As fulfilling as it is on multiple levels, a career in insurance is not one that most young people intentionally pursue. Ask anyone who has spent more than a few years in the industry and he or she will tell you that they fell into it, but that they truly enjoy it—and in many cases they’ll say they had the benefit of a mentor who helped shepherd their careers.
In the next seven to 10 years, more and more institutional knowledge will be lost from the insurance industry as much of its old guard turns its attention to other life interests. Whether it's a producer passing his agency on to a successor or a carrier executive or risk manager finally seeking retirement, many longtime professionals in this business will soon make way for a new generation of leaders. Yet recruitment efforts to attract and cultivate young talent have not kept pace with the number of top people in the insurance industry who will be making their exits within the next decade.
It's not a failing on insurers’ part, but rather a tale of numbers: In 2014, the average age among insurance agents in the U.S. is 59. According to data from global management consulting firm McKinsey & Co., 25% of the insurance industry's workforce will retire by 2018.
There are two ways in which insurers can view this confluence of events: as a crisis, or as an opportunity. And those who are working to secure the insurance industry's future by investing in young talent will insist that their own efforts are part of a larger push that is critical to sustaining businesses built on decades of hard work.
“It's definitely something that keeps us up at night,” says Scott Culler, co-chair of surplus lines association NAPSLO's “Next Generation” initiative, one of the leading organizations in recruiting young people to the insurance industry and educating them on its wealth of opportunity. “It's the one question that's on everyone's mind. Every company we’ve dealt with is trying to figure out how to attract young people—and once we’ve done that, how do we challenge them?”
Next Gen, which includes more than 650 members, was formed about five years ago. Its members spend the year visiting college campuses and conducting web events with students: Last year it worked closely with insurance fraternity Gamma Iota Sigma, attending symposiums, job fairs and seminars held at college campuses, and Next Gen plans to extend these measures throughout 2014. The goal: to get the word out to twentysomethings that in a still-challenged job market, the surplus lines insurance business needs—and actively seeks—insightful young talent.
“We’ve got such a great amount of human capital right now, but how do you pass that information on to them?” asks Culler, who also chairs NAPSLO's Career Awareness & Internship Committee. One solution, he says, is stressing to young people the industry's potential for career growth.
A regional president at Markel Corp., Culler likes to bring people who are frustrated by their career or trying to discern what line of work they’d like to pursue and provide them with a real-life picture of the potential success that awaits them, should they choose to pursue it.
“I walk them on the floor,” he says. “I tell them, ‘These people are going to be gone in five to 10 years. If you come in and really work hard at it, your potential is unlimited.’”
In addition to all of Next Gen's efforts, Culler says developing and supporting an organization-wide culture of learning is essential. Admittedly, this isn't always easy; he's well aware that every operation fortunate to still possess an open door is working harder than ever just to stay in step.
“We talk to every company in the business, and we’re all lean and mean these days, trying to be as efficient as we can,” Culler says. “But as an industry, we have to make it a priority. Everybody's stressed, but if we’re able to build a culture around people being able to ask questions and have them answered, we can make time to learn.”
Evangelizing on behalf of the industry is a strategy shared by the Professional Insurance Agents (PIA)'s Young Insurance Professionals group, which in recent months has had a presence at college career fairs in New York, New Jersey and Connecticut. While presenting industry and organizational materials is key, most important is the presence of several young insurance professionals on hand and ready to engage students and talk to them about insurance's possibilities, says YIP Director Kim Voelker.
“Efforts to foster an interest in an insurance career among youth are probably most successful at the local, community level,” she says. “Reaching out in person not only serves to educate youth regarding the industry's diversity of career opportunities, but helps challenge the negative stereotypes insurance is saddled with.”
Indeed, one of those stereotypes is painfully familiar to those who have spent decades helping to rebuild lives when clients’ policies are triggered. Few and far between are the mainstream media stories detailing how well insurance carriers performed following a disaster, says Mike McGavick, chief executive officer of XL Group. Because insurance is a compulsory purchase, he relates, it creates a sense among consumers that they’re playing a game that can't be won.
Still, McGavick feels the paradigm may be shifting as more young people are exposed to the work done by not only insurers, but also by philanthropic organizations such as the Insurance Industry Charitable Foundation—for which XL is a premier presenting sponsor, serves on its Northeast board and was honored with the 2012 IICF Northeast division Double I award recognizing influence within the industry and impact within the community.
“Where, as an industry, we might have had challenges in the past with immediately being able to attract the highest caliber talent to insurance, we’ve seen that dynamic shift in the last couple of years,” he says. “Younger generations realize our work connects very deeply to the difference they want to make in society, and they see that the kind of innovation that's at hand in insurance is really key to bringing more and more solutions to society. So I actually see the dynamic starting to move in a much more positive way than has always been the case.
“If we can get young people into this industry,” he adds, “they fall in love with it.”
Taking this education of young people about insurance a step further, other organizations start at the high school level. InVEST, a school-to-work insurance program founded in 1970 by the Independent Insurance Agents of Los Angeles and funded by insurance carriers, foundations and grants, state associations and agents, teams with high schools and colleges to teach insurance-agency and company operations to encourage students to pursue careers in the industry.
InVEST volunteers, agency and company representatives work with teachers so that students can acquire real-life perspective on the insurance business. The organization partners with 59 colleges with insurance programs to help students find their best fits within the industry and help them find entry-level jobs or internships.
“We try to connect an older generation to a younger generation,” says Diane Mattis, InVEST's executive director. Teachers are empowered with free materials to teach young people about how an insurance agency works, in the process fulfilling many states’ educational requirement to take a business class; students learn, for example, how to sell mock homeowner and auto policies.
Producers and executives connected with the program also visit classes to talk specifics about how the insurance industry operates. “We can get all the free resources we can to teachers, but the teacher doesn't know and love the industry like professionals do,” says Mattis. “Professionals can make an impression on them. If kids sit close to the window, they’re looking to see what kind of car they drive, how successful they are.”
While money has traditionally been an attractor for young people when choosing a career (especially in the insurance business), for millennials it's just one piece of the puzzle, she says. Younger people now possess a different set of desires than their older contemporaries when it comes to employment.
“For a lot of older people, you have to change your perception of what young people are looking for out of the workplace,” Mattis says. For one thing, she explains, they’re looking to make a difference in their communities, which speaks directly to the core mission of insurers—to restore people's lives when aid is needed most. Second, they desire reinforcement and regular interaction with their boss—someone who takes a personal interest in them, has a vision for where they’re going, and who will regularly engage them.
It's quite a change from the days when getting called into your boss’ office usually meant you had something to answer for. “They want to connect every day,” she explains. “It's a different mentality. It's easy to mentor them once you understand that.”
Indeed, much of the conversation around recruiting young talent often turns to mentorship. Yet the term itself may need to be re-thought, Mattis adds.
“Maybe ‘mentor’ is too big of a word; that scares people,” she says. “That starts to sound like, ‘Ugh, I have to train them, they have to sit with me.’ Maybe we shouldn't call it mentoring. Maybe we should call it being a role model. You want to invest in them.”
It's an investment that more often than not pays dividends—provided the time can be made to prioritize it.
“As an industry, we are not nearly as disciplined as we should be about developing our professionals,” says Terri Browne, chief people officer at Sedgwick. “Now that we have four generations in the workforce simultaneously, each with its own unique orientation and work style, it is a growing imperative that we improve our efforts to share our institutional knowledge through mentoring programs.”
Time pressures, she adds, are the No. 1 reason that career coaching gets pushed to the back burner, so it is important that programs be systematic and structured to ensure successful participation. Discipline, says Browne, is the key.
TEACHING BY EXAMPLE
Claims management is likewise at a crossroads when it comes to talent, says Browne at Sedgwick.
“People are opting to leave the industry through retirement or other means, but young people are not coming in to fill the void,” she says, adding that many don't even know what claims management is or why they may be interested in it. There also has been a shift in mindset, Browne says, as claims management is now viewed more as a job rather than a lifelong career path. The art of building long-term relationships with customers, for instance, is a skill that must be cultivated over time and best taught by example.
The insurance industry's future, she says, will depend on its ability to look beyond traditional talent sources and engage the next generation entering the workforce. To this end, in addition to forging partnerships with colleges and universities to raise awareness about job opportunities in the claims space, Sedgwick recently joined the Military Spouse Employment Partnership as a way to attract military spouses to its own ranks. Because military families have to relocate every few years, Browne notes, unemployment among military spouses is as high as 26%. Positions that allow for telecommuting provide much-needed employment and job stability for this largely untapped population.
The widening talent gap, however, will not be exclusive to insurers: It also will be seen in the number of risk managers, says Peggy Accordino, vice president and director of risk management for National Financial Partners and chair of the Spencer Educational Foundation—an affiliate of RIMS and the leading educational and charitable organization for awarding scholarships in risk management and insurance.
Educating young people on the role of risk management in insurance will be critical in the coming years, she says, as the insurance business loses a good deal of its legacy players: “The industry needs to reach out and get students when they’re younger. I talk to college kids and many of them took an insurance course as an elective, but they found comfort in it. Reach out to your local school. Get kids into those programs.
“It can be a very fulfilling career,” she adds. “This industry is not just about insurance, and ‘insurance’ is not a dirty word. It's the grease that makes the wheels of industry continue to turn.”
At the end of the day, what makes the insurance industry appealing to those who have spent decades in it isn't just the compensation or the other trappings of success. It's the relationship-building, the ties that you maintain with clients over time, that many find most rewarding. And that message is one that should be communicated loudly and clearly to potential recruits, says PIA Management Services President and CEO Mark LaLonde.
“The best image boost for the industry is the work that independent agents do for their communities,” he says.
“Look at what happened with Sandy,” adds LaLonde. “We heard myriad stories of how agents and their employees, who were struck by the storm themselves, were literally the first call homeowners made. Agents were the first responders, helping clean up and fix the damage with their own hands, and helping their neighbors—some of whom weren't even their clients—negotiate the claims process. I can't think of better narrative than that to demonstrate that we are in an important, fulfilling career that makes a difference.”