The insurance industry continues to find itself in a talent crisis. The workforce challenges we are facing are not entirely new. Some of them are the lasting impact of the pandemic, while others have come and gone over time as the result of a changing world.
There are some challenges that I believe are self-inflicted, albeit unintentional. The good news is that they are also within the industry’s power to change. It won’t happen overnight, but let’s get started. Since people are the industry’s most valuable asset and are at the heart of everything we do, doing nothing cannot be an option.
People do not want to join the insurance industry
Upcoming or younger members of the workforce do not see a career in insurance. Only 4% of respondents to The Hartford’s 2015 Millennial Leadership Survey found insurance to be appealing. And ACORD’s 2020 survey found even less interest from the generation that will make up 75% of the global workforce by 2025. Keep in mind that only 25% of insurance employees are under the age of 35.
People are leaving the insurance industry
The insurance industry will lose half its workforce between now and 2036 as almost 400,000 employees retire. Most P&C carriers expect to increase staff during the next 12 months while finding most positions challenging to fill and facing more than 10% voluntary turnover. The hiring pool is limited for entry-level and experienced talent, with 65% of people leaving an insurance job also exiting the industry. The leading reason why employees quit is a need for more career development and advancement.
Our call to action
Insurance needs to reclaim its brand in the world. This is above and beyond the hard work that individual carriers, brokers, and agencies do to articulate and reinforce their products, services, and experience. I am referring to an industrywide effort for insurance to take back its voice to tell its own story. Borrowing a page from Simon Sinek’s “Start with Why,” insurance has a noble purpose and a critical reason to exist. We have inadvertently allowed the insurance story to become an amalgamation of carrier advertising, less-than-flattering attorney commercials, and the media’s appetite for only the bad news.
Insurance has a compelling and unique talent story that, if told, can both drive employee engagement and strengthen recruiting. If you’ve not worked within an insurance organization, all you may understand comes from a few insurance interactions and advertising. You wouldn’t have had the exposure to realize there is work that matches any combination of creative, analytical, and technical passions. You wouldn’t have the context of the insurance value proposition to appreciate the motivation that comes with a larger sense of purpose.
A multi-dimensional talent development strategy is critical to build an organization that operates both horizontally and vertically and can adapt to change. Companies need specialists and generalists for strategies and execution to have both a top-down and bottom-up perspective. Career journeys that are co-owned by the employee and employer replace a career path predefined by the company. Flexibility is vital to recognize that vertical and horizontal journeys are not mutually exclusive.
Flexibility is also key because over time the needs of both the organization and its employees evolve. Technology has been driving change within insurance for a long time, requiring the elimination of some roles and the creation of new ones. AI keeps accelerating the rate and pace of change, as seen most recently with generative AI. Companies need to master the selection and transformation of existing employees into new roles that blend business expertise with analytical and technical acumen. Some of the expert talent that is quitting due to lack of a perceived career path, or retiring, could be the strongest candidates for these new positions.
My advice to all employees is to have a goal for their next potential role but also keep their peripheral vision unblocked. Their best next move could be something in a completely different area or perhaps a role that doesn’t even exist yet. I offer that guidance from my own career journey.
The next time someone asks you what you do in the insurance industry, don’t forget to include your “why.” I confess that I paused for a moment the first time I was asked why I chose to become a claims adjuster as my first job after college. Then it all came back to me, along with a great sense of pride and gratitude.
The hiring pool is limited for entry-level and experienced talent, with 65% of people leaving an insurance job also exiting the industry. The leading reason why employees quit is a need for more career development and advancement.
As with many industries, the insurance workforce has been aging. The latest U.S. Bureau of Labor Statistics data show that the median age of the insurance industry workforce is 44 years. Currently, 538,000 employees in the industry are aged 55-64 and 186,000 are 65 and older.
Nearly 400,000 employees are expected to retire from the insurance industry workforce within the next few years, according to the U.S. Bureau of Labor Statistics.
As the insurance sector grapples with multifaceted challenges, identifying and understanding these risk factors is the first step in crafting a resilient strategy for the future.
One of the primary reasons insurance agents can accumulate wealth is their commission-based income structure. Unlike salaried employees, agents earn a percentage of the premiums they sell to clients. As they build a client base and generate more sales, their income potential increases.
Nothing is guaranteed in life, but some professions have more stability than others. Insurance is widely considered an “evergreen career,” one which typically offers excellent job security.
Young drivers ages 16 to 24 tend to have the most expensive car insurance. Drivers in this age group are often inexperienced and are more likely to get into car accidents and file insurance claims. As a result, car insurance companies often charge higher premiums to young drivers.
Historically, turnover rates in the insurance industry have increased from 8-9% to 12-15% recently, indicating that retaining employees is becoming more difficult (Deloitte United States).
Altogether, it seems likely that today's insurance talent shortage isn't going away any time soon. If anything, carriers may be feeling increased pressure from reduced staffing in the coming years, in a few critical ways.
We forecast total direct premiums written (DPW) growth of 7.0% in 2024 – an upward revision from 5.5%, driven by momentum in personal auto – and 4.5% in 2025 after nearly 10% growth in 2022 and 2023.
Specifically, leaders are looking to spark growth and transform operations for a more digital and customer-centric future. The path forward will be defined largely by corporate purpose, with products designed to boost consumers' financial well-being and protect against future shocks (including another pandemic).
Standing out in the insurance industry requires a combination of factors. Building a strong personal brand, showcasing your unique skills and expertise, and actively networking are essential. Additionally, staying up-to-date with industry trends and embracing technological advancements can give you a competitive edge.
The main drivers are the higher costs insurers face, including from more severe storms; higher replacement costs; and re-insurance, the type of insurance used by insurers to limit their risks. These are passed on to consumers.
From big brands to insuretechs like Hippo that laid off roughly 20% of its employees, the cuts are undeniable. CEOs cite several drivers behind their decisions, from restructuring to improving efficiency to automation to re-evaluating product offerings.
Main takeaway: Poor communication is a big contributor to customer churn (opens in a new window). Neglecting communication is a mistake a lot of agencies make. One study found that only 44% of clients (opens in a new window) had been in touch with their agent in the past year and a half.
To be a thriving insurance agent, you have to want to succeed. Failure to work hard is one of the top reasons people in this industry want to call it quits. While it's true that this job isn't easy, it's also true that it can be very rewarding when you allow it to be.
Introduction: My name is Aron Pacocha, I am a happy, tasty, innocent, proud, talented, courageous, magnificent person who loves writing and wants to share my knowledge and understanding with you.
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