Finding skilled staff is becoming increasingly difficult. The number of companies experiencing recruitment problems has increased by 50% in the six months since December 2000. Some 9% of insurance companies now say they can't find the staff they need.

The Reed Skills Index puts insurance sixth highest in its league table of industries suffering from skills shortages, with accountancy, administration and secretarial at the top of the list.

The areas experiencing the tightest squeeze are the South-East and South-West. Both areas report nearly a quarter of companies lacking skilled staff.

There are several reasons why the insurance industry is suffering from a lack of qualified technical staff. Mergers, acquisitions, the development of call centres, slashing of training programmes during the last recession and employer attitudes all play a role.

The South-East and South-West's particular problem stems from its historical strength in insurance. Bristol was once second only to London for insurance companies, but the introduction of contact centres and subsequent de-skilling means the area no longer has a pool of qualified technical staff to do the jobs they once did.

Where there were once offices in Taunton, Exeter, Bath, Bristol and Cheltenham, now Bristol may suffice for the whole area. Meanwhile, call centres miles away, in towns such as Bradford, handle much of the selling work the branch offices once did, at a fraction of the cost. Using a bank of telephone operators with a computer software programme to do the calculations is more cost-effective than the highly-trained risk assessor or claims adjuster.

However, call centre workers only last around two years before needing a change from the high-stress environment. They move into another job or sector, taking with them their experience.

In the last recession, graduate-training programmes were one of the first things companies cut. This resulted in a four- or five-year gap, where few first-time employees were being groomed for future progression. Ten years on, this means a lack of qualified technical staff.

At the other end of the scale, those who took early retirement or voluntary redundancy either left the industry completely or may now face age discrimination if they apply for jobs for which they are amply qualified.

Catching today's graduate is also a challenge. The decline of Independent Insurance, a company with a good name, especially for its graduate recruitment programmes, does not instil confidence in the job seeker looking at the industry for the first time.

This has had an impact on the public face of the industry, too. Once regarded as safe and stable, mergers, acquisitions and liquidations mean insurance looks less secure. But specific jobs have improved their profile, with TV programmes such as LA Law and Ally McBeal making claims, litigation and personal injury sexy fields to work in, while brokering and underwriting are regarded as the somewhat duller cousins.

Geography and competition play a key role. If, in a city such as Bristol, which once had Norwich Union, General Accident and Commercial Union offices, an employer needed a qualified staff member, recruiters had a large pool of skilled staff looking to move between the three to call on. With all three now under one umbrella, that is no longer possible and recruiters must look further afield. In some cases, insurance companies have realised positions once confined to an office can now be performed at home – location of the employee becomes less important (see case study). It is a story repeated throughout the regions, with the exception of London, which still has a concentration of insurance companies, allowing staff to migrate from one to another.

With so many reasons for a skills shortage, employers need to take action to ensure they develop their own staff and retain these valuable employees. Ex-employees cite lack of training and promotion as the single biggest reason for leaving a company. Often promises have been made at the interview stage and not fulfilled and candidates return to recruiters after a year or less, arguing that the companies are not living up to their expectations.

While workers in the 16- to 20-year-old age group will swap jobs for an additional £500, more experienced candidates are looking at a rise of £5,000 plus in the overall package offered. Job satisfaction and career progression are key elements for today's workforce and those who feel they are brought in solely to train juniors with no personal gain soon quit for a company that will offer them training and personal advancement.

In addition, employees are attracted to those companies offering options around the salary package. For example, some companies now offer staff the option of adding more of their basic salary into the pension, or buying holiday days, as well as offering more flexible working hours.

There has been a slight pressure on salaries as the skills shortage increases, with some salaries rising by around £5,000 (allowing for inflation) over the past two years. For the right candidate, companies will go £1,000 to £2,000 outside of the upper limit, especially for those specialising in business development or revenue-generating positions.

In the immediate area around London, insurance companies must fight the perception that it is better to go into London and get 25% more money. Companies in the Home Counties need to argue that the quality of life is better and offer additional benefits to outweigh the extra money offered by the City.

As the skills shortage increases, employers need to broaden their appeal to different sectors of the work force. A more flexible approach towards mature and part-time workers could open a new pool of qualified candidates to employers. While some companies balk at the thought of training a graduate, it may take up to four to six months to recruit an experienced underwriter – by which time a graduate could have started to be useful within the job.

Some firms are thinking strategically and taking skilled workers when they are available, rather than when a vacancy arises. In the Home Counties, for example, commercial specialists are in short supply, so when someone with the right experience comes onto the employment market, even companies not looking to hire will employ them, in order to have someone “in hand”.

The situation for the insurance market is not yet at crisis stage and indeed has eased slightly over the last quarter. With a little forethought and strategic planning, companies can maintain this trend and avert a serious shortage over the next two years.

  • Martin Delahoyde is the operations director of insurance sector recruitment firm Reed Insurance Selection.

    Case study
    RK Harrison Insurance Brokers is a provincial broker with 120 staff, with headquarters in Bedford and offices in London, Salisbury and Exeter. Finding staff for the HQ is particularly difficult, especially as other insurance companies such as Norwich Union and General Accident have merged or shrunk operations considerably.

    Regional director for RK Harrison, Stuart Rootham, says: “There is a dearth of young talent because other insurance firms are no longer there.”

    Rootham has gone down a different road for recruiting business development managers. Rather than relying on the local employee pool, he has cast the net wider and advertised nationally to find suitable candidates, regardless of their geography.

    “We have the technology to enable people to work from home and tap into our database. We still need them to come in once a week or so but, in five years' time, I estimate more than 10% of our people will spend at least some time working from home,” he says. Case study

    RK Harrison Insurance Brokers is a provincial broker with 120 staff, with headquarters in Bedford and offices in London, Salisbury and Exeter. Finding staff for the HQ is particularly difficult, especially as other insurance companies such as Norwich Union and General Accident have merged or shrunk operations considerably.

    Regional director for RK Harrison, Stuart Rootham, says: “There is a dearth of young talent because other insurance firms are no longer there.”

    Rootham has gone down a different road for recruiting business development managers. Rather than relying on the local employee pool, he has cast the net wider and advertised nationally to find suitable candidates, regardless of their geography.

    “We have the technology to enable people to work from home and tap into our database. We still need them to come in once a week or so but, in five years' time, I estimate more than 10% of our people will spend at least some time working from home,” he says.