Where have all the experts gone?

Where have all the experts gone?

…and where will the new experts come from? A skills crisis across the industry is sparking calls for a talent renewal strategy

By Bernice Han

The past few months have been extremely busy for Sydney-based national loss adjuster Technical Assessing. Not only did the company recently open an office in Canberra, it also made a number of new hires to support its fast-growing business across the country.

Recruitment of specialists for the insurance industry is often a difficult and complex process, and Managing Director David Cambridge says the problem is growing – there simply aren’t enough people available to take technically challenging jobs.

“There is a talent war going on right now,” Mr Cambridge tells Insurance News. “I think it’s going to get worse before it gets better, because this takes a long time to fix.”

Industry insiders and headhunting firms in Australia say they have never seen anything quite like it. It isn’t just loss adjusters that are hard to find; underwriters, brokers, claims managers, actuaries and other specialist insurance professionals are also in short supply.

Vacancies in critical back-end supporting positions such as broker assistants and claims support consultants are proving equally difficult to fill as well – a sign of just how tight the insurance labour pool is at the moment.

To address the current labour crunch, insurance firms have had to think out of the box to attract and retain talent, coming up with innovative tactics to secure the staff they need.

Technical Assessing, for example, has moved its bonus scheme to a quarterly basis from annually. It has also in recent years operated a cadet program where a junior adjuster who may be completing their tertiary qualifications can gain experience and be mentored by senior and executive adjusters.

If anything has come to define the economic side-effects of the pandemic, it is shortages. The world is running low in just about everything from computer memory chips, cars, building materials, and consumer goods to skilled manpower.

The Morrison Government’s strict COVID border closure policy has virtually choked the supply of high-calibre experienced specialist candidates from traditional sources such as the UK, the US and South Africa.

But recruitment experts say the broader labour squeeze affecting the industry at present has been years in the making. Human resources agency Hays warned five years ago that the insurance industry was facing a shortage of skilled executives and would have trouble filling vacancies.

Hays says in its latest salary guide that the industry will remain an “active job market” over the next 12 months, with high demand for professionals with specialist knowledge. Cyber underwriters and cyber claims consultants are in greatest demand at present, with insurers finding it hard to fill vacancies because cyber is still a reasonably new product.

The widely shared consensus is that years of under-investment in talent scouting and development, particularly at the university level, have finally caught up with the industry. And it is now paying the price for not giving as much attention as it should have to tertiary students who have so many career options to choose from. It’s a “perfect storm” hitting the industry at the worst possible time when Australian borders remain shut to overseas arrivals, closing the availability of foreign specialists. And it’s likely to remain a problem long after the pandemic is over.

Simon Weaver, Willis Towers Watson Head of Australasia and Head of Corporate Risk & Broking Australasia, says the border closures have reduced the talent pool to some degree but points out that “it’s always been difficult to recruit skilled insurance candidates”.

He agrees there are shortages in some niche lines of insurance in particular. There simply aren’t enough people with knowledge and experience of those niche products to match the rate of growth in client demand.

“Beyond what we’re dealing with today, insurance has an ongoing skills shortage because not too many children grow up wanting to become a catastrophe modeller or an insurance broker,” Mr Weaver says. “Many people simply ‘fall into’ working in insurance. But the reality is once they join the industry, they love it and they see the extraordinary career that is possible.

“If we could find a way of getting children excited about working in insurance, skills shortages would dramatically reduce.”

Australasian Institute of Chartered Loss Adjusters President Glyn Lloyd says the skills shortage facing the profession is “very acute”. He pinpoints a number of factors that have combined to cause the current squeeze.

It isn’t just the impact of the lack of 457 visas for loss adjusters coming in from overseas.

Mr Lloyd, who is part of the management team heading up liability at global adjuster Charles Taylor Adjusting, says it takes a unique set of skills to become an adjuster.

“[Loss adjusting] is a role that is not always seen as a natural progression for those in the insurance industry, and due to the increase in work demands it has been a difficult process for loss adjusting companies to both attract young talent and adequately train those individuals,” he tells Insurance News.

Besides having suitable qualifications and technical knowledge, adjusters need “soft skills” such as diplomacy, empathy, technical knowledge and excellent negotiation skills.

He says some adjusting companies may have failed to provide suitable soft skills training for their adjusters – possibly because they’ve been too busy doing the job to focus on such training.

“Increased pressure from client demands plays a part in the lack of investment in training in developing new loss adjusters due to the increased frequency of catastrophes,” he says.

He says the resource pool of experienced loss adjusters is often very stretched, and their primary focus is dealing with claims to all stakeholders’ satisfaction, as well as complying with new regulations set out in the General Insurance Code of Practice.

A spokesman for IAG says COVID-19 has presented challenges to many Australian businesses in the form of state and national border closures. The spokesman says one of these impacts is emerging skills and labour shortages due to a lack of skilled international migrants.

“We continue to use emerging technologies to increase engagement and productivity, such as ‘virtual assessing’, to attract the best talent in the market and to support us in responding to changing customer and environmental needs,” the spokesman tells Insurance News.

Technical Assessing’s Mr Cambridge says it is time for the industry to take a longterm approach to building its talent pool, and he is not alone in thinking this way. For far too long, the industry has relied on talent renewal by virtue of people “simply falling” into the profession instead of joining because it was in their career plan.

“If people are saying ‘they fell into it’, it shows we’re not being strategic as an industry in how we recruit,” Mr Cambridge says.

“The industry is not often considered by aspiring young professionals, largely because it’s not as well known as say, the banking and accounting sectors. There is no well-defined pathway into the profession.

“Responsibility to address this rests with the industry.”

Paul Murphy, the Managing Director of insurance specialist employment agency Ensure Recruitment, says the larger insurance firms do a good job at training fresh talent and offering them opportunities to rise up the ranks.

He says businesses with fewer resources have been less willing to compromise on the skills and/or the experience level they are looking for, and this is leading to extended hiring times and positions being vacant for longer periods. Meanwhile, businesses that are willing to invest in people development and support them in moving into more senior or technical roles are attracting new talent.

Offering better salaries and other non-financial perks are no longer the only requisites in today’s employment market, Mr Murphy says.

“Employers have to be really confident that their hiring leaders are able to really sell the organisation and make sure that they’re articulating what the organisation can do for the candidate and their career.

“Yes, salary will be part of that for sure, but candidates have become very good at seeing through generic statements that are made by an employer – things like ‘we offer great career progression’. They want to see real-life examples of that.”

He says employees now want permanent flexible work arrangements as well as a rewarding and absorbing job.

“The biggest thing to develop since COVID has been flexibility,” Mr Murphy says. “Pre-COVID it was seen as a bit of a benefit, but now it is a norm. Organisations that aren’t offering flexibility are simply not going to have access to the best talent in the market.”

Specialist actuarial recruitment firm SKL Actuarial sees long-term extensive training mechanisms as key to the industry meeting demand for actuaries.

Managing Director Jas Singh says the profession is highly specialised, requiring plenty of on-the-job training to build up experience.

“It’s not a plug-in profession where you just get in all these applicants from abroad and fill in the supply,” Mr Singh tells Insurance News.

“If the industry doesn’t take responsibility for training young actuaries and expects accomplished actuaries to just come out of nowhere, that won’t happen.”

He says actuaries look for a lot of things besides financial incentives such as cultural fit, career prospect, rapport with potential boss and social values of prospective employers. “It’s a whole raft of factors that go into it as opposed to just the money,” Mr Singh says.

He says the international border closure has impacted the recruitment of overseas actuaries but points out that it’s not “the heart of the problem”.

“It was never the magic solution,” he says of the recruitment of actuaries from other markets such as the UK.

Recruitment firms say that in a market as tight as this, insurance firms relying on standard advertisements to fill key roles will most probably come up short in their search.

“It’s no longer enough to just say ‘we’re looking for a financial lines broker with these skills’,” Mr Murphy says.

“We’re saying to our clients, ‘you have to create your own value proposition to convince and entice a potential applicant to join you’.”

Mr Cambridge of Technical Assessing says the “brain drain” affecting the industry top-down is not going to go away.

“We need to be telling graduates insurance is actually a great career option,” he says. “Otherwise the industry will see itself with an even greater talent leakage in coming years.”