Ben Cook says insurance executives are not on fat-cat salaries.

Executive directors in the insurance sector are getting smaller pay rises than their counterparts in most FTSE350 companies.

Research published earlier this month by Deloitte revealed that, in 2008, the median basic salary increase for full-time executive directors in all FTSE350 companies was 6.2%.

This compared to a 7% median increase in 2007 and a 6.8% increase in 2006.

But salary for insurance company executives rose only 5% in the past year. Even directors in the embattled construction industry got bigger pay rises.

Overall, increases were lower in the past year than they were in the previous two years. Given the state of the economy, this comes as no surprise. But it does not mean that executive directors will suddenly be experiencing hardship – the average increase in the retail prices index in 2007 was 4%, while in the first half of 2008 it was 4.2%.

“Salary for insurance executives rose just 5%. Even
directors in the embattled construction industry got more.

Ben Cook

However, what should cause concern in the sector – particularly regarding the ability of insurance companies to retain their top staff – is those smaller pay increases.

Deloitte’s guide showed that executive directors in insurance got the same pay increase as their equivalents in the technology, telecommunications, retail, media, and oil and gas industries.

But their 5% rises were dwarfed by the financial services sector, where the average salary increase for executive directors was 8.5%. Those working in utilities, banks, transport and business services received an average increase of 7.5% .

That said, it’s not all bad news for executive directors in the insurance world. They will be cheered by the fact that executive directors at small and medium-sized insurance companies (there was no data available for large companies) are paid 2.5% to 6% more than the average for executive directors at similar-sized FTSE350 companies.

Ben Cook is a freelance journalist.