Terri Grainger reviews the recruitment crisis that is growing within the industry and the solutions being considered
This year has continued to see further consolidation of the insurance market. Merger and acquisition activity has intensified within the broking arena and insurers, such as Allianz Cornhill, have also managed to secure a piece of the action.
Also evident is the general trend of companies attempting to reduce costs. Restructuring, redundancies and offshoring have been constant themes running throughout 2006. In June, Royal & SunAlliance confirmed 1,000 UK jobs would go in a bid to save £70m.
In September, Aviva announced 4,000 redundancies will occur by the end of 2007 with up to 1,000 jobs being offshored to India. Zurich also announced its intention to offshore jobs as part of an operations review, putting further jobs under threat.
The reasons for downscaling and offshoring have been attributed to changing customer habits including the fact that more consumers are moving online.
Clearly insurance distribution lines are and should evolve to suit the changing needs of the consumer. Nevertheless, while such changes may lead to redundancies in some areas, growth will still occur in others. No doubt the channels that are most effective in selling to the end customers will dictate areas of growth and curtailment in the future.
The lack of quality talent within the industry has also been debated throughout 2006. The supply of transferable skill sets at senior level, particularly in the areas of sales and leadership, have been failing to meet demand.
Similar problems face those employers interested in candidates with specialist knowledge and experience. Moves to begin to tackle this problem over the longer term, such as the CII's talent initiatives launched in October, have been well publicised.
But what have such trends meant for those working in insurance in 2006? Indeed what are likely to be the attractions and challenges that the career minded (whether already working in insurance or those thinking of joining the industry) and employers need to consider for 2007 and beyond?
With the intensification of mergers and acquisitions, 2006 has seen an increasing focus on growth and succession planning in many areas. This topic is likely to reverberate throughout 2007. In terms of external talent required that cannot be secured immediately, companies may look to secure such people eventually by developing relationships over time.
Resource departments are already keen to know who the best people are in the marketplace. This needs some complex measures and analysis, particularly where teams and brands play a big part in a success story. It seems most large companies are running a project of some nature on this topic and further focus and development in this area looks probable next year.
More new talent management programmes will be developed to tackle the issue of succession planning. Some companies will also be concentrating on getting better at nurturing and providing opportunities for junior staff.
Brand will be increasingly important to companies in a number of ways. From a recruitment perspective, companies will need to spend time making their proposition more attractive in order to sell themselves as the place to work in 2007 and beyond. There will also be an increasing need for companies to understand competitors and how they can attract talent from the market.
Due to the poor returns and inherent administrative overheads of many large insurers, it seems likely that broker underwriting will continue to expand. More skilled staff will therefore be required and increasingly brokers may look to employ underwriters from insurers.
Brokers also look set to become more consultative than ever. Such trends will again put further pressure on the demand for skilled staff in 2007.
Therefore despite redundancies, overall the hiring market will continue to tighten due to the lack of quality candidates and lack of specialist skill sets available.
Such is the need for talent and the intensity of competition for talent in the market place, that increasingly companies will be more prepared to make room for quality candidates as and when such candidates become available.
Approaching staff not actively looking to move will continue and no doubt increase. For the few employees at a senior level or working within specialist lines who are not already aware, this type of interest will give them an even greater sense of their worth in the marketplace.
Remuneration strategies rather than just an emphasis on basic salaries will be of key strategic importance during 2007 and beyond. How much, for what, over what time frame and paid in what form, will be questions looked at in an increasingly innovative way.
Lack of talent and skilled people within the industry will continue to be a major issue in 2007 and beyond.
In early December, Gordon Brown promised extra funding for education largely driven by the need to overcome Britain's desperate skills shortage and therefore highlighting the scale of this problem not just for the insurance industry, but the UK's economy as a whole.
Lord Leitch's recent report emphasised that training and development is an absolute necessity if the UK is to maintain its position in the global market.
With only one in eight employees in the UK's insurance sector holding some form of insurance qualification, this could have a serious impact on inward investment and support for the UK insurance market as companies will look to follow talent oversees.
The report warns that the UK is falling behind other developed countries and a crisis is looming over the next 15 years unless action is taken.
The results of talent initiatives and how the initiatives evolve over time will therefore continue to be hotly debated topics. IT
Terri Grainger is a recruitment executive at Mansion House