The P&C industry is painting itself into a corner. While innovative technological solutions offer the promise of both greater effectiveness and greater efficiency—in areas ranging from claims processing to client billing—these solutions are dependent upon a continuing inflow of highly skilled talent.

Yet the industry is losing, rather than gaining talent. Recently, Peter L. Miller, president and CEO of The Institutes (formerly known as the AICPU), reported the number of employees age 55 and over is 30 percent higher in the P&C industry than in any other industry. With so many retirements looming, insurers will need to fill as many as 400,000 positions by 2020.

Few would say, however, that the industry has positioned itself as an exciting or attractive place for recent college graduates to work. Although P&C companies suffered less through the economic crisis than their banking or capital markets counterparts, the industry does not exert much pull on Millennials or on their younger siblings and cousins. Memorably, a 2011 Wall Street Journal survey ranked insurance 97th out of 100 industries in terms of its attractiveness as a career for young people.

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To make matters worse, P&C insurers are competing for data management and analytics talent at a time when demand for these skills is soaring. An Accenture survey of 600 companies in the U.S. and U.K. last year showed that two-thirds of respondents had appointed a senior executive to lead data management and analytics in the past 18 months. Of those that had not done so, 71 percent expected to do so in the near future.

Although data management and analytics skills are coveted, they are not the only capabilities in demand among P&C insurers. A claims investment survey conducted by Accenture last year indicated that 59 percent of insurers saw hiring or training customer service professionals as a top priority to address customer needs. P&C insurers need developers to create and deploy mobile applications for customer and to build digital customer profiles for claims professionals to use during claims transaction handling. They need CRM experts to work on net promoter scores and J.D. Power and Associates' claims satisfaction scores.

To secure the talent they need, P&C insurers will have to compete fiercely with other industries. As more organizations increase their analytics capabilities, the demand is already high in industries ranging from information technology to pharmaceuticals. When we looked at demand trends for analytics across industries in the seven countries, we saw that there simply will not be enough talent to go around. The U.S. alone could encounter a sizeable shortfall of more than 260,000 analysts by 2015.

Given the coming shortfall and the fact that the P&C insurance industry will have a hard time competing with more "glamorous" industries for experts in analytics and other high-demand areas, we see four steps that P&C insurers—acting on their own or through industry associations—should undertake immediately to address this problem:

Influence universities to add business analytics and insurance coursework to a wide variety of programs. By incorporating more statistics training within non-quantitative programsor business training within "traditional" science and engineering programs, colleges and universities will be able to generate more graduates with the skills needed for insurance.
Get the most out of existing talent. Companies can do much more to better utilize the advanced and specialized skills of analytics scientists and other technology specialists. They can create development opportunities for analytics experts. They can provide training for employees with strong quantitative skills who are not working in analytics roles, preparing them to take on the responsibilities of analytics specialists.
Raise insurance awareness among students. Only a small percentage of qualified graduates take P&C insurance jobs today; the rest go into other fields such as investment banking, consulting, software development, or academia. These choices are often shaped by a lack of awareness of the opportunities in insurance. Employers should work more closely with universities to make students aware of the career prospects within the industry.
Make sure insurance jobs are appealing to prospective students. Employers need to define roles and allocate tasks in ways that ensure skilled young people can do challenging work that contributes directly to the organization's goals rather than just generating reports. Customized roles and career paths provide clearly defined objectives, reward structures and growth opportunities. Organizations should think about developing distinct career paths for those with distinct technical skills, rather than shoehorning such individuals into existing career models.

P&C insurers will need innovative skills and sourcing strategies to overcome the looming talent gap. Companies should begin now to plot out strategies for finding and retaining the talent they need to compete. Those making this investment now will achieve a competitive advantage over rivals who find their growth strategies frustrated by the retirement of skilled professionals and the shortage of talented replacements.

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4 Steps P&C Insurers Must Take To Recruit Talent

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