How much are you worth? Are employees in the insurance industry worried by the threat of redundancy? What is the outlook for the industry in the next five years?

These are questions answered in th ...

How much are you worth? Are employees in the insurance industry worried by the threat of redundancy? What is the outlook for the industry in the next five years?

These are questions answered in the second annual Insurance Times Salary Survey 2002, which provides a comprehensive review of salary across the general insurance market.

Following on from the exceptional response to the online Insurance Times Salary Survey 2001, this year's survey was again conducted entirely online. Exposure was maximised through associations with , and Lime Street Recruitment. The survey was designed to be quick and easy to complete, to encourage a significant response.

Moreover, thousands of pounds worth of prizes, including minidisc and DVD players, televisions and video camcorders, were offered as an incentive to complete the survey. The prize-winners are listed in the 14 March issue of Insurance Times.

The survey was limited to respondents in full-time employment, working within the UK. In an attempt to represent the whole insurance industry, the survey was open to respondents from a range of disciplines across the insurance industry, from insurance companies and brokers/intermediaries to loss adjusters and information technology suppliers.

The response options to a number of questions, including salary and bonus specific questions, were intended to be minimally invasive. To this end, predefined response ranges were provided.

It is therefore important to note that a number of the average values reported in the following analysis have been calculated by using the midpoints across a series of ranges.

Responses were collated and analysed by external data analysis agency LDA. They were treated in the strictest of confidence.

Of the respondents completing the Insurance Times Salary Survey 2002, three out of every four are male. However, 19% of under-25-year-olds are female as compared to 8% of males. The majority of this imbalance is redressed in the over-45s grouping.

As with last year's survey, around 50% of respondents are aged between 25 and 35.

Overall, 16% of employees working for insurance companies are under-25-year- olds. Insurance brokers/intermediaries appear to employ fewer personnel in their early-20s, just 7%.

The geographical distribution of respondents completing the survey is extensive. As expected, however, there is a significant concentration of respondents based in London and the South East (27% and 27% respectively).

The survey reveals that insurance brokers/intermediaries are more evenly distributed across the UK. Only 18% of insurance brokers/intermediaries are based in London and 24% in the South East, while a quarter of insurers are based in London and 35% in the South East. A significant percentage of other executives serving the insurance industry are based in London (39%) - with 23% in the South East.

Overall, there is a relatively even spread in seniority of respondents completing the survey. The largest proportion, however, occupy middle management positions (24%).

Only 2% of females are employed at director level, including chief executive officers (CEO), managing directors (MD) and partners. Likewise, only 1% of insurance company employees work at the most senior level, versus 19% of insurance brokers/intermediaries. More than three in every five directors (including CEOs, MDs and partners) head offices with only one to 24 employees.

Respondents work in offices of significantly varying staff sizes. One in four are employed in small offices - with between one and 24 employees. More than half of respondents work in offices with fewer than 100 employees.

Brokers work in small offices, while insurers work in big offices. Two-thirds of insurance brokers/intermediaries are employed in offices with less than 50 staff.

More than four in five insurance company personnel work in offices with 50 or more employees - more than two-thirds work in offices with more than 100 employees.

Two out of every three respondents work for either an insurance company or insurance broker/intermediary (35% and 32% respectively). The equivalent statistics for last year's survey are 31% and 26%. The remainder are employed across a range of product and service providers to the insurance industry.

Survey responses were received from an extensive spectrum of companies, ranging from blue-chip insurers to the high street broker. These include Zurich, Marsh, Norwich Union, Aon, Fortis , DAS Legal Expenses and Hill House Hammond.

Throughout the remainder of the analysis, reference is made to the key findings within significant sub-sets of the full sample, including insurance companies (35%), insurance brokers/intermediaries (32%) and companies having other principal activities, that is, other companies serving the insurance industry (33%).

For full visual statistics downlaod the PDF

Salary - how much are you worth?
The current average basic salary (as at February 2002), excluding bonuses, directors' remunerations or benefits, of UK insurance industry professionals is £31,350 (median £25,000-£29,999). The average is skewed upwards as against the median due to a small proportion of respondents earning a very high salary.

The average basic salary from last year's salary survey was £31,300 (median £25,000 to £29,999). There appears to have been only a very minimal increase in basic salary between March 2001 and February 2002.

The average basic salary for March 2001 however, as reported by the respondents in this year's survey, was around £29,500 (median £20,000 to £24,999). This represents a 6.3% increase in the 12 months from March 2001 to February 2002.

Nearly half the industry (45%) earns less than £25,000, with a third earning more than £40,000 (before tax). Around 20% earn from £20,000 to £24,999 per year.

The current average basic salary of a male employed in the insurance industry is £32,800 (median £25,000 to £29,999). The female equivalent is £27,050 (£25,000 to £29,999).

In general, this is a reflection of the disparity between a male and female salary at junior and account executive level, where there appears to be a £5,000 difference, and for analysts and consultants, where there is a £4,000 disparity.

The overall disparity in current basic average salary is also evidence of the disproportionate number of females in lower-paid, administrative and junior/account executive roles .

Salary disparity
There is a step increase in basic salary versus escalating seniority (see right). There is an approximate £9,000 increase in basic salary from a junior executive to middle management positions. While a promotion from middle to senior management is "worth" approximately £13,000.

Insurers earn more than brokers. A key finding from last year's survey revealed a difference of only £1,000 in the average current basic salary of insurance brokers/intermediaries versus insurance company personnel (£30,200 and £29,200, respectively).

At present, the average insurer earns a basic salary of £30,600 a year - £1,300 more than the average broker/intermediary.

But it is sevice professionals who earn the most. They earn, on average, £33,100 per year.

During the "early years", significant increases in salary can be expected with advancing age (see above right). The rate of increase slows as employees near the pinnacle of their career.

London workers keep getting richer compared to the rest. The London weighting versus the South-east was £6,000 in last year's survey - the difference reported in this year's is £10,000.

The London weighting is £7,700 versus the highest of the other UK regions. And the London average is significantly higher than the national average for the insurance industry - £8,250 higher.

The current basic salary results, by geographical region, should be treated with caution. Within each region, there is a significant variation in basic salary at the individual level. This is reflected in some surprising findings in certain regions.

Finally, it appears that one in 10 respondents were attracted to their current job by the basic salary offering. Basic salary, however, is the key feature keeping a quarter of insurance employees in their current jobs.

For full visual statistics downlaod the PDF

Bonus payments
Don't worry if you didn't get a bonus, over 40% of us didn't. The average bonus of insurance industry professionals in the UK for between March 2001 and February 2002 is approximately £2,900. But the median bonus for the same period is less than £1,000.

As with the current basic salary, the average is skewed as against the median due to a limited number of respondents who received larget bonus payments.

The average bonus payment has decreased by £1,100 compared with the same period last year.

This is perhaps a reflection of less favourable economic conditions in the past 12 months.

Key facts

  • 49% of administrators and 46% of junior/account executives did not receive a bonus in the past year
  • 67% of middle managers and 70% of senior managers received bonus payments in the past year
  • 60% of CEOs/MDs/directors/partners received bonuses between March 2001 and February 2002.

    Of the remainder who earned a bonus, one in three received less than £1,000 - more than 60% received less than £2,500.

    Hope springs eternal. Respondents' average forecast bonus for the forthcoming year (March 2002 to February 2003), is approximately £3,800 - this represents a projected increase of 31% as against the past year.

    It is important to note the average bonuses are significantly skewed upwards versus the median. This is again due to a limited number of executives earning a large bonus payment, most strikingly visible in the CEO/MD/director/partner key findings.

    There are mixed opinions on satisfaction with current gross salary. The bulk of respondents feel their overall salary package is competitive versus the industry norm for their position (45%). Overall, one in three respondents, however, judge their gross salary to be below the industry average.

    Administrators and junior/account executives are less satisfied with their gross salary than more senior counterparts.

    There are no major differences in salary satisfaction between insurers, insurance brokers/intermediaries and other executives as against the overall picture.

    Benefits and perks
    More than half of the respondents receive the offer of subsidised/free gym membership. Last year's top benefit was a company pension - 80% of respondents were entered into a company pension scheme. The equivalent figure this year is unexpected - only around 40% are entered into a company pension scheme, either contributory or non-contributory.

    One in every two respondents works flexi-time. Approximately two in every five receive life assurance, a company car and/or a low interest loan.

    In general, insurance executives are poorly qualified on entering the industry - 43% of insurance industry executives have no qualifications. But the number of undergraduates entering the industry is growing. Some 28% of respondents have an undergraduate qualification as against less than 10% in last year's survey. Many respondents have more than one qualification, while 31% of respondents have an insurance qualification.

    Here's how you scored on industry specific qualifications:

  • ACII, part and fully qualified, 54% of respondents having an insurance specific qualification
  • FCII 11%
  • CIP 11%
  • IFC 7%

    Qualifications lead to higher salaries. The current average basic salary of those with a specific insurance qualification is £32,700. The equivalent statistic for those respondents not having an insurance specific qualification is £30,600. Respondents with an ACII qualification (either part or full qualification) earn on average £34,000.

    Having a specific insurance qualification is likely to add around £2,000 to an employee's basic salary. An ACII qualification is worth an additional £3,400. A similar conclusion was drawn from last year's survey - a specific insurance qualification was worth an additional £2,200; an ACII qualification appeared to be worth more than £5,000 extra.

    Overall, more than half the respondents are affiliated to the Chartered Insurance Institiute (see below). This represents an increase of 11% from last year. Men make up 54% of the respondents who are affiliated to the CII as against 45% of the females. A limited number of respondents are members of more than one trade body.

    Training is gaining importance. Overall, 22% of respondents receive no official training. This is a marked improvement from last year's salary survey, where one in every three insurance industry executives received no training days per year.

  • 18% of insurers have no training entitlement; 40% are entitled to one to five days
  • 24% of brokers/intermediaries receive no training; 45% receive one to five days
  • 27% of other insurance executives get no training; 41% get one to five days.

    43% of respondents receive one to five days official training per year. Overall, of the remaining 35% of respondents, 23% receive more than five to ten days official training per year.

    Of those who stipulated a specific training requirement needed in order to sustain their ongoing development (11% stated they had `none'), the following are considered the most important:

  • General on-the-job skills (28%)
  • People management (14%)
  • IT skills (10%)
  • FSA regulation (9%)
  • Time management, presentation & sales skills (4%)

    The N2 introduction of the Financial (Services and Markets) Act has has a huge impact on training. Nearly one in five senior directors have had training on FSA issues this year.

  • CEOs/MD/directors prioritise training in FSA regulation (18%) or no training (16%)
  • Senior and middle managers prioritise people management (18% and 22% respectively)
  • A significant number of senior managers also receive training in FSA regulation (16%)
  • Junior/account executives and administrators require general on-the-job skills to sustain ongoing development (47% and 30% respectively).

    For full visual statistics downlaod the PDF

    The working environment
    Brokers work longer than insurers. Insurance industry executives are contracted to work, on average, a 36-hour week. More than 55% of respondents are contracted to work 35 hours per week. In reality, however, insurance industry executives actually spend 44 hours per week at work. This is equivalent to working over 1.5 extra hours every day across the five-day working week.

  • Insurance company employees work, in general, 42 hours per week
  • Insurance brokers/intermediaries work 44 hours in an average week
  • .Other executives serving the insurance industry work, on average, 45 hours per week.

    Like last year's key findings, it would appear that working additional non-contracted hours is an accepted norm for the majority. It has been proven that the British workforce work longer hours per week than other EU member states.

    There is no relationship to suggest, however, that the long hours in the office are in any way proportional to above average levels of stress at work.

    Job stress
    Insurance industry executives have mixed stress levels in the workplace. On a scale of 1 - 7, where 1 = `not worried at all' and 7 = `extreme stress at work', the bulk of respondents are spread evenly across ratings 3, 4, 5 (about 80%), reflecting only moderate stress. One in every 20 employees experiences extreme stress in their job (rating of 6 or 7).

    It is evident there are significantly more CEOs/MDs/directors/partners and senior managers in the higher stress bracket (rating 5, 6 or 7) than junior/account executives - 39% and 37% respectively as against 22%.

    Note that there were only minimal stress differences between insurers, brokers/intermediaries and other companies serving the insurance industry; and between males and females.

    Threat of redundancy
    Despite current economic conditions, there is a strong sense of job security in the insurance industry. In all, 36% of respondents are `not worried at all' by the threat of redundancy.

  • 27% of insurers are `not worried at all' by the threat of redundancy
  • 48% of insurance brokers/intermediaries are `not worried at all' by the threat of redundancy
  • 36% of other executives serving the industry are `not worried at all'.

    A further 35% of respondents articulate only minimal concerns regarding redundancy threats (rating of 2 or 3 on a scale of 1 to 7 where 1 = `not worried at all' and 7 = `extremely worried'). Less than one in ten respondents express extreme worry. More than 14% of respondents were attracted to their current jobs by the promise of job security.

    It would appear that insurers are more concerned by redundancy threats than brokers/intermediaries and other product and service providers.

    In the past year, 46% of respondents have not been contacted by a headhunter. Overall, 37% of respondents were contacted one to two times in the same period, while 13% were contacted three to five times.

    It would appear that senior and middle managers were contacted on a more regular basis with a view to changing company.

  • Nearly 60% of senior managers were contacted more than once by a headhunter
  • 64% of middle managers were contacted on more than one occasion

    Looking to the future experience from within
    Three quarters of respondents have worked in the insurance industry for over five years, 57% for upwards of 10 years. Employees within the industry appear very faithful and committed to it (see top right).

  • Over two-thirds of respondents between 36 and 45 years old have been in the insurance industry for more than 15 years
  • More than three-quarters of respondents between 46 and 55 years old have worked in the industry for more than 20 years
  • The average insurance broker/intermediary has been working in the industry for nearly 16 years - the same insurer 13 years.

    Where do you see yourself in five years time?
    The insurance industry is given a resounding vote of confidence by the bulk of its employees. Overall, nearly 70% of respondents believe they will be working in the industry in five years time (versus two thirds of respondents in last year's survey). Only one in ten respondents do not foresee a future in insurance.

    The under 25 years age group are, unsurprisingly, most uncertain of their future in the insurance industry. Around eight out of every ten respondents in the 36 to 45 years bracket will be working in the insurance industry come 2007. Only 3% will leave the industry for other pursuits. A proportion of the 46 to 55 year olds are no doubt contemplating early retirement within the next five years.

    Female respondents appear to be less certain of their future in the insurance industry than their male counterparts.

  • 59% of females believe they will be working in the insurance industry in five years time as against 73% of males
  • 31% of females remain undecided as against only 19% of males.

    Insurance brokers/intermediaries are extremely positive about their future in the industry. Three-quarters of brokers see themselves working in the industry in five years time. Only 5% will move elsewhere. Respondents working for insurance companies are less positive when it comes to their future in the insurance industry (66% and 13% respectively).

    For full visual statistics downlaod the PDF

    Key findings compiled by Neil Campbell © Southern Magazines Limited March 2002