Big Questions: People and talent
A poor talent pipeline has exacerbated wage inflation in (re)insurance. Is there a short-term fix to this challenge, or must the sector wait for the bubble to burst?
Louisa Blain, insurance consulting leader, Aon Human Capital Solutions: In reality, most of the headlines we see about the insurance-industry hiring crisis and rocketing employment costs are an oversimplification of a complex and multi-dimensional talent problem facing our sector. Aon’s latest salary-prediction data for 2024 for insurers suggests a fall in budgeted increases relative to 2023, which is actually in line with the wider financial services sector trend and quantum (5% in the UK, 4% in the US). Our recent talent conversation series with 20 insurance CEOs tells a more nuanced story. They are keenly aware that, without the people with the right skills in place, they will have to alter the quality of what they do – or deliver less. Neither strategy is an option. To deliver this ambition, the insurance sector needs to attract and retain talent, at all levels, from outside the industry – at scale and now.
Keith Harrison, international CEO, Lockton Re: There is no lack of young talent to enter and support our industry. However, we need to put more emphasis on finding it, courting it and developing it with a longer-term lens, which will allow a more diverse talent pool capable of being more multidisciplinary. Currently, the industry lacks diversity and is too siloed, which limits the long-term health of the market. The current market environment, where we are seeing some disillusionment with larger, more hierarchical organisations and the rise of challenger brands on the broking and underwriting side, has encouraged movement of talent, and that is what has created wage inflation. There is no short-term fix to this issue, but there is certainly a medium-term one. However, it requires businesses to invest for the long term, which is often at odds with the short-term demands of large public companies and time-constrained private equity businesses.
Hannah Watkins, managing director, BMS Re: We discuss this a lot across BMS Group. It is felt that the hiring freeze in the early ‘90s is still being felt today, creating a talent gap between the ages of 45 and 55. We need to learn from this and ensure we develop our own talent with the knowledge of our most experienced team members. There is no short-term fix, but we need to build robust training programmes to capitalise on the current reduction in hiring across financial services. It’s crucial to showcase the high esteem in which the industry is held and emphasise its resilience in economic downturns. This field offers substantial potential for growth to those who actively pursue it.
What skill sets does the (re)insurance sector need to attract new talent, in order to future-proof the industry?
Thomas Blunck, CEO of reinsurance, Munich Re: Although there is no single answer to this, skills around data and data models, analytics and artificial intelligence and its applications have a growing relevance to be at the forefront of our field and serve our clients well. In addition to industry-specific capabilities, we should not forget human-centric skills such as critical thinking, problem-solving and being able to successfully work in diverse teams and hybrid work settings. Skills have a shorter lifespan than in the past – some of what we have learned and has served us well before will not necessarily be crucial in the future. This shift demands that our employees – as well as new talent – have a mindset of continuous learning. The willing and openness to unlearn and re-learn is extremely important.
Rob Gibbs, president and CEO, SiriusPoint International: The rise of automation, digitalisation and AI is a big challenge to all industries, including (re)insurance, and we will need to attract people who are able to work hand in hand with the evolving technological landscape. We also need to find and retain those with the skills to fully utilise the best data technology, AI and data analytics available to understand and mitigate the complex risks around climate change and the prospect of growing geopolitical instability. However, the (re)insurance sector has always been a people industry where experts leverage their relationships to deliver for our mutual clients. This is key and cannot be underestimated or forgotten.
Blain: Insurance industry leaders are adapting their businesses to manage digitalisation, for example, and at the same time stay relevant in a shape-shifting risk environment. Meanwhile, game-changers such as climate risk, socioeconomic and geo-political upheaval are heaping uncertainty on to the macro outlook. This highlights the need to attract people with the right balance of technical skill and behaviours to collaborate and tackle emergent risk, while having a mindset to embrace a fast-changing business environment into the sector.
Jean-Paul Conoscente, CEO, Scor P&C: The industry is being exposed to the dynamics of virtually all [economic] sectors – diversity in skills is key. We need talent able to assess climate change, geopolitical situations, hyperconnectivity, social inflation, energy transition, cyber risk, etc. Along with actuarial and data analytics skills, the industry needs to attract technology skills to foster innovation, both for internal efficiency and for our clients.
How can the industry make itself more attractive to younger generations who are potentially less attracted by financial or wealth-creation incentives?
Blunck: I am a firm believer that our industry has an incredible amount to offer. It is, therefore, more about providing authentic insights into what we do and how the reinsurance industry plays a vital role in addressing some of the most urgent global challenges and social issues of our time. The younger generation especially is driven by purpose and wants careers that align with their values and make a positive impact to the world. Therefore, it’s become increasingly important to showcase how our industry contributes to the greater good. Sharing stories of how we help to rebuild communities devastated by natural catastrophes, how we have prioritised tackling climate change and how we contribute towards achieving global net-zero emissions, as well how we facilitate adoption of new technologies, are just a few aspects that make a career in our international company both exciting and meaningful.
Gibbs: Empowerment and a clear route to progression motivate young professionals, as does a purpose and vision that applies to our company and the communities we serve. I joined the industry straight from university as a first-generation university student in my family. I have travelled to 21 countries, insured some amazing risks and set underwriting strategy in Chile the day after the 2010 earthquake. We all need to tell these stories and demonstrate the openness of the industry to talent and what experiences it can provide.
Blain: At an organisation level, working with other sectors has emphasised the value of using data to personalise the employee value proposition to attract and retain talent with different expectations, and insurers can learn from this: commtech and pharma are stand-out examples. Using workforce intelligence in this way creates the opportunity for insurers to tailor the employee experience, aligned with the evolving expectations of those entering the workforce and highlighting the variety of opportunities, interesting exchanges, formal and informal personal development, financial reward and sociable, dynamic working environment available. Aon’s market data indicates 65% of candidates report they have discontinued a hiring process due to an unattractive employee value proposition and culture. Given the sector’s talent challenge, getting this right is vital.
The industry still has a long way to go in terms of more diverse representation at senior levels. What are the barriers to succession and how can we deconstruct them?
Blain: Integrating this broader mix of skill sets, diverse experiences and personalities won’t be easy. In the near term, at least, individuals will have to learn to recognise, respect and value differences in expertise in a way that hasn’t previously been experienced. Achieving cohesion and collaboration between colleagues with different experiences and backgrounds is a big cultural challenge, and it calls for a renewed focus on engagement and belonging. It follows that people who can manage this sort of transformation are also going to be more in-demand and opportunities will evolve.
Watkins: As an industry, we recognise this is an issue and are working to fix it. But there is no quick fix. We all need to ask ourselves why and how we can prevent this happening in the future. Ultimately, the long-term solution is to ensure we question the status quo. We all recognise that the skill sets required of our businesses in the near term are going to change – can some senior positions be filled by talent outside of our industry, potentially bringing a fresh perspective to what has been a very traditional industry that has and is accelerating its modernisation?
Conoscente: If we continue to follow traditional recruitment paths, looking only for professionals having 20+ years of experience in (re)insurance, we will not succeed. The industry needs to enlarge its pool of talent. Firstly, by creating internally a pipeline of future diverse leaders from the recruitment of entry-level roles that we accompany at every step of the career. Secondly, by trying to be creative in leveraging candidates’ skills in potential positions beyond the one they have applied to, which might not always be the perfect fit. Thirdly, by looking externally at experts who belong to other industry sectors. This not only true for IT, legal and marketing, but also for core business functions. Scor was among the first to hire engineers as underwriters.
How can the industry plan succession better to mitigate the oncoming retirement cliff-edge?
Blunck: The impending retirement of a considerable number of experienced and knowledgeable employees within the insurance industry has the potential to significantly impact the sector. However, there are various effective strategies to mitigate this impact. Early initiation of succession planning is crucial, well before the retirement cliff-edge is imminent. Adequate time is needed to identify and groom potential successors, providing them with the necessary skills and knowledge for key positions. To build a strong and diverse pipeline of top talent, organisations should create talent pools from the outset. These talent pools should be carefully nurtured through various development opportunities and targeted programs.
Harrison: A truly collaborative culture is the key when it comes to effective succession planning. Experienced and seasoned professionals need a career pathway that both encourages and rewards them for sharing their knowledge and relationships with the next generation. But this is about much more than a process – this is about the right culture. Rewarding people solely on their individual performance and production and working with a plethora of P&Ls thwarts the ability to incentivise the sharing of opportunities and expertise, and the successful transfer of knowledge and relationships, which is so vital to the succession of the industry.
Blain: Adopting a skills-based, not role-based, workforce-planning strategy aligned with their business strategy enables insurers to better identify where to ‘build’, ‘buy’ or ‘borrow’ talent with greater flexibility and manage forecast market trends, including senior leader and technical expert retirements. Identifying priority skills gaps and time horizons can then inform sourcing and recruitment decisions, talent development, workforce mobility, innovative mentoring, agile knowledge-transfer solutions and value-proposition tailoring to be very attractive pre-retirement, slowing down the exit process while maintaining engagement and adjusting workload according to need.
Conoscente: Succession planning is not a sufficient answer if it does not come with a knowledge-transfer plan that must be in place much earlier than the legal retirement age. To mitigate the risk of losing expertise, a better mapping of employees’ skills and appetite for new skills needs to be developed. A data-driven industry should not be lacking people analytics. In this exercise, if strong dependencies emerge, key experts will be responsible for identifying and training eager junior staff.
Watkins: There are a few things we should be considering here. First, we should look to create leadership teams. It's not effective to anticipate that a high-performing broker excels both as a people manager and as a leader. Instead, identify the team's strengths and enhance them collectively, minimising the reliance on a single key individual. Second, we should establish shadow executive committees – these would provide emerging talent with opportunities to engage with various aspects of the business and understand the essential factors involved in devising visions, implementing strategies and preparing for the future. Finally, we need to look outside of our industry. That instantly brings fresh ideas and perspectives.