Soft market cycle driven ‘horrible’ hiring hiatus of young talent – Caroline Wagstaff

The insurance sector’s current soft market cycle is driving a “horrible moment” of stalled young talent recruitment, which London Market Group (LMG) chief executive Caroline Wagstaff described as “a catastrophe” that is hampering medium to long-term management succession pipelines.

Speaking exclusively to Insurance Times, Wagstaff noted that the insurance industry is a “real outlier” compared to its financial services subsector counterparts when it comes to market-wide recruitment cuts, with hiring in fields such as wealth management and private equity remaining stable.

This observation tracks with findings from the Financial Services Skills Commission (FSSC). Its Annual Skills Report 2026, published in May this year, found that over the course of 2025, the total number of employees across financial services “declined by 5%, driven by larger firms in banking and insurance”.

Wagstaff attributed this trend to the insurance market’s unique soft pricing cycle, which can cause companies to tighten their belts as competitiveness for business increases in line with product supply exceeding demand from customers.

“We see this every time there’s a soft cycle, we see a reduction in hiring,” she said.

“When you ask people why are you not hiring, they go ‘artificial intelligence (AI), outsourcing, soft cycle’. For me, that’s the wrong order because everybody else [in other sectors] has got AI, everybody else has got outsourcing – people putting jobs in India or whatever – but we’re the only ones with the soft cycle.”

For Wagstaff, brokers are often the first domino to fall victim to this type of penny pinching.

She explained: “The other thing you have to remember is how the market hires. So, 50% of the young people who come into the market work for a broking firm, they’re hired by one of the top five brokers. Who were the first people hit in a soft cycle? Brokers. They’re the first people to immediately see a reduction in income, so they are the people who have really slowed down their hiring.

“In order to balance [this] out, it would mean that we’d have to get lots and lots of small firms to take a couple more people – and that’s quite a hard task. And then, of course, everyone [looks to] AI, outsourcing, [etc] so we’re in this horrible moment.”

Wagstaff warned that this train of thought around halting hiring in a soft market cycle would be a mistake, however.

She continued: “I can see that [in the] short term, that seems like a good idea. Let’s not hire any young people, save some money, don’t know what they’re going to be doing in a more AI driven world. But in the medium to long term, it’s a catastrophe.

“We mustn’t let our short-term thinking override the long-term need for young talent.”

Blocked pipes

The knock-on effects of the insurance sector “[forgetting] to hire a generation” is wage inflation – which is likely to bite employers further down the line – as well as stripping the pipeline of potential leaders for the future.

Wagstaff said: “The really startling statistic [is] if we don’t increase the number of young people that we recruit, in 10 years’ time, the population of the [insurance] market who are under 30 will have fallen from 24% to 7%. That, to me, is a really burning platform.

“What that is telling you is the wage inflation we’ll see in a decade will be extraordinary – seven people out of every 100 [aged] under 30 are going to look very, very unique. Secondly, who’s running businesses 10 years after that? Where is the pipeline?

“[These numbers were] predicated on a standstill level of hiring. Historically, the [London] market takes in about 1,200 to 1,500 young people every year. What I found out recently is the number of young people hired last year dropped by 25% – and is predicted to drop by another 25% next year.”

Wagstaff believes that a key method in trying to stem the flow of this detrimental trend is sharing data and using statistics to paint a detailed picture that leadership boards can understand.

“Data is what is going to help us make people really concentrate,” she emphasised. “When I show my board this data, there was a genuine intake of breath.

“Now, we’re doing some work. We’re going to try and model what we think wage inflation looks like in 10 years’ time. We’ve done a bit of work on what do we think the real cost of a young person is. I’m trying to bring them data to help them make better informed decisions.”

Supply and demand

The impact of the soft market on recruitment runs alongside a concurrent issue plaguing Wagstaff – that the supply of young, entry level talent into the insurance industry is actually flourishing, but available jobs to house interested and viable talent leave a huge mismatch.

She explained: “We talk a lot about supply. How do we get to the right pools of talent? How do we make insurance attractive [and a] destination [for a] career?

“All of [those conversations are] great, but absolutely no sodding use if we’ve got no jobs for them.

“For me, this demand issue is much more live and much more important than the supply question. We’re still running our [talent] outreach programmes and all the stuff we would normally do, but I do worry that we’re doing [all] this and [getting] people excited about the industry and then there’s no jobs for them.”