Insurance Times together with our sponsor, Groupama, met some of the industry's future leaders to discuss the merits of the CII talent initiative
Chair: Are we on the right lines as an industry with the talent initiative?
David Curry: We must all be passionate about the industry. This will be a success. It's certainly far better than what's gone on in the past 15 years. There are positive steps towards recruiting some young, fresh talent into the industry.
We should be very proud of this industry and not be ashamed when someone asks us what we do. I hope it is a step forward in dispelling the grey men in grey suits myth.
Julian Edwards: At MCE we don't find it particularly difficult to source talent, but we're a relatively small provincial broker. We recruit people who do not have a profession in insurance and we train them ourselves on our particular product; unless we're looking for key expertise in areas such as accounting and financial accounts. We don't particularly have a problem attracting people to insurance, because of the dynamics of the business.
Jon Nottingham: AXA is doing an awful lot internally to focus on our talent pools and that's going very well. Over the past two years, we've started to look more at individual needs and values and not just about people striving to become managers. Is that role actually right for that individual? We're becoming a lot more focused on building people's natural skill sets and values into varying roles. Our big challenge is to attract the right talent into the business.
Lee Gladwell: At the CII we've focused on universities and the whole issue of how we bring graduates into the industry, trying to raise the industry profile for companies that want to recruit at that level. The next steps are to broaden that out, into looking at schools as well, because talent isn't just about graduates. We will also look at how we develop existing talent in other areas, how people are employed and how people are developed once they're in jobs.
Andy Green: The feedback that we've had from students when we've engaged them directly on campus has been very good so far. The guys that I've spoken to in the market have all supported it. The challenge that we face is one of resource. The project team here at the CII is pretty small, and that's going to be one of our constraints for next year: engaging the industry to generate more resource to support a wider spread of events on campus.
Nottingham: It is about getting talent who are dissatisfied with other industries. Just as we've seen people leaving insurance, there are people in other industries who may be interested in insurance. It is about persuading these people to choose insurance as their industry.
Clair Hayward: The problem is that a graduate or school leaver's perception of insurance is not accurate. They don't know about the diversity of roles we have. There is a challenge to get that picture to them as well as the day-to-day work that we do, which is fundamental to the country, but is not sexy. This is a fantastic start.
However, we seem to have done this great launch, but nobody seems to know whether this actually works for these people. The CII has had some great sponsorship from top industry experts and leaders. For them that's a huge time commitment. If they can't continue, who do you put in there instead? Clearly, it needs somebody to drive the initiative who has the passion.
Sandy Scott: We have, and will continue to have, commitment from Chris Hanks, Brendan McManus from Royal & SunAlliance, Mark Cliff from AXA and so on. I'm very grateful for that. We also had a huge amount of funding from the General Insurance Standards Council, which has now ceased to exist. We have 750 student registrations already so, to me, that's a success.
We shouldn't get the view that the insurance industry isn't talented, because it's one of Britain's most successful industries, so it must have talent, but we are facing a huge demographic change in Britain. The balance of the British population is shifting to over 50.
By 2010 there will be an enormous challenge for every business today, in whatever sector of the economy. That is only going to get worse as we go through the next four years, and quicker than many people anticipate. Our timing is great; our progress is great. Focus and development is required.
Will we be supported in the next phase? Yes.
Chair: Do you think that the talent we have will stay in the industry?
Scott: We need to not just be thinking about school leavers and graduates. Like all industries, we will have to become much more serious about diversity in all its senses.
The available pool of people for work is changing very fast. Just to have the staff, you're going to have to retrain people and take people from industries that are not performing well or are in decline, and older people. Women must not be inhibited by glass ceilings or anything else, because the workforce is changing very quickly.
Hayward: For a chief executive, what they describe as talent is this all singing, all dancing, rounded person who can do everything to a degree. Actually, there is lots of talent in pockets that we don't pick up on.
Scott: I can tell you from my experience of the companies you come from, they're really impressed with you. They're really impressed with the investment they've made and the results that it's bringing.
Green: The real challenge is whether people deliberately choose a career in insurance or whether they accidentally fall in. I agree there is talent there, be they graduates or non-graduates, but it's whether or not we are deliberately getting that talent or whether it's just happening to fall in through the back door.
Chair: Martin [Davidson], you've just moved from Willis to Network Rail. Is that a career path that you had always known about?
Martin Davidson: It was one of a number of options that I had. In this initiative, it's important not just to focus on getting people into the industry, but also on providing them with development paths once they enter it.
That's not to say that I couldn't have had further progress within Willis, but this was a career move that I thought would develop my ability and experience by making the move in-house.
It is important for employers not to think that because they've employed somebody they'll be able to continue along the same path. They have to mentor, develop and review regularly what the options are and how they can move forward that person as quickly as they can.
Ben Nicholson: From our point of view, this kind of initiative is incredibly important. At Beachcroft, we are competing for the same small pool at graduate level. We then have an internal issue of tracking people who we recruit into the firm into the insurance side of the business, because the sexier, sassier side is perceived to be banking, corporate and those areas.
We have to show to our trainees and new recruits that insurance has a lot to offer, too. Internally, we have been quite successful at that, but there is a constant struggle to ensure that the best people take up insurance. This kind of initiative is very helpful for that because it raises the profile of the industry to people who are picking careers.
Curry: Would everyone agree that what is at the root of all of this is a re-education of what we do to people who are unclear and also an image revamp? How do we expect all of these graduates to realise the sorts of salaries that can be obtained? While it's not all about remuneration, they might look at insurance and say, there's a very low ceiling.
Hayward: A low start point is what they see. If you look to anybody around here who was a graduate, insurance pays significantly less than every other industry.
Terri Grainger: Insurance is quite different from other professions in terms of you don't have to have a degree to be in the industry, so graduates may view it slightly differently. You cannot get around that. You have the likes of the ACII, which is a degree level qualification, but do graduates really appreciate what the ACII is? I know that the CII is looking into a degree award as well as pay.
Green: In terms of other industries activities on campus, the CII is doing more or less the same, but probably doing it with a more dedicated resource. It's doing it with a bigger budget, and it tends to be more proactive at a company level. It's not unusual to see the accountancy institutes up there with the top accountancy firms.
Grainger: That's key, too. It's not just down to the CII; it's down to everybody involved in the industry.
Scott: We're quite behind the curve. If you look at the legal profession, it has its hooks into talent in the first year undergraduates, not when they finish. There's much more structure. The big four accountancy firms and the consultants are far more focused.
Chris Thevenot: As part of my role in Allianz, I am involved in graduate recruitment. We run internships, which let us look at interns and allows them to find out about us. If they're good, we'll sign them up as quickly as possible.
The problem we've found is only 10% of graduates tend to even consider a role in insurance. So there's only a small pool in the first place. This indicates the image problem that insurance has.
Once graduates actually consider a role in insurance, they look at the terms and conditions and consider the career progression. Again, this does not always impress, compared with other industries. This will take time to change. There are two or three issues to address, including the actual image of insurance and the way the industry competes in career terms with other sectors, say banking or law. It won't be done overnight.
Lynn Harris: The vast array of jobs involving technology are going to attract different people into the industry, competing on websites, with aggregators now coming on board. It's all changed.
We have to take responsibility for: a) bringing people in, in the first place, and b) for our own careers. The CII does an awful lot and has done a lot more in recent years in terms of making examinations more achievable.
Thevenot: It's all very well attracting talent, but then you have to keep it. We attract some exceptionally good people and, after two years of training, we need to ensure they don't go somewhere else.
At Allianz, we have an international network and graduates can experience different sides of the industry from a number of viewpoints. We need to emphasise the diversity and breadth of experience that insurance can offer.
Hayward: That's an issue with graduate recruitment generally. We have to be able to attract enough to keep the right percentage. If you look at how the big four accountancy firms recruit, they recruit a certain percentage because they know they will lose a certain percentage.
They recruit on the basis that they're not going to keep them all, which is a different philosophy and requires a big cost base.
Scott: A lot of employees in AXA, Allianz, Aviva and so on have no concept of the organisation that they work for, its size, its scope and the opportunity that it provides. I'm not saying that big is beautiful, but they just don't know.
Edwards: What's the hook? What gets people interested in other industries?
Green: The reality is quite simple: they're doing a better sales job than us. They're telling people about their industry a lot more; they're more visible; it's more frequent; they do more events to help students prepare for interviews, do CV courses and things like that.
Hayward: One of the things we should sell is that most people in investment banking burn out at a certain age. They're expected to work hours where they have no quality of life. They might earn significant amounts of money but they have no life at all. We probably should stress that because that is important to people nowadays.
Curry: Where the imagery is concerned, television is such a powerful medium. Perhaps one of the ways is to get an industry figure, one of these entrepreneurs, the guy who is in charge of Towergate perhaps, someone to spearhead television advertising.
Thevenot: I don't think we've identified our unique selling points compared to other industries. Salaries aren't the only issue and we need to emphasise this when we're competing with some of the very highly paid professions. As we mentioned before there's the work/life balance and the insurance industry also offers a huge breadth of opportunity. All of these areas need to be touched upon to show the full complexity of the proposition to potential employees. This is the only way to give them a meaningful insight on which to base their final decision.
Nottingham: I cannot think of an industry that offers the range and diversity of roles that we have.
Hayward: In a law firm, there's a distinct path that you can follow. We don't tell them what the distinct path is. They see this wide range. I think it's fantastic that we have this diversity of jobs that you can do, but we don't tell them which one they can get to or by when, and you can see that in other industries. For a graduate, a school leaver or whoever it is, that is attractive.
Nottingham: I haven't yet met a person with a personality trait or values that don't fit into the insurance industry somewhere.
Nicholson: That diversity, to a certain extent, is a hindrance in the sales pitch. In a law firm, there is a very clear and simple structure. You join as an assistant, some firms have an intermediate role and then you're up to a partner.
Everyone can read in the press what partner salaries supposedly are. In the insurance industry, the fact that there is that diversity makes it very difficult to go to a graduate and say, If you join us, this is where you'll be going.
Chair: Is there a case for going below the graduate level and talking to school leavers?
Harris: I didn't go to university and I deliberately came into insurance. I would entirely agree: why are we aiming specifically at graduates?
Green: The focus has really been on graduates, but 2007 will see us start to build our schools proposition, looking at how we link into that and how we access the thousands of schools across the UK.
Grainger: Do we have the placements in the first place? The interesting thing is that we are generating this interest, which is really good, but are we managing expectations as well? We're not geared up to take in lots and lots of graduates.
Green: It's about creating a bigger, wider and better pool to fish in so that our choices are broader, and we can raise the bar on the people who we do let into the industry.
Curry: The more people who are educated, the more awareness that's created. You might not get them all in, but you're creating that awareness. By targeting school leavers, they might not go into the industry at that stage, but the awareness has been created and insurance is at the back of their minds.
Davidson: Insurance is such a people based industry. It's all about developing relationships. Depending on what part of the market you're working with, insurers, brokers, clients, claims adjusters or whatever, that can be a very rewarding and enjoyable part of the job.
Chair: Moving on from talent, what does everyone predict will happen in 2007?
Edwards: The trend towards consolidation is a huge issue, particularly for my segment of the market. MCE is a small provincial. Saying that, we'll eventually see our insurance clients going to 100,000. Six years ago that would have been considered a large company, not even medium sized, but large. That's a trend that's going to continue.
Grainger: There's a change in the distribution of insurance as well. Equally, you will still get these niche players and brokers. There will still be an area for that.
Edwards: I tend to take issue with that. At the moment, with personal lines insurance, if you are niche, you are targeted above anything else. That goes to show the deals that are currently being done, and the financial packages that are being returned to people.
Grainger: Do you think it's the end of small players?
Edwards: I don t think it is. I believe brokerage will continue to evolve. Product types will continue to evolve. A firm sitting at the moment saying: "In 15 years time, I'm going to be using this as a distribution channel and these are going to be my product types," might not have the mindset to be able to keep up with the evolution.
Hayward: I don't think there will ever be an end to the smaller, niche players, whichever market that they are in, because there will always be an element of entrepreneurial talent and people will always, as a consequence of that, go out and set up. They might get consolidated in, but they'll then break off. That's a natural business cycle.
Edwards: What we're noticing at the moment is principals that may have sold their businesses over the past three years, and have worked out their contracts and are now becoming new start -ups, whether they're now set up as aggregators or internet-only brokers.
Harris: Now we're seeing insurance companies buying up brokers. As long as they continue to keep a distance from them, that'll probably be reasonably successful with lessons learned from the past. You're right: aggregators are now the competition for the direct writers. Broker networks continue to expand. There are mergers and acquisitions constantly.
Hayward: Other channels will come in because they have to, because the industry needs funding and capital. They have to come in, or else it doesn't get that funding.
Harris: With the aggregators now, how important is the brand? If you're looking at brokerage and personal lines insurance, is it all on price? The aggregators give a lot of brokers a fantastic opportunity to compete with the direct writers because they don't have to spend a fortune on getting those adverts on the TV. It's opening up a great opportunity for them.
Edwards: The acquisition costs on aggregators have significantly increased this year. I tend to think aggregators are a bit of a buzz this year as, similarly, buying and selling calls were three years ago. Now few have continued to do very well and most of them have fallen by the wayside. I feel most aggregators will fall by the wayside over a period of time. The very few that are strong will survive.
Green: One of the great things about the industry is that it changes all the time. That creates the dynamism. There will always be new roles available and new opportunities for people to look at things in different ways and create different perspectives and opportunities, without a doubt.
Gladwell: There's a view that the distribution side of the business is polarising now so that, at one end, you have companies that cater for customers who think they know what product they want, and they're really just looking for convenience, a good price and pretty minimal advice. The view would be that all of the people who cater for that market, which would be call-centre based brokers, new brands, supermarkets and direct players, the skills there are going to all be about process design, pricing skills and getting a slick operation that can just deliver product very successfully.
Therefore, to be successful as a broker, if you want to be advice-based, you need to differentiate yourself further away from that, so at the other end of this polarisation will be people who have a lot more knowledge and better advice skills than before, and are focusing on people who want a lot more technical advice about the types of product they ought to have.
Hayward: I would agree. Certain products are becoming more and more commoditised. There is nothing wrong with that, to a degree, because they are that type of product and we shouldn't try to change that just for the sake of giving lots of people jobs where they think they're influencing a sale when they're not. You have to differentiate yourself in that way, and you have to do that in a way that takes you away from that last market.
Green: How far up the line do we think that commoditisation will reach?
Davidson: At the higher end, service levels become more and more important than maintaining long-term relationships with insurers.
Scott: A car insurance policy or a travel policy is actually pretty complicated.
Edwards: For commoditised products, if we move to full transparency that's going to have the effect of a significant line between direct writers and the intermediary market.
Scott: Over the next three years, I think we are going to see a fundamental change in distribution. That is not going to be driven by more regulation, more disclosure and more transparency - all of those things forced on by the regulator. It's not going to be altered by the fact that ownership might change quite dramatically, as to who owns distribution companies.
The industry will have to become more professional and deal with its reputation issues. The reason that motor insurance is highly commoditised is people don't value the service, and that means you'll probably have to pay a fee to get advice.
Nottingham: I worry about this debate about where commoditisation sits in the commercial market, particularly what a complex customer is and what is not. If we had the education levels in our consumers that we should have, that wouldn't be so much a worry.
While the education isn't right, and people aren't sure about how complex that purchase is, takeaway advice-led selling is a highly dangerous strategy for the industry.
Hayward: Unfortunately, the consumer makes that choice, don't they? We don't want them to make that choice because we want to give them the right advice.
Edwards: I'm not sure with commoditised products that it's because the customer doesn't value the service. As the insurance industry has become more professional, service is a prerequisite, when it may not have been in days gone by. IT