The cost and availability of good, skilled people is a perennial issue for businesses, whether the economy is buoyant or not–and the insurance industry is no exception.

In challenging economic times like these, it is essential that businesses attract and retain the best people possible.

In a poll of London market chief operating officers, conducted by Ernst & Young at the end of 2007, almost three-quarters (73 percent) of interviewees said qualified people are key to the success of their business. This was way ahead of third-party support, strong management focus, and clear leadership and strategy, which each claimed 9 percent of the vote.

Earlier this year, claims-handling and management faced the biggest shortage, with 73 percent of COOs planning to prioritize the claims process, especially in terms of resourcing it during 2008.

But away from the specifics, having the right people on board is essential in differentiating and maintaining the reputation not only of an individual business but also the broader industry.

The research, “London & Bermuda: The COO Agenda,” found that people-related issues account for 60 percent of the top key competitive differentiators for insurers, with technical expertise (24 percent), broker and client relationships (19 percent), and leadership and people (17 percent) in first, second and third place, respectively.

London was recognized as the location for international technical expertise in specialist lines, and where most lines of business can be accessed. But Bermuda is gaining a competitive foothold in the world markets through its innovation and efficiency of the placing process–and it's presenting a very real challenge.

Some industry players are seeing double-digit inflation year-on-year and a shortage of suitable staff for certain key areas of their organization. Clearly, this is unsustainable in the long term, as recruitment and retention of high-caliber employees is fundamental to the prosperity of the market.

In a crowded market, where there are pressures on pricing and rates, insurers are also competing in the war for talent. What came through loud and clear in the research was that the majority of COOs place more significance on people-focused factors rather than defined performance metrics as they battle to differentiate themselves.

In such testing times, smart insurers will make sure that despite the downturn, they are recruiting the very best candidates, maintaining entry-level recruitment, as well as developing and nurturing new and existing talent. Not only will that business grow in the upturn, but having the best people now will ensure that the company really shines against competitors.

A copy of Ernst & Young's report is available at: http://www.ey.com/global/content.nsf/UK/_Insurance.

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