The insurance industry is facing the bleak prospect of a skills shortage across the board, and of a dearth of the young recruits who will be the managers of the future. But the industry's short-sighted attitude towards graduate recruitment and training means that it has only itself to blame. Simon Grace reports
British insurance companies are bracing themselves for a difficult passage in the near future as an industry-wide shortage of general and specialist management skills begins to bite.
This may appear alarmist, but the fact is that the industry is failing to recruit skilled staff of a sufficiently high calibre to ensure sound management succession over the next decade.
Neither graduates nor the better-qualified school leavers are being attracted to insurance as a career, and there is no concerted effort to put matters right. This defect is to be seen against the background of an industry with increasing numbers of vacancies.
"We are working in a market that is short of candidates," says Ian Bull, of recruitment consultancy Hays Inter-Selection. "There are a lot of jobs around and we have seen a steady increase in vacancies over the past year.
"Suitably qualified and motivated candidates are in short supply. Although we get a lot of approaches from graduates, it is uncommon to find graduates who want to work in insurance, other than as a second-best choice."
In his experience, graduates see insurance as a poor relation of banking and finance.
Robert Charles of recruitment consultant Joslin Rowe says that there has been a serious skills shortage within the industry for the past couple of years, and that it has been caused by two major factors. "First, there are not as many graduate intake schemes across the board as there used to be. Then, the industry went through a pretty bad time eight or so years ago and recruitment fell off. As a result, there are not sufficient good quality, experienced staff around."
The general consensus among recruitment agencies is that the insurance industry needs to project itself as more dynamic and exciting. This is the message that must be got across at job fairs and impressed upon university careers officers.
Unwisely, individual insurers are not keen on committing themselves to the expenditure of time, money and effort needed to participate in the so-called "milk round" of British universities, the traditional, and usually successful, way of recruiting graduates.
As one life insurer's human resources manager says: "We're all waiting for the other guys to start. If there could be an industry-wide initiative, that would be another matter, but for the moment we're quite happy for our rivals to recruit decent graduates and train them, and then we'll poach them!"
Far from sexy
It seems it is the graduates' first impression of the industry that is the main problem.
Overall, the industry is in dire need of better public relations, marketing and advertising campaigns, particularly addressed to potential employees. Something drastic needs to be done about the image of the insurance industry, which is seen as dull and far from glamorous.
Chartered Insurance Institute (CII) director general, Dr Sandy Scott, emphasises the importance of recruiting the best graduates with the brightest minds and finest creative skills. In his judgment, this is a key issue for the insurance sector, which has witnessed the evolution of a skills gap between the less-experienced workforce and the senior, very experienced employees.
There is also the question of keeping talented graduates for more than a year or two. "The message is obvious: even if you are able to attract the best, retaining them is going to be just as difficult."
He says that employers have to provide the right environment. "It is not just a matter of pay or benefits but also of internal talent management. The organisation must have a culture in place to develop people to their optimum potential."
This is a requirement also stressed by others. Insurers can only begin to address the skills shortage by investing in training and staff development programmes. Companies will have to be competitive across a spectrum of benefits and facilities if they are to recruit and retain the best staff.
Graduate training programmes make good sense, especially when allied to sponsorship and support for professional qualifications, such as those offered by the CII, and staff medical expenses, travel and other benefits. There are a number of such schemes in operation around the industry, for example, within Royal & Sunalliance, Norwich Union and Independent Insurance. These are based on reasonably attractive starting salaries and significant career prospects.
However, the extent and size of these graduate intake activities have been severely reduced in recent years. In many cases, schemes have been put on hold or cut drastically, and the incidence of mergers between insurers, each with their own graduate programme, has meant further cutbacks. Where programmes remain in operation, there is a strong degree of commitment on the part of the employer and a determination to get the best outcome for all concerned. Nonetheless, there is a dearth of suitable entry points for graduates.
"We used to have a graduate training programme," says Groupama's London human resources manager, Steve Tickle, "but that ceased about four years ago. We found that we were not attracting graduates and we cut back our investment.
"However, we now have several projects in development and we are looking at relaunching a graduate training programme."
Making life difficult
Rather than participating in a national recruitment drive, he says Groupama prefers to establish links with specific universities and specialist recruitment agencies.
"Agencies and head-hunters are leading sources, and we rely heavily on them. The good ones make very good matches between people and jobs."
However insurers continue to make matters more difficult for themselves by insisting on considering only graduates with degrees in the business and finance areas, and eschewing those with degrees in other disciplines, such as physical sciences or the arts.
This is a lesson that accountancy firms learned many years ago. "It is the quality of the mind that is valuable rather than the ability to crunch numbers," says one senior consultant. "I have spent many hours trying to explain that to insurers, but to no avail."
Making insurance attractive
Recruitment in many business areas can be extremely difficult, says Groupama's Tickle. "Some jobs tend to be harder to fill than others, particularly in specialist areas, like the London Market for instance. It's all a question of demand and supply."
He says that the solution is to get the employment package right. "We offer a competitive salary and try to place ourselves close to the leading edge. Then, we provide a good working environment, with good surroundings and first-rate equipment and back-up. These initiatives have generated a very positive feedback."
There is, though, a catch 22 element to insurance recruitment. "Experience counts for a lot, and we're all looking for someone who has some knowledge of insurance and the market." That is one of the reasons Tickle welcomes mergers and acquisitions, which make skilled and experienced staff available to the market.
There is a clear need to change the industry's thinking on this demand for previous experience, but that is not going to happen without some form of catalyst or sustained initiative.
Equally, there needs to be a change of perception among graduates and school-leavers if the industry is to maintain employment levels and qualities. "If insurers are more open to employing managers who have had experience in other sectors," says the Association of British Insurers' spokesperson, Suzanne Moore, "that will bring freshness and dynamism into the industry. Then, perhaps, young people will be more attracted to insurance, rather than seeing it as peopled by a bunch of old suits."
The war for talent
CII spokesperson Steve Radford, says that the "milk round" is only a point in time. To attract school-leavers and graduates, the industry needs to do more and get in earlier. He points to the CII's careers information service and its network of local institutes as central to recruitment efforts. "In each local institute there will be one dedicated careers officer, who will visit schools and promote insurance to the pupils." There is also a four-strong CII team of education advisers who liaise with insurers across the UK, informing and shaping staff development programmes.
Conscious of its pivotal role in this battle, described by Scott as "the war for talent", the CII is making determined efforts to push insurance to the fore in both school-leavers' and graduates' minds and to address the employment requirements of the insurers.
"We have embarked on a fundamental review of what the corporate market wants and needs," says Scott. The review is looking at the ways in which CII courses and examinations, and its membership categories, meet the demands of both employer and employee.
This year, a careers fair is planned at the institute's annual conference in Edinburgh, and considerable time is to be devoted to the issue of recruitment and training.
Without a shadow of a doubt, the industry needs to do more to attract and retain the best people. Getting it wrong will create serious problems: there are already yawning skills gaps in management, which are set to widen as older and more experienced staff leave.
The way forward, say many in the industry, is for individual insurers to set aside competitive considerations and combine their efforts in a major promotional campaign.
After all, if it makes commercial sense to spend hundreds of thousands of pounds each year to get brokers onside, and even greater sums to ensure that particular products are at the forefront of customers' minds, it must be equally sensible to make a concerted effort to attract the right staff to deal with those brokers and policyholders.
Brokers suffer from lack of exposure...
It is not just insurance companies that are experiencing serious difficulties in recruiting and retaining quality staff. Brokers are combating both a shortage of able and willing candidates and a comparatively unattractive job market profile.
One of the principal obstacles is that, while most of the bigger insurers are virtually household names with strong public images, not even the largest brokers are well known among school-leavers and graduates. Aon, Marsh and Willis may be globally resonant names within the industry, but they generally mean little to job-seeking youngsters.
There is also the substantial drawback that, with the exception of the larger and better-placed brokerages, training and staff development programmes tend to be the first victims of tightened budgets and reduced resources.
To an extent, the CII's proposed "Chartered Insurance Broker" qualification, for which approval is being sought from the Privy Council, may go some way to improving career prospects within the broking profession, but there is still an urgent need to increase recruitment standards and attract the brightest and the best people.
While brokers remain reluctant to employ and train inexperienced staff, and look more favourably on older candidates with working knowledge of the industry, the situation is unlikely to improve.
Within many brokerages, there is a growing shortage of skills and experience at management level and this continuing attrition can only be deleterious.
The time has come for the major brokers to implement structured graduate and school-leaver programmes and to put in place career and personal development strategies.
There is a shortage of good and skilled people within broking, and that is certain to worsen unless something drastic and proactive is done immediately. The problem is that brokers are not bringing in the new blood that is vital to the profession's survival.
.....and staff feel unappreciated and poorly trained
Brokers' staff say that they do not feel valued or appreciated in their jobs, according to a survey conducted last year by recruitment consultant Joslin Rowe. Among junior staff, 43% said that they did not feel valued or appreciated at all, with a further 48% saying that they only felt appreciated sometimes. For management staff, the findings were 20% and 62% respectively, and for senior level staff 2% and 51%.
Equally, most of the respondents said that they received no management skills training, even though that was identified as important by a substantial number. Of the junior staff, none reported receiving any management training. Only one in ten of management level staff received management training, and none of the senior level staff. Against that, the majority of staff at all levels received IT systems training (from 78% at the junior level to 92% at the senior level).
The survey showed that the issues considered important by the staff were not being addressed and that their needs were far from being met. The survey's authors concluded: "Organisations will find themselves being run into the ground by individuals who lack the awareness and experience of the past."