The widespread skills shortage is forcing brokers to train in-house Ann Hesketh reports.
The skills shortage in the industry is reaching crisis point and options for brokers to obtain and keep highly skilled staff are diminishing.
The regulatory requirements for highly trained staff is forcing brokers to take training into their own hands.
A recent survey by Biba revealed that one third of brokers believe that the biggest talent shortage in the industry is in the technical sector, ahead of IT and management skills.
The problem for many in the industry is that school leavers and new graduates consider insurance as the 'ugly duckling' of financial services and are not persuaded that it can be an exciting business.
But brokers have discovered that by growing their own talents through apprenticeship schemes, they can bridge the skills gap and give young people a chance to see for themselves what insurance is all about.
Coversure, for example, is trying to entice young people in by offering them a qualification and attractive career prospects. The broker, which has over 80 franchised offices around the country and a premium income of over £60m, has just launched its business apprenticeship scheme.
Apprentices will be offered a three-month induction and further training opportunities as they develop their career path. Coversure is planning to have two or three recruits starting this autumn and increase the intake for next year.
"Historically, brokers used to recruit from insurers who had trained the staff, but the insurer business model has changed dramatically over the past 15 years," explains Allan Gambles, Coversure's compliance manager.
He adds that insurers now tend to concentrate their offices in a few call centres in major areas of population. This means fewer ex-insurance company staff come on to the market in provincial areas.
Also, with FSA regulation heightening the distinction between insurer staff and intermediary staff, it has become more difficult for brokers to recruit people who previously worked for an insurance company.
"A good broker will aim to offer solutions from a range of products and insurers, and will actively advise the customer on selection of the most appropriate for their demands and needs," says Gambles.
"Staff in insurance companies are now more specialised, perhaps concentrating on the 'commodity' products of motor and household. Broker staff need to be more versatile particularly as we move into the SME market."
But setting up in-house apprenticeship schemes is not without its challenges.
Gambles admits that organising such training puts pressure on brokers, but he says it is an inevitable consequence of a changed business model.
"We can no longer expect trained staff to fall into our lap. We would look at this as a positive rather than a negative, as it gives us the opportunity to mould staff into our way of working. Being set in one's ways is not necessarily an attraction in an increasingly changing environment.
"The feedback we have received from our franchisees is that despite the extra training, they prefer to recruit and develop staff virtually from scratch."
Gambles adds that the CII offers a range of professional qualifications, which increase in scope according to individual needs, skills and ambitions.
"There is something for everybody who wants to add a formal insurance qualification to their name," he says.
"The CII offers different types of training. But so does Biba and many others like Searchlight. So we don't have to rely on the CII. It is its formal qualifications that have more cachet and can enhance an individual CV."
"Arguably, qualifications make a person more marketable, but it is up to brokers to offer staff suitable career development and opportunities as our apprentice scheme is intended to do."
Adding to its range of qualification, the CII is now planning to replicate its Pathways programme to meet specific broker needs.
"Allocating the necessary resources can be an issue for all but the largest brokers. The CII is therefore aiming to help by developing its Pathways concept specifically for the broking sector," explains a CII spokesman.
Pathways was originally designed to deliver a training and career structure for financial advisers.
A broker version of the programme is being developed by the Faculty of Insurance Broking.
An outline of this approach will be available online for the CII Conference, with the full version launching in early 2006.
Clive Wyatt, training coordinator at Higos, a Somerset-based broker, says that the benefits outweigh the difficulties of running an in-house apprenticeship scheme.
Higos' programme was set up three years ago. Since then, it recruited over 45 of its current 120 staff through the scheme, which takes at least six new entrants every quarter.
"It is the best way to attract people," says Wyatt. "We have a very tight labour market in Wales and many companies are competing for the same people. We invest heavily on training. The benefits are that we have a workforce that know what they are talking about."
Apprentices, who are usually between 16 and 18 years old, take part in an induction programme and are required to have a CII qualification within two years of joining. Their costs are funded by their employer.
Apart from advertising the scheme in the local papers, Higos also has a link with two local colleges. Pupils doing a business-related subject can opt to study for a certificate in insurance-related subjects with a prospect of getting a job at the end of it.
"If they sign up and get the required qualifications we would offer them a job. There is no guarantee, but we do our best to take them on," explains Wyatt.
Reaping the benefits
He says that although the resources required to set up the scheme were high, brokers that nurture their own talents are better off in the end.
"There is a high initial cost which does affect the bottom line, but give it two or three years and you start reaping the benefits. It's money well spent because we are investing in the future."
Teresa Sayers, chief executive of the Financial Services Skills Council, agrees: "If putting an employee through an apprenticeship programme will give them the knowledge they need to meet regulatory requirements, test whether they are competent in the day-to-day job, give them other transferable skills, the question, surely is not why would you do it, but why wouldn't you?"