The insurance industry is facing more acute talent risks than many other sectors when it comes to recruiting talent, employee engagement, skills development and culture. We believe that rethinking talent strategies and addressing the 5Cs (capability, cost, compliance, capacity and connection) of talent development will help the industry overcome the skills shortage.
While many industries are struggling to respond to the challenges of an ageing workforce and talent shortages of suitably qualified replacement recruits, the insurance industry appears to have a more unbalanced workforce age structure than most. Studies suggest that up to 40 percent of insurance sector employees – by definition including most of the senior, experienced and high-skilled staff – are set to retire in the next few years. Research indicates that this will have a disproportionately severe impact in the areas of claims management, underwriting and reinsurance.
Also, as the sector expands, so does the number of vacancies since young people are increasingly attracted to working in what they perceive as ‘sexier’ industries, which reflect their own interests and experience. Insurers will need to learn to operate in the comparable digital world as those they hope to recruit do. Deeply ingrained company cultures may need to change in order to create an environment of innovation and collaboration.
Many sectors are adapting through new training initiatives, outreach programs to colleges and universities, modern apprenticeship schemes and things like gamification used to close skills gaps and as a means of employee engagement. Moreover, insurers may benefit by looking beyond the sector and recruit candidates based on skill rather than industry experience.
Recruiting talent and talent development of the right skills needed for success in the digital world is a major challenge for insurance companies. Digital channels will probably require fewer people, and people with a potentially different skill set. However, insurers must also preserve and transfer the critical expertise of seasoned actuaries, underwriters and other professionals. Getting the balance right can be challenging in part because insurance companies operate in highly regulated environments.
In our 2013 research of insurance companies making up the FT Global 500, we identified five key attributes that we believe enabled them to remain profitable even through sustained periods of economic volatility and low yield growth:
Creating an organizational culture with these attributes at the core can help insurers find a winning balance and offset the skills gap.Insurers’ future workforce must balance these skills:
Insurers also need to focus much more closely on articulating key skills for their operations, and on reviewing the way they manage and develop them. Only with a consistent and coherent approach to the whole talent issue can the return on human resources expenditure be evaluated. An evidence-based approach to human resources issues such as these, coupled with exploitation of new technology and data methodologies, can generate important insights into recruitment, retention and succession planning.
Talent management is now a business-critical process for every organization. Insurers need to isolate and address a much broader array of talent risks, taking into account the critical need to connect their people to each other and to leadership; to forecast and manage costs.
Beyond tackling the ‘5Cs’, insurers must also hardwire talent risk into their wider enterprise risk management framework – thereby placing human capital risk firmly on the radar of the right people at the right level.