Cost-Conscious Insurance Companies Facing 'War For Talent' | WGLT

Cost-Conscious Insurance Companies Facing 'War For Talent'

Mar 11, 2020

More retirements, low unemployment, and increased competition from other industries have all contributed to a “war for talent” in the insurance business, according to a hiring expert.

Recruiting difficulty is on the rise, especially for actuarial, technology, executive-level, and analytics positions, according to the latest Insurance Labor Market Study from the Chicago-based Jacobson Group.

"Our reading of the difficulty to fill all positions combined was the highest it’s been in the history of the survey (which began in 2009),” said Greg Jacobson from the Jacobson Group.

There are two main reasons why.

The unemployment rate for insurance-industry workers—between 1.5% and 2% the last few years—is typically lower than the economy overall. The industry has also seen a lot of retirements recently.

“It’s creating a demand cycle from many different issues,” Jacobson said.

On top of that, insurers are competing with other industries for employees more so than ever before, he said, especially for technology and analytics talent.

“Especially given the fact that the industry is bringing in a lot of these younger workers, maybe a few years out of college, where those workers have the skills that can be transferred to any industry in any geography,” Jacobson said.

At the same time, the insurance industry is on a long-term streak of expense-consciousness, he said. In its recent year-end financial results, Bloomington-based State Farm touted its falling property-and-casualty expense ratio, from 41.7% in 2015 to 35.6% in 2019. It also recently announced it was exiting the banking business, where its return on assets last year was .35%. 

“When there’s a lot of capital and a lot of competition chasing the same dollars and same customers, premium doesn’t grow as fast as it might. And when that happens, that’s going to impact your expense ratio. So we are seeing companies concerned about the expense rate,” Jacobson said.

“But at the same time, we’re in a war for talent. And we are seeing as a result people who have a specialized skill—a soft skill or a hard skill—or are high performers, those people are receiving raises that don’t really correlate with inflation in any way. We’re seeing significant raises for retention purposes and the recruitment of new employees. But it tends to be limited to the people who are most in demand.”

In all, 61% of companies in Jacobson’s survey plan to increase staff during the next year. That number has been declining slightly and is down from 66% a few years ago, Jacobson said.

Optimism for revenue growth decreased 2 percentage points from July 2019 for property-and-casualty companies, down to 76%, the January 2020 survey found. 

“Historically, we’re seeing a waning of the growth of the industry,” Jacobson said. “The industry has not been reaching some of its expectations in terms of revenue growth. In part that’s from the competition and capital in the market. But the majority of the growth positions that have been created over the past couple years have been in anticipation that companies are going to grow, and some of those companies are not growing to the extent they expected.” 

Insurance and financial services jobs are the backbone of the Bloomington-Normal economy. State Farm and Country Financial are two of McLean County’s Top 5 largest employers.

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