach opportunities for diversity.
Both CAS CEO Victor Carter-Bey and Millers’ Collins stress the importance of recruiting from high schools rather than just universities, which have in recent years become the industry’s main hunting ground. (In the US the number of universities offering risk management programmes has skyrocketed in the past decade or so, from just a small handful to over 40, according to the International Risk Management Institute).
Zurich agrees. High school leavers account for about half of Zurich North America’s two-year “earn-as-you-learn” apprenticeship.
The programme has an 85% retention rate and has exceeded recruitment targets since its launch in 2016, with 118 having completed the programme by 2020, and another 400 to 500 expected to do so in the five years to 2027.
Zurich NA’s Al Crook, head of human resources business partners, says cross-industry collaboration is at the programme’s core. Its initial partners were Aon and Accenture, which used its model for their own apprenticeships, and with whom it established the Chicago Apprenticeship Network. More recently it has worked with Travelers, The Hartford and AIG.
“There is ample talent out there and our programmes are unique enough for that ample talent to choose where it wants to go,” he says.
Zurich has just been selected as a Department of Labor apprenticeship ambassador and two years ago won a presidential award for work with under-served communities.
Crook notes, “When you remove barriers that typically are in front of under-represented groups like a degree you open the doors to a whole other talent pool. It is one of the best, if not the best, outreach opportunities for diversity.”
Indeed, the Transatlantic recruitment crisis has provided the opportunity for an overhaul of the insurer workforce to make it more like the communities it serves.
“Insurance is making a difference in communities and I think people are really embracing that. There is a lot of good going on in insurance, including a good career.
Among numerous other initiatives, in the US, Triple-I has partnered with historically black colleges and universities to recruit more black talent, after the US Bureau of Labor Statistics reported that as of 2019 African-Americans made up only 12.4% of sector employees.
The CAS’ Carter-Bey suggests that diversity, equity and inclusion (DEI) programmes create a virtuous circle.
But he notes, “Students and professionals, particularly young professionals, are really asking for a lot of transparency and accountability when it comes to diversity, equity and inclusion initiatives and they want leadership to be committed to them.”
Scrutiny of companies’ DEI credentials is just one example of a lengthening of candidate requirements beyond salary, and even work-life balance.
Drawing from six countries, consultants McKinsey recently noted that traditional levers like pay and job title no longer cut it with large swathes of the workforce and warned that even hanging onto the “traditionalist” cohort is akin to a game of whac-a-mole, given steep competition for talent.
Upskilling and genuine flexibility – which headhunter Greg Jacobson warns isn’t the same as simply remote/hybrid working –are among other demands.
Consultants also advocate exploiting automation to provide “meatier” roles with challenge and a strategic component. Horizontal advancement is another key theme. Speaking for actuaries, for example, Carter-Bey notes that they are well placed for corporate governance roles and climate change-related posts.
And when people do quit, McKinsey in its 2022 global insurance report warned that offboarding needs to be done properly so companies understand why.
Opening Minds
In the insurance industry we are all dancing and people are changing partners more rapidly. The rising tide of the dearth of employees and the tremendous thirst for professionals has lifted compensation across the board.”
The insurance industry has traditionally harboured a belief that people from outside will struggle to “get it” but those with hiring oversight insist companies need to break the cannibalisation cycle, and aggressively seek talent externally, whether from academia, other areas of financial services, consumer industries or from technology and innovation-focused sectors.
Unfortunately tech prowess – which both the Aon-Jacobson study and recent LMG-KPMG work pinpointed as a fundamental future need – is in high demand across multiple industries, least of all Big Tech itself, which appears to be increasingly fishing in insurance waters.
The sector has a tough job on its hands but optimists point to insurance’s immense resilience, a key selling point given the pending economic downturn, as well as its “stickiness” once people do join. And what the industry lacks in ping-pong tables and corporate cool it makes up for in social purpose, they argue, with the current environmental, social and governance focus, including the climate emergency, helping the cause.
Triple-I’s Kevelighan says, “Insurance is making a difference in communities and I think people are really embracing that. There is a lot of good going on in insurance, including a good career.”
