Faced with an aging workforce, operators in the specialty, target/managing general agent (MGA) and wholesaler spheres face an ongoing battle to attract and retain technical underwriting and actuarial talent to meet the demand for niche insurance solutions.
Making matters more pressing is that not just any talent will do.
“Only the best and brightest can tackle complex risks. To have a true specialty focus, you need deep talent and expertise,” said Pat Donnelly, president and deputy CEO of JLT Specialty USA.
“The competition to attract and retain specialist talent is real and a challenge throughout the industry,” said Donnelly, who noted that specialty lines continue to grow as a percentage of all insurance premiums when compared to standard lines.
Earlier this year, a survey by London Market Group (LMG) and Deloitte of the London insurance market — a renowned hub for MGA expertise — identified skill gaps in operations, wordings, underwriting and claims that respondents felt could threaten performance in the long term.
Technology is also contributing to the issue, according to LMG. Indeed, the technical talent pool is being stretched both by competition from outside the insurance sector and the increasing movement of talent within it.
“The days when a majority of workers could expect to spend a career moving up the ladder at one company are over,” LMG and Deloitte stated in the report.
“Young people anticipate working for many employers and demand an enriching experience at every stage of their working life, leading to expectations for rapid career progression, as well as a compelling and flexible workplace.”
Bernie Heinze, executive director of the American Association of Managing General Agents, is seeing the same pattern emerging in the U.S.
“The concept of loyalty to one’s employer has gone out of vogue — if you want loyalty, you’re better off getting a dog,” he said.
“We live in an ADHD world. The current mind-set is to maximize one’s talents to the greatest of one’s capabilities. If talent see an opportunity to do so they take advantage, and are more likely to move project to project, or title to title, than to stay in one place.”
Consolidation, as well as fundamental changes in strategy — with many underwriting and brokerage firms choosing to leverage scale and efficiency over expertise and specialization — have also increased movement between companies.
“These strategies and initiatives might be advisable, even necessary, in certain circumstances. But they have without question had an impact on talent dislocation in recent years,” Donnelly said.
MGAs and wholesalers face competition for talent not just from competing outfits and new entrants in the specialty space, but also the standard insurance markets, which are increasingly seeking to establish specialty arms to boost their ailing profit margins and increase product diversity.
“[Standard markets] that recognize that clients don’t think in terms of insurance products, but rather in terms of risk and loss scenarios — and adapt their approach and offerings accordingly — will be more relevant to clients. This, in turn, will make them more attractive to good talent,” he said.
“We’re beginning to see fierce competition for actuaries, data science roles, [and] information technology in addition to competition for specialty underwriting, claims and brokerage talent.”
“Only the best and brightest can tackle complex risks. To have a true specialty focus, you need deep talent and expertise.” — Pat Donnelly, president and deputy CEO, JLT Specialty USA
However, with many mainstream insurers cutting staff following expense reviews, it’s not all one-way traffic, noted Peter Staddon, managing director of the UK’s Managing General Agents Association.
“The nature of many MGA businesses is to develop a more efficient and cost-effective way of providing niche insurance products compared to mainstream insurers. This can be very attractive to underwriters looking to take more control of their business.”
According to Staddon, the cost of technical talent will likely rise, though he believes this will correct itself over time as sectors such as cyber and emerging technology expand, increasing supply.
Yet with retaining talent “vital” to success, “providing equity, additional employee benefits, skills development opportunities and support with professional education all have a role to play” in helping firms keep hold of valued technical staff, he said.
“Ensuring employees are appropriately recognized for what they bring to the party, and that they are able to engage within the management process or growth of that business, is important in the MGA business,” Staddon said.
Donnelly added that creating a desirable workplace “culture,” offering staff performance rewards, career path clarity and flexible working arrangements can all help firms retain valued talent.
Tackling Dynamic Risks
Heinze believes that the insurance industry has historically done a poor job of selling itself as a career path, but that the specialty space has a unique opportunity to appeal to new talent by offering the opportunity to “fashion interesting, dynamic, bespoke insurance products,” compared to the relatively vanilla standard markets.
“This may be difficult to hear, but the insurance industry is tremendously exciting,” he said.
“When we talk to students, we say the E&S of excess and surplus also stands for ‘exciting and sexy’.”
The opportunity to tackle risks, from cyber fraud to power grid outages due to emissions of gamma rays from the sun, is what gets young professionals excited, Heinze said.
“They can have a hand in creating insurance solutions that will fundamentally transform the way in which the old, antiquated insurance model has existed. The promises of the insurance and technological abilities of the future are untold.”
With millennials set to account for around three-quarters of the workforce by 2025, Staddon is optimistic that there is a strong pipeline of technologically savvy talent waiting.
“We are seeing many young people come into the insurance industry from an array of educational and social backgrounds,” he said.
The U.S. has seen an uptick in educational programs in a bid to tackle the talent shortage. The AAMGA has, for example, developed a 40-hour program that allows risk management undergraduates to add an underwriting certificate to their degrees, equipping them with basic underwriting knowledge and reducing the learning curve upon entering the workplace.
But if it is to truly solve the problem, the insurance sector must look beyond its borders. According to Donnelly, JLT has employed 200 people in the last two years from 30 firms, half of which are outside the insurance industry.
“The good news is that we work in a vibrant, challenging, complex industry that is attractive to a large pool of potential employees. The bad news is that competition for that talent will only intensify — both within and outside the industry.” &