The industry is on the brink of a serious brain drain. Baby boomers joined the insurance industry in their hordes about 35 years ago. Now, facing retirement they have insured almost every risk from Rihanna’s legs to Hurricane Sandy and have sustained barmen and landlords across the world. But many will imminently be hanging up their suits and putting their feet up as they prepare for retirement, and one big question remains - who will replace them?
Currently, there are simply not enough people in the industry pipeline to replace so many senior figures. The industry will need to fill 400,000 positions by 2020 to remain fully staffed, according to McKinsey and Company, a management consultancy firm.
A host of industry initiatives and events have taken place to help address the problem. Back in September, Reactions hosted its inaugural Human Capital Risk and Talent Management Summit in New York where a host of industry figures gathered to discuss what can be done to help bring the industry leaders of tomorrow into the market.
More recently, Swiss Re, along with some 300 other firms, took part in February’s “Insurance Careers Month” – an initiative to try and show graduates that the re/insurance industry offers a rich and fulfilling career.
Monica Ningen, head of property underwriting in the US and Canada for Swiss Re, says: “I think a lot of college students don’t understand the diversity of technical backgrounds in re/insurance companies. It is really quite impressive when you look around at the diversity of what people bring and what it takes to run a re/insurance company. We have to get better at advertising and educating people. A lot of people in college are just not aware of it.”
Admitting you work in insurance at a party is often met with an awkward silence, but those who work in the industry no doubt feel this is a wholly unfair assessment. To make the industry more attractive to the public, and in particular youngsters, the market needs to highlight the numerous perks associated with having a re/insurance career.
“Not because it is insurance, but because of things like it is a stable environment that really creates solutions for the world’s problems,” says Keith Wolfe, managing director, US property and casualty, Swiss Re. “You could find a lot of opportunities to do things once you get into the industry, beside the role you started in. I have been in the industry for 20 years without quitting a company, I have worked for five so I have been through multiple acquisitions and on the way I have been in 10 different jobs doing very different things, so I have never left an organisation but I have had an unbelievably diverse career, both in functional participation as well as corporate culture,” he says.
One potential source of well-trained 30-to-40-year-olds could be the banking industry, particularly as big banking firms are not recruiting as actively as they were prior to the 2008 financial crash.
However, a senior headhunter based in London, who wished to remain anonymous, says the re/insurance industry is very close-knit, and tends to hire within its own borders. “From an insider’s perspective, the re/insurance industry is quite a close knit community, generally hiring from within. Ten to twenty years ago, few companies had graduate schemes in place to attract the younger generation. You could even go so far as to say RSA, Willis and Marsh had the only good programmes available.
“Today, the industry has widely transformed its hiring practices and become a more attractive opportunity for graduates. However, recruiting is still considered far behind some other industries. Even with big financial institutions recruiting less than they used to, I still haven’t seen many people trying to move from banking to insurance. Insurance is quite stubborn, really. Just because a bank falls under, doesn’t mean insurance will take people in from that sector,” says the headhunter.
Swiss Re gave recruiting from banking a shot. Following the financial crisis in 2008, Swiss Re targeted graduates that would, under other circumstances, have sought out jobs in banking in order to achieve greater diversity in skill sets. However, it did not work well, admits Wolfe. Cultural fit as well as expectations are important aspects when it comes to recruitment, he explains.
“The reason goes back to the heavy pre-screening that we do on corporate culture. We don’t operate like a bank,” explains Wolfe. “We have a very different corporate culture from an investment bank or hedge fund. It ended up being a poor fit, because the expectation mismatch ended up being so far apart from what we would want these individuals to do and what they could expect from their own careers inside this organisation, that many of them ended up going back to banking as soon as the banking sector opened back up,” he says. This was the case for about two dozen out of a class of 80 to 90 graduates, says Wolfe.
Banking and insurance often require different skills from graduates, Ningen says.
“In reinsurance, we expect someone to learn a lot more outside what their degree taught them in college. In banking most of what you do will be aligned to your degree or a small variation from it. When someone comes into the property underwriting department, they might have an economics degree but they will also have to learn about seismology and meteorology. You have to be willing to lean outside of your core education and learn a lot of things.”
The headhunter agrees with Ningen that insurance requires people to learn a wider skillset than banking. “In some areas the skillset is
Students who come out of a high-end business administration programme often have very high expectations of what their career path will look like and what they will be doing, adds Wolfe. They expect to be accelerating quickly with large profit and loss responsibilities within a few years, says Wolfe. “Re/insurance can accommodate that, but if you have never spent time in our industry I think it is very difficult for somebody to make that career path work,” says Wolfe.
The headhunter views this as more of a problem with graduates in general: “In this day and age, there is a general feeling that millennials expect to be CEO within a few weeks of joining a company and don’t truly appreciate what is earned through the experience of climbing the ladder. Clearly, it is more important than ever for employers to manage graduates’ expectations and give them a plan and path to career success.”
Swiss Re’s global graduate scheme takes in about 80 a year across the globe. In the last five to seven years, it has experienced a high retention ratio. Wolfe jokes: “I would like to say it is because we are awesome at what we do but in reality, I think we have had a bit of tail wind from the job market not being as great across the globe in many sectors besides ours.” He continues: “We have a good set up and good people but we also provide opportunities that aren’t available outside our industry or marketplace. So that dynamic has provided us with fairly good retention from quite a few individuals.”
While industry grad schemes are definitely improving, this does not address the entire problem. The imminent talent gap with be for those aged around 30 to 45, rather than in their 20s. The headhunter says: “There are not enough graduate jobs for the number of subscribed applicants. We have more people applying for jobs in the industry than ever before. The problem is individual companies retaining people.” He argues that the industry is quite good at hiring its own people, but from an external individual’s perspective the industry is quite a closed shop.
“Ten to 20 years ago, people would only be hired because they knew Sue from claims or because they went to watch the same football club on Saturdays. In the old days there was only RSA and Willis that had a graduate scheme that was any good. Marsh used to have a very good one as well,” he says. However he believes that, despite still being well behind some other industries, the industry has got a lot better at hiring in recent years. This is supported by the fact that banking isn’t doing so well. “Insurance is becoming an obvious point of reference for many graduates,” he adds.
The companies that do retain their staff are the ones that make an effort to do so. The headhunter cites Hiscox and Chubb as good examples of this. “They have had very strong graduate retention. They empower their graduates and give them variety. There is a lot to be said for work-life balance. Many companies wash over it so cannot offer the same opportunities,” he says. Giving young people a chance to work abroad is also often very attractive for them if the company has an overseas office.
“A very strong culture makes companies different to any others. Chubb has a very strong culture, training and mentor programme. They invested a lot in the organisations so that its staff saw it as better than other companies,” says the headhunter.
In this vein, Swiss Re tries to offer plenty of career development opportunities, with a focus on technical training or leadership development. Wolfe says: “If people were to leave they would say they weren’t getting one of those two. We don’t get this problem because we pay attention to it on both fronts. If you don’t pay attention to both fronts you’re missing an opportunity to have people move into roles that are well suited to their interest desires and abilities,” he adds.
By Vicky Beckett - firstname.lastname@example.org