As older generations of employees are retiring from the workforce and younger generations are resigning in search of lifestyle or career changes, insurance carriers are facing a big challenge of attracting talent with the right skills to transform a legacy industry, experts say.

Executive Summary

High rates of employee turnover due to retirements and resignations have kept the insurance industry on its toes for the past several years, and this is coupled with challenges this industry is facing regarding inflationary pressure, climate risk and technological disruption. In Aon’s 2022 P&C Performance Outlook webinar in December, Charlie Gall and Jeff Rieder discussed how the industry can prioritize employee fulfillment, workplace culture, and develop a new generation of leaders as it seeks to attract and retain talent.

Terms like The Great Resignation and quiet quitting have popped up to describe what’s happening in the workforce amid a slew of retirements and resignations, and this comes on top of an already challenging environment with inflationary pressure, supply chain shortages, and climate risk. Charlie Gall, associate partner of insurance within Aon’s Ward Benchmarking team, said during Aon’s 2022 P&C Performance Outlook webinar last month that all of these changes are beginning to add up.

“It does feel a little bit like a perfect storm, where there already is a lot of change, but there’s going to continue to be a lot of change as you see our aging workforce,” he said. “We’re trying to find [talent for] skilled positions … I think in some of the key roles, we’re having to hire over a third of them with entry level experience.”

He said this is most apparent in claims, as Aon’s research shows this is a sector with high employee turnover in the industry right now.

“We saw a lot of turnover in the claims function starting late last year, and it went throughout this year. So, we’re having to replace with a lot more entry level employees, which is going to create a lot more training,” he said. “And maybe workloads are going to have to shift downwards a little bit as we work back into building up the talent on the claims side.”

This is because not only an aging workforce, but changing employee desires, means the industry is grappling with a skills gap, he explained.

Charlie Gall

“From our surveys, we’re seeing that there’s a spike in voluntary employee departures,” Gall said. “We definitely are running into a talent shortage, which also means that we’ve lost a fair amount of skills. During that turnover, we’ve lost a lot of long-tenured folks, and so now we’re losing some of those skill sets. And then on top of that, we’re having a hard time finding employees with those skills.”

That all adds up to fierce competition for attracting talent, Gall said, as many carriers are chasing the same type of workers.

“We’re all kind of chasing the same type of skill sets, and coupled with all of that, we’re still having that high turnover at levels that are still elevated beyond what we’ve seen pre-pandemic,” he said. “Everybody wants to hire experienced [workers with] certain skill sets. So again, a lot of us are chasing the same type of people out there.”

Embracing the Future with Technology

One of the ways carriers are combatting this is with technology, he said, as they seek to not only move a traditional industry forward, but also improve efficiencies in the overall hiring experience.

“We’re trying to increase our hiring experience to make it more enticing to want to work for our organization,” Gall said. “So we’re using more tools and technology to improve our hiring experience.”

As carriers seek to do this, they are looking to gain tech talent that can modernize older systems and create work that appeals to employees with tech-focused skill sets. One place the industry can look, Gall said, is InsurTech. This comes as investment and funding in the InsurTech industry peaked in 2021 and began to pull back last year, he added.

“We are trying to provide value to customers, enhance our digital experience and gain efficiency. So, I think there’s a lot of opportunity, and I don’t think it’s fully played out yet,” he said. “With InsurTech starting to back off a little bit, [and experiencing some] some headcount reductions, that might create some more opportunity for our industry to find some of that technology talent we need.”

Indeed, the layoff news in the InsurTech space kept coming this year. Technology company Root Inc., the Columbus, Ohio-based parent company of Root Insurance, began the year in January by announcing that it had laid off approximately 330 team members throughout its business. Co-Founder and CEO Alex Timm in an emailed statement to Carrier Management cited pandemic losses as factoring into the decision.

NEXT Insurance and Thimble announced in July that they laid off parts of their workforces. NEXT cited challenging economic conditions, and both InsurTechs pointed to an increased focus on profitability, Carrier Management reported.

As part of an “organizational realignment,” Hippo Holdings Inc. also announced in September that it was eliminating roughly 70 jobs from the company, amounting to about 10 percent reduction of the InsurTech’s overall workforce.

Refining the Employee Experience

As carriers seek to capitalize on a wave of layoffs by recruiting tech-focused talent to reform their workplace, several factors are being considered, Gall said. One of those is workplace flexibility. Aon’s research showed this is one area of focus as carriers seek to build their company’s value proposition and make employees want to work for their organization.

Jeff Rieder

“It still is somewhat new to our industry, as we always had people working in the field, but never really a fully flexible working environment,” he said. “So I still think it’s fluid, and we’re still working that out, but it’s definitely top of mind for everybody.”

Part of this initiative means refining the employee experience, whether it’s remote or in-office, or a combination of both, he said.

“I think we’re still tweaking and refining what the remote experience should be, and even a lot of companies are still focused on their on-site experience because as we are bringing people back into the office, we want it to be inviting,” he said.

Developing New Leaders

Gall added that insurers are also focusing on career development as a retention strategy, as they may need to hire entry level talent initially to fill skills gaps. He said companies should seek to ensure newer employees have the resources to progress and become the next leaders.

“We’re still putting a lot of focus on talent development and then rounding out with compensation and benefits and employee recognition,” he said.

With this in mind, compensation was another factor that ranked high for carriers, according to Aon’s research. However, this is creating challenges as the inflationary environment continues to cause concern for insurers in the U.S.

“It was interesting, literally 10 minutes before this presentation, a CEO reached out to me talking about the expectations that companies will have across the board to manage employee compensation increases against this backdrop of inflation,” said Jeff Rieder, partner and head of insurance within Aon’s Ward Benchmarking group.

This challenge comes as pay transparency is becoming more top of mind in many states as well, he added.

“We’ve already seen regulations have impacted several states, and pay transparency is front and center here [in the U.S.],” he said. “I think the reality for this is pay transparency is likely to become more of the new norm.”

He said carriers will have to continue to prepare for salary disclosures not only for prospective employees, but to their current employee population by reviewing employment contracts and processes.

“It’s not only looking at the pay equity for roles within companies, but often, companies that are hiring for new employees into the organization may be hiring those in at higher levels than the current incumbents,” he said, adding it’s important to make sure that there’s equitable pay internally. He said with this in mind, companies are going to need to manage how they deal with employee requests for pay information.

“Do they have clear criteria to underpin the reward and promotion decisions that are being made? In addition to that, is that the guidance that you would be happy to share with all employees?” he said. “Ultimately, it is understanding what you can do to improve your pay gaps and making sure that you’re effectively communicating those changes internally as you prepare for any public disclosure.”

The Great Reshuffle

As companies rethink hiring strategies, tech investments and company culture, they can begin to navigate what has been called The Great Resignation. However, Rieder has a different term for this, and it’s slightly more optimistic: The Great Reshuffle.

“We’ve seen that great reshuffle that is occurring. There has been a significant amount of higher level turnover and retirements for many organizations … which is causing them to rethink the way that they’re attracting employees from traditional methods,” he said. “We’re also seeing new and changing competitors for talent as companies are competing across all industries, not just within the insurance industry, and a greater emphasis on changing lifestyles.”

That said, he believes these workforce changes will ultimately be a positive for the insurance industry in 2023.

“What we’re finding is that the 2023 outlook ultimately is that despite the financial challenges in 2022 for the P/C industry, the financial position for most companies remains very strong, which will allow to companies continue to fund investments in product and geographic expansion and their technology initiatives, and the roles that support those initiatives will remain in high demand and may lead to higher pay increases for those,” he said. “As we look at the labor market, this may begin to turn slightly more favorable for the insurance carriers, with layoffs in the tech sector and some of the other industries.”

Gall has yet another name for it. He calls it The Great Convergence.

“There are so many different things converging, [such as] skill sets,” he said. “We’re seeing more hires coming from other industries that may be more tech advanced or media related organizations that can help our industry.”

Topics Carriers InsurTech Windstorm Talent Tech Training Development Market Property Casualty Aon