According to statistics from the US Bureau of Labor Statistics, a quarter of all insurance professionals will retire in 2020, leaving 200,000 unfilled positions across the larger industry. And sadly, there aren’t the same amount of millennials in the industry to take up the entry level positions and learn the ropes as the leaders leave and enjoy their well-deserved retirement.t wouldn’t be exaggerating to say that unless something is done soon, the captive industry will be in the middle of a talent crisis within the next 10 years.
While no studies have been done for the smaller captive industry, the generation split is mirrored but on a smaller scale. Just looking around conferences and meeting rooms, there are some younger faces but not enough to fix the upcoming problem.
Zachary Finn is a clinical professor and the director of the risk management and insurance programme at Butler University, where students run a captive as part of their studies.
Finn is passionate about insurance education and believes the industry needs to be investing more in its own talent supply chain. “Imagine if you will, that the accounting industry needs 500,000 accountants and they said here’s what we’re going to do. We’re going to get 5,000 people with accounting degrees and then we’re going to train 495,000 people on the job,” he said.
“That would be unacceptable to the economy. It would be on the cover of The Wall Street Journal and would be one of the major business stories of our time. That’s happening in the insurance industry right now. And I’m not saying you need an insurance degree to be good at this. You don’t.
“But in an economy where you can only replace every baby boomer with half a Gen Xer, and where most people don’t want to work in insurance that are Gen Xers because of all the stereotypes, we need a faster pipeline. And programmes like the ones at Butler have proven this is a solution to the talent crisis.”
Melvin Findlay, global programmes and captive development manager at AXA XL, and a millennial himself, believes that while the programmes like Butler’s are amazing, the industry needs to try and encourage a broad range of people into roles.
“You want to attract new young talent, people that are studying different things at school, people that are leaving school with different aspirations. But it’s not selling itself,” he said. “It’s got to be something that can attract someone who studied journalism, someone who studied marketing, psychology.”
Findlay added that he thinks the industry needs to look at itself, asks itself why this has happened and what can be done.
“Maybe that’s a case of looking inward and understanding why there is a lack of talent in terms of the youth,” he explained. “It didn’t happen overnight, you know – it’s happened over a sustained period.
“And I guess breaking that cycle or making sure they lower the barriers of entry, which I know is probably not conscious. But it’s a competition. And in a day, you’re competing against marketing firms and startups when students decide who they want to work for.”
Alex Gedge, vice-president of business development and captive insurance, is also one of the current younger faces in the industry. Gedge believes that not only are millennials needed in the industry for the numbers, but they can bring something new and fresh to captives.
“I think what millennials are doing very well is that we have grown up in a time where we are very used to tech changing,” she explained. “I think we are very good at embracing change, we’re not scared of it. So I believe that can be a big plus.
“Millennials are people who understand technology in a different way and will probably embrace it and say, ‘right, well, why don’t we use this?’
“This is a lot of what we talk about as an industry. And we don’t necessarily always do it, or we do it in a kind of smaller way or it takes a long time. If you’ve got leaders who are saying from the top we want changes, and they will actually drive it, that could be a good thing.”
Although there is some debate around the exact cut-offs of the generations, according to the Pew Research Centre, baby boomers were born between 1946-1964, Gen X between 1965-1980, millennials between 1981-1996, and Gen Z between 1997-2012. This means the youngest of the baby boomers is now 55. Still young, but also well within their rights to retire in the next 15 years.
For Gedge, she believes that this brings another side to the talent crisis – getting new blood in, but also not losing knowledge from these leaders when they do decide to retire.
“I think the most important thing to do is to make sure we get as much knowledge from those people before they retire,” she said. “These people have been around for 30, 40 years and they know absolutely everything. So it is most definitely a case of trying to nab them before they retire and saying ‘help me, teach me’. A few of them have transitioned into working on boards, which is a really nice way of still dissipating that knowledge. So at least when they’re retiring, they’re still working with captives in some way.”
However, knowing there’s a problem is one thing – getting people into the industry is another. As Finn pointed out, sometimes it can be hard to get people through the door. But every millennial you speak to in the industry loves it, so how do we get the message out?
According to Findlay, there are many aspects to captives that would attract millennials – which is what attracted him to the role once he knew about it. The fact that captives are innovative, different and changing, are things that millennials want, and that the industry can deliver.
“This is an industry in which you can feel like even if you haven’t been there for long you can bring something different to it,” he explained. “It’s not as archaic or draconian as some of the industries where it’s like ‘no this is the status quo, we’ve always done this type of insurance this way’.
“It’s something that has a legacy, but which is also trying to look to the future. So this was great to hear about emerging risk, parametrics or cyber, which most people who are new to the insurance industry are excited about, and captives are on the forefront of that.”
This creativity and freedom is also one of the things that Christoph Betz, head of captive pricing and consulting at Zurich, said was one of the main things that attracted him to the industry, and why he would encourage other young professionals to look into captives as a career path.
“I think it’s a shame, actually, that there are so few young professionals in the area. I think it is a very special topic, and a very special area. It might not be a fit for everyone though,” he said.
“But I think everyone should give the captive industry some thought and consider it as a career path because it is an area that gives a lot of opportunities for young professionals. You can indeed really shape the way forward based on your own creativity and you have great chances to grow your own career.
“Furthermore, especially for me as an actuary, I see that the captive role brings together a lot of different disciplines that you wouldn’t get to combine in other jobs, be that pure pricing or even just one line of specific business. With captives, you have the chance to get a broad knowledge.
“So that’s why I would definitely encourage more young professionals to research more of that area of insurance and consider it as one potential part in which to make their first steps in their career.”
Findlay said that one of the key things he believes is that if the talent crisis is to be fixed at some point, then the captive industry needs to start marketing itself better to millennials and start showing off all the benefits you get from a job working with captives.
Millennials, Findlay said, want diversity, and captives can offer that. “I think the most important thing is expressing how diverse the captive industry can be with regards to the different businesses it works with,” he explained.
“One of those key things, if I was going to generalise for young people, is that millennials want to be able to interchange the different things you do in your career at a relatively young age.
“It kind of is the consensus of make as many mistakes as you possibly can, as long as you are not just making mistakes but learning as much as you can in the process. If you feel, or if the captive industry feels siloed, and I hate that phrase, but niche, then they won’t like it.
“If I were to join the industry at 21, spend four years here, and would like to but can’t shift over to say working in marketing or something crazy like media or anything else. If there’s not that link, then why would I want to go where I can’t leave? And the thing is, the industry is in a position where they can offer that diversity.”
Findlay also points out that the industry needs to make use of the ‘fireworks’ factor, the big companies it works with, the travel, the tech, to draw in the best and brightest.
“The clients we work with are so diverse, so big. They are the type of companies that use captives, just like the Googles, the fintechs, the insurtechs, and even cryptocurrency companies they work with,” he said. “It’s just that I don’t feel the captive industry makes use of how exciting it could possibly be.
“That should be on the forefront of how they pitch during a grand scheme. You know, work with the Googles, work with the Samsungs, travel abroad. That is not at the forefront. I understand that you need to learn the technical stuff first, but you know, it doesn’t hurt to put off the fireworks in there as well.”
And to get the best and brightest, Finn believes that professional education programmes are the best way to go.
“That’s one of the problems with the industry – we need to professionalise our profession,” he said. “We can’t have 2,000 degree programmes, 900 finance degree programmes, only 82 risk and insurance programmes, and expect people to understand how to do all of these things.
“I mean, the way to train someone to work with a captive is by training them on risk, on insurance operations, etc.”
It might seem all doom and gloom, but Findlay said that although there aren’t as many millennials who are currently working in captives, the ones that have found themselves in the industry are committed to it and love what they do, which bodes well for the future of the industry.
“The young people that are in the industry really do have a love and passion for it. Even though all our stories are different in how we entered the industry, most of our motives are the same,” he said.
