The war for talent
As Baby Boomers, retire, who will take their place?
By Dennis H. Pillsbury
Ten thousand a day. No! That is not what I get paid for writing these articles, although I am willing to consider an offer. It’s actually the number of Baby Boomers that will be reaching retirement age continuing until 2026, according to the 2008 edition of Plunkett’s Insurance Almanac.
That’s right; for almost the next two decades, 10,000 Baby Boomers will be eligible for retirement every day. Who’s going to replace them?
For the insurance industry, that means we are going to lose about 1.3 million people over the next 20 years, many of whom are key people with experience in underwriting, sales, claims, loss control, actuarial, risk management, and other disciplines. That averages out to attrition of about 65,000 people per year. And the insurance industry is growing. According to an A.M. Best report, the insurance industry added 23,500 jobs from April 2007 to April 2008. That means our industry will need to find approximately 90,000 people a year to fill new positions or positions opened up due to retirement.
If those positions require college graduates, there are slim pickings indeed. Larry Pistell, senior associate director of corporate and industry relations at the Center for Professional Education at St. John’s University School of Risk Management, Insurance, and Actuarial Science, in talking points prepared for a panel discussion on the War for Talent, estimates that “there are fewer than 40 formal, full-time university programs specializing in risk management and insurance and actuarial science in the United States today. Many of these programs are small. For all programs on a combined basis, the total enrollment is estimated at fewer than 3,500 for these academic areas.” That’s not going to put much of a dent in the estimated 90,000 people needed.
At the same time, other avenues for developing insurance expertise also are showing less-than-stellar performance. In its recent report, “Generational talent management for insurers,” Deloitte Consulting LLP points out that “many insurance companies could face critical talent deficiencies in the next few years. Currently, 88% of Chartered Property Casualty Underwriter (CPCU) members are aged 40 or older, along with 70% of company adjusters.”
The report goes on to point out: “Compounding the aging demo-graphics of the insurance talent force is a diminishing pipeline of replacements. Fewer than 23,000 professionals sat for their CPCU exams in 2006, an over 55% decrease from 1992. Similarly, the number of AIC (Associate in Claims) examinations has decreased steadily.”
Obviously, we have a problem.
InVEST comes of age
Fortunately, InVEST, a school-to-work insurance program sponsored by the Independent Insurance Agents & Brokers of America (IIABA) that teams up with high school and community college educators to provide a useful insurance curriculum for students, has grown along with the industry’s need for talented new employees. And it may very well prove to be one of the most important solutions for the aforementioned problem.
InVEST was started in 1970 at Hollywood High School by the Independent Insurance Agents of Los Angeles. The brainchild of Steve Dach, whose passion kept the program alive during its early years, the program has blossomed and evolved during its 35-plus years to become an important ally in the industry’s War for Talent. From its humble beginnings at one high school in California, InVEST now boasts some 235 programs in 30 states and has produced more than 96,000 graduates.
Many of the InVEST programs include job shadow days where students liaise with industry professionals, following insurance agency or insurance company personnel throughout the day to truly learn what it takes to work effectively in the insurance industry. Many of these interactions lead to internships and job offers after graduation.
At a recent InVEST meeting in Westfield Center, Ohio, hosted by Westfield Insurance Companies, participants heard about a number of exciting programs that are producing knowledgeable insurance people ready to hit the ground running when they enter the insurance workplace. One company reported that 25% of its employees were InVEST graduates. Another had four interns working at its headquarters and had hired a previous intern as a full-time employee.
The most interesting thing about the program is that it is malleable. InVEST provides support to a diverse array of programs, many of which vary greatly from each other, but have a common goal of developing an understanding of insurance and the opportunities that the insurance industry offers to young people interested in a challenging career.
With all too much of the publicity surrounding the insurance industry being negative, InVEST is providing a more realistic view of the insurance industry that not only counters this negative publicity, but also highlights the good things that insurance industry people can accomplish on a daily basis. With one of the key drivers for the Generation Y individuals now entering the workforce being “a focus on social responsibility,” according to the Deloitte study, it is clear that the industry needs to counter the skepticism felt by many Gen Yers toward the industry.
And InVEST, with its unique hands-on approach, is able to counter many of the negatives almost immediately. One Gen Yer, who had shadowed an agent, got to experience one of the most difficult and yet most rewarding events that agents encounter—a claim. And it was a big one. The insured and his family had just lost their house to a fire.
The agent went to the scene and was sympathetic and helpful. After all, these people were not just clients, they were his friends. He also had a check that would pay for the family to live elsewhere while their house was being rebuilt. The Gen Yer’s attitude toward the insurance industry did a complete 180 after that experience. He saw the good that the industry did in about as dramatic a way as possible.
Unfortunately, what makes the news most of the time is the rare instances where claims are not paid or are disputed. You rarely hear about the vast majority of claims that are paid promptly. InVEST students get to see that side of the industry.
At its Web site, InVEST delineates the advantages it brings to the table. InVEST:
• Trains workforce and brings new talent for carriers, agents and brokers.
• Reaches a diverse group of employees, such as urban and minority students.
• Gets insurance professionals involved on a local level as classroom liaisons.
• Promotes positive public relations, positioning the industry as a respected liaison between the academic and business worlds.
• Produces knowledgeable insurance consumers.
In future articles, we will look at some of the individual programs and discuss their strategies for successfully bringing talent into the insurance workplace. *
The insurance industry soon will face a critical shortage of trained employees as Baby Boomers start to retire and competition for replacements begins. Thus far, the economic downturn has helped alleviate the situation as the insurance industry, which has done better than most other industries, has continued to add to its ranks by hiring people from other industries. But that is only a short-term solution and does not answer the question about how we attract Generation Y, which is now entering the workforce. And, as the economy improves, competition from other industries will only intensify.
The War for Talent is starting, and the industry needs to prepare for battle if it plans on growing and thriving in the future. InVEST has proven to be a dynamic force that is helping the industry win this war. Because we at Rough Notes see this as a critical area of concern for the industry that we serve, we will be providing regular articles on the successful campaigns waged in this war in the hope that others may be able to emulate those successes in their regions. This first article delineates the challenge and briefly describes some of the solutions.
For more information:
Web site: www.investprogram.org