It is no secret that the insurance industry is suffering a severe talent gap created by the aging workforce. In fact, it is projected that the industry will need to fill nearly 400,000 positions in the next couple of years, but there are simply not enough employees and candidates to take these roles.
According to the most recent Semi-Annual U.S. Insurance Labor Outlook Study, insurers rated executive positions the most difficult to fill at 6.8. A mass exodus of tenured, skilled professionals limits insurers from selecting their next leaders from within. These professionals could have exerted great leadership, only if they are still there. Unfortunately, now insurers are left staring at empty office chairs previously occupied by long-tenured senior executives.
How did we get here?
During the uncertainty of the Great Recession, insurers laid off employees and instituted hiring freezes in order to keep personnel costs at a minimum. Some professionals forced out of the industry ventured to different fields, and insurers have since carried on with a thin lineage of mid-level professionals. Now, organizations are left with a smaller bench for executive replacements.
In addition, many insurers also put an end to training programs that fostered well-rounded insurance leaders for years. Historically, cross-training programs rotated new hires into different departments, allowing them to learn various functions within the organization. Even when the economy started to prosper again, organizations did not reinstate rigorous training models or return to pre-recession training budgets.
Cross-training programs helped emerging professionals excel not only at their designated roles, but also provided context on enterprise-wide operations. These programs increased the organizational flexibility to sustain fluctuating workloads and ensured teams maintain productivity despite employment changes. At the same time, rotational training instilled a culture of collective success and allowed employees to better understand other functional areas and their coworkers’ responsibilities. Professionals were armed with the experience to grow into well-rounded empathetic leaders. If these programs had prevailed, insurers today would have a diverse bench of emerging leaders at their disposal. It is essential that cross-training programs are revived to prevent future executive shortages and to ensure long-term sustainability.
How can we fix this?
Even if forward-thinking insurers revive cross-training programs today, this cannot reverse the current talent crisis. There simply are not enough qualified industry professionals to mitigate today’s growing leadership loss. One solution is to recruit proven leaders with transferable skill sets from different industries.
If highly technical experts are needed to fill in the gaps, insurers should look to the finance industry. Many finance professionals, skilled in mathematics and statistics, can seamlessly transition to actuaries, financial executives, risk managers or underwriters within the insurance space. Even though they do not come with a deep understanding of the insurance industry, they have the foundational technical acumen to thrive and exert great influence once they are up-to-speed.
Organizations should also consider expanding their candidate pools to include former military officers, who come from strong leadership backgrounds. Military veterans hold high levels of responsibility and authority for their units and are people-oriented. They have years of experience in an analytical, strategy-based environment and are guaranteed to be skilled in motivating, encouraging and empathizing with others. Military training teaches officers the value of promoting diversity and being a good listener, and these individuals are well prepared to make decisions in extreme conditions and take risks. While lack of relevant industry experience may be a deterrent for some insurers, it should be noted that military officers reached the height of their careers by performing duties as fast learners in stressful environments. Many also possess strong data analysis and technology experience. This valuable foundation can be a strong learning platform for insurance knowledge.
To attract these non-traditional executive candidates, insurers should continue to promote the financial stability and social value of the industry. Insurance is a recession-proof industry that provides value to society. It provides a rewarding work environment for employees and helps people recover, sometimes during some of the most difficult moments of their lives. If insurers are willing to provide competitive compensation packages, they can motivate these candidates to switch careers and provide sustainable leadership into the future.
Insurers may often find locating these nontraditional candidates challenging. Partnering with an insurance executive search firm can help organizations efficiently and effectively search for candidates both in and out of the traditional candidate pool. Successful search partners have an extensive network and intimate knowledge of what it takes to succeed in the industry, translating into the executives needed to address present and future leadership shortages.
As C-suite executives vacate their long-held leadership roles, insurers are left with the task of providing continued leadership and guidance to their organizations. Being open to expanding traditional candidate pools can provide immediate relief, while reviving cross-training programs can support comprehensive succession plans for the future. As the war for executive talent deepens, organizations must be ready to make long-tail investments to grow sustainable C-suite teams for years to come.