(Editor’s note: During the summer of 2015, EY interviewed executives at approximately 20 leading US insurance manufacturers, distributors and reinsurers as part of an ongoing effort to understand how the life insurance and annuity industry can surmount current challenges and move forward. The objective was to understand the views and concerns in the eyes of industry executives and stakeholders and to outline the industry opportunities and challenges from the perspectives of customers, distributors and manufacturers. The interviews focused on the global economy, innovation, distribution, talent issues and consumer protection. This is the fourth article in a five part series, where EY will walk through the key findings. You can read the first article here, the second article here, and the third article here.)

Talent management and human capital issues have become so critical to the industry’s future outlook that one survey respondent expressed a belief that the chief human resources officer had the most difficult and most important job in the C-suite.

The talent shortage affects every layer of the organization, with a lack of sufficient candidates to fill senior executive roles and significant gaps in technical skills. In seeking top, executive-level talent, the industry seems less lucrative than others, nor especially cutting-edge.

Then there are the generational issues; the insurance industry is simply not attractive to young people, respondents believe. The industry’s image as staid, risk-averse and only interested in profits simply does not appeal to the brightest and most promising young people, who likely view technology companies as their employers of choice. Diversity—both cultural and geographic—is another dimension. Several executives commented that the employee base must ultimately reflect its future customer base.

Executives recognize the deep need to find new talent—such as data scientists and digital experience designers—is not merely about burnishing the industry’s image. Rather, the industry will bring more data scientists and more skilled IT resources on board, largely because a larger resource base in these areas will likely drive market leadership. As one executive stated, companies “that can use and make the most sense of data will have a competitive advantage going forward.”

Undoubtedly, there is a clear and pressing need to replace an aging workforce, especially in critical areas like underwriting. Multiple respondents also highlighted the need for more “people” people in the industry. In addition to a variety of quantitative skills, new insurance talent must still possess the desire to help people.  

Taking a more strategic view, the talent gap reflects the need to foster innovation-centric and entrepreneurial cultures and to develop next-generation capabilities. There is an opportunity for the industry to tell a clearer and more persuasive story about its mission and important societal role in helping individuals and families secure financial protection. The rising generation of workers is seeking such purpose as they choose their career paths. We need to talk about our values and how we have to be good stewards for the future, as our people have done in the past. As one responded stated, “We have to walk the walk.”  Here again, doing well and doing good are synonymous.

Talent management programs will continue to evolve, with more opportunities for enhanced acceleration of careers. This is important for demographic reasons, thanks to “a generational shift in expectations,” cited by one respondent, who added, “Digital natives have come to expect more transparency in terms of their opportunities.” The agent network could certainly stand to get younger, if only to smooth the transition of appropriate business to digital channels.

These generational shifts in expectations portend the need for the HR function to change, as it may be a microcosm of the overall need for industry transformation. Many respondents believe new performance measurement systems will be established, with greater flexibility in work locations and a rethink of both geographic footprints and real estate strategies.

We believe the talent questions are “another face of the relevancy question,” according to one executive; insurers must “look relevant as an employer in the same way can we look relevant as a product provider.”

What Survey Respondents Say

• “No one wakes up and decides that they want to go into insurance.”
• “Financial services companies are heavily regulated and slow moving and we are competing against cool companies for talent.”
• “[We have the] same problem attracting talent as attracting customers.”
• “We want our employee base to look more like our future customer base, which means more diverse in age, outlook ethnicity, religion… There are geographic implications, too—you can’t be representative if you’re not in locations that are representative of your population profile.”
•  “Digital natives have come to expect more transparency in terms of their opportunities.  There is a generational shift in expectations.”

The views expressed herein are those of the authors and do not necessarily reflect the views of Ernst & Young LLP, the global EY organization or the Insurance Technology Association. Doug French is the managing principal of the Insurance and Actuarial Advisory Services practice within Ernst & Young LLP in New York. He can be reached at doug.french@ey.com.