What’s on Dec? | Episode 8 | P&C demographics

Insurance Institute of Canada’s latest demographics research report provides a comprehensive analysis of the state of the P&C insurance industry’s workforce.

Listen as Brad Neal, the Institute’s vice president of business development and strategic partnerships, dives deep into the 2022-23 report. In our eighth What’s on Dec? podcast, Brad discusses how retiring leaders can still be part of knowledge transfer in the industry, as well as how to deal with the gap in middle management. He’ll share his thoughts on recruiting efforts, compensation and flexible work arrangements. What’s missing in the industry? How is employee well-being and mental health trending?

Tune in to hear Brad discuss these topics and more!

 

Audio transcript

Intro: You’re listening to What’s On Dec, the Canadian Underwriter podcast, focusing on the hottest topics in the P&C community. Featuring insights, analysis, and interviews with subject matter experts throughout the year.

Pete Tessier:

Hey everyone. Welcome back to What’s on Dec?, and we’ve got an exciting episode here for you. We would not be here without Taycon Risk. They’re the MGA that specializes in niche markets, hard to place or unusually complex commercial risk. They turn hard risk into smart coverage the old fashioned way – they underwrite it. Curt, we’ve got an exciting guest today because we’ve got Brad Neal, who is the vice president of business development and strategic partnerships for the Insurance Institute of Canada. And Brad’s got a lot of insight, and he’s going to be talking about something kind of specific, isn’t he?

Curt Wyatt:

Absolutely, Pete. The Institute has helped our industry develop, it’s helped it grow, and maintain intellectual property within it. And we dive deep into this with Brad.

Pete Tessier:

Yeah, the Institute actually has published a new survey and it’s got respondents from all parts of the insurance ecosystem, and it really focuses on some of the HR side of things, what we’re dealing with as people retire, gaps in middle management, the kind of skill sets we need in this industry across the board, and how we can potentially deal with some of the challenges this industry is going to face as technology impacts the industry and as demographics shape it as well. And the changing demographics of who could potentially enter the industry.

Curt Wyatt:

And we use the word industry, it’s quite interesting in that I don’t know how many other sectors have this sort of, call it, sharing of talent within all these various silos that we operate in. And you have these people who move between them. And because of that, we’ve got to continue to fill the gaps within certain silos as other ones become more full, less full, however you want to phrase it, Pete. There’s this unique challenge we have that I can’t say every other organization out there, or maybe not organization, sector can say that they have these types of challenges.

Pete Tessier:    

Yeah, it’s hitting everyone. And part of the problem is that everyone is poaching from someone else. But hey, enough from you and I. Brad’s been waiting to jump on with us. So let’s get Brad in and start the conversation. And Brad is the vice president of business development and strategic partnerships. And we’re going to talk about some of these demographics, the challenges and what the Institute has found out and what they are sort of predicting for the future. So hey Brad, thanks for holding on with us and welcome to the show.

Brad Neal:

It’s a pleasure to be with you, Peter and Curt. Thank you very much for having me.

Pete Tessier:

So let’s talk a little bit about this report. Can you tell us a little bit about when it began? What was the first steps, what was the impetus for it, and some of the feedback you’ve gotten since it was released in June?

Brad Neal:

Yeah, thanks. The report itself is the latest in a series of reports on demographic research. We’ve been doing those back to 2007. And we started them at that time to give our stakeholders some insights into what’s changing in the demographics within the industry, what roles are important, what skills are important. And we’ve just been using it as a step every five years to take a look and see what has changed. So our most recent report was released in June, just over a month ago, in English, and was just released early July in French. So it’s on our website in both. And I think gives us some great insights into how some of those roles and skills are changing.

Curt Wyatt:

Brad, within the report, I think one of the things that our listeners are going to find very interesting is that there’s a concern for the leaders of the industry that are retiring. The intellectual property that’s slowly disappearing. And how do you see as an organization a way for this leadership group to still come back and be part of the knowledge transfer that needs to happen? We need to get this stuff out of their heads and into the heads of the next generation of insurance people. And that’s a scary thing when, as an industry, it’s been a people driven industry, like a lot. And hey, let’s face it, without that information, it could create a catastrophic turn of events as the industry moves forward if we can’t keep the flow of knowledge moving down.

Brad Neal:

Absolutely. And that’s a great thing to latch onto from the report. Obviously having done these since back in 2007, as we’ve looked at the demographics changing in the industry, we have seen the boomers declining, the millennials rising. There’s no shock there. But that’s exactly what we’re concerned about as well. Because when you look at this report, it says that 8.5% percent of the workforce looks to be ready to retire in the next five years. And while that in itself may not be too shocking, what might be surprising is that 15% of those are in senior management, which speaks directly to your point about the knowledge drain that we expect to have happen.

The positive thing is that most people in the responses we had say that they’re very happy with the training they’re getting from their organizations in the industry, which is fantastic. But I think what we’re hearing is missing is that maybe developmental side, not training so much, but the development. So senior individuals showing people what it is they do, how they do it, why they do it, in that mentorship role about how to move people from where they are today into those senior roles before these individuals retire.

Pete Tessier:

Brad, the middle management gap, you just sort of referred to it a little bit. It’s a tough one because we have this area where companies are always going through transformation it seems right now, whether it be led by technology, whether it be led by purpose and identity or even marketing and brand, and some people don’t want to go along with transformation. How has the evolution of insurance affected the talent and the accessibility to talent? And I guess where I’m going with this is are companies in all parts of the ecosystem looking for talent that maybe they didn’t look for 10 years ago?

Brad Neal:

Yeah, there’s no question there’s a rise in some of those new jobs. So AI, data science, there’s definitely an interest in that. But what’s interesting to us is that the same jobs that were in demand back in 2017 prior to COVID are still the jobs that we’re seeing today. The most urgent recruiting needs are in actuarial, adjusters, and commercial underwriters, and the hardest ones to retain are the exact same. And that is the same picture we had since 2017. So in a role-specific way, nothing has really changed other than it kind of is a siren for us to say we really need to look at how we’re going to fill those moving forward.

Pete Tessier:

Brad, one of the things with the actuary side and the adjuster side, the AAs. I don’t know why I’m coming up with that now, but because they’re related but on both ends of the spectrum. But we’re seeing that, one, there are a lot of challenges in finding people who are going, particularly the actuary stream, who want to go into it. But then we’re also finding that there’s a lot of challenges getting people to be adjusters. It’s a grinding job. How has the general consumer landscape and the nature with which claims have changed affected people’s desire to be adjusters? That is one job position in this industry that I keep hearing nightmare stories about, just of sheer burnout.

Brad Neal:

Yeah, and our demographic report doesn’t really speak to that per se, but I just know from my role here at the Institute speaking to individuals in claims, grind is exactly the word that’s being used. Burnout as well. Especially looking at the changing customer expectations that have happened over the last five years with everything being available all the time, any time, at your fingertips. Claims people are just being pushed further and further down that customer service slope while being constrained by the fact that they’re responding to a contract. So I think we’re seeing that more and more, and that is one area where not only is it hard to get them, it’s hard to retain them. And you see that as a result.

Curt Wyatt:

And as we go through that sort of life cycle of people within the industry retaining, bringing new ones in, we’re also trying to remain competitive in the overall economy here in Canada. And we’ve seen inflation. It’s the topic of the day. I mean you cant open the Globe and Mail and not read an article about inflation. So the insurance industry is no different. I believe it’s responded. And I think that today the wages and the benefit packages are much better than they were 10 years ago. But in addition to what you get in your bank account every two weeks, what are you seeing that the industry can do to draw in and beef up its aha factor when trying to either keep employees loyal or bring people into the industry, I suppose.

Brad Neal:

You bring up two very good points. One is what’s in it for me? And we can talk about that. But just to your last point there, bringing people into the industry, that is something that I think was highlighted by our HR survey that comprised part of this was that it’s the lack of public’s understanding about what we do as the industry and what a great industry it is. That is one of the challenges we have as an industry in trying to attract talent. Those of us that are in it, when you look at the numbers, those of us that are in it stay in it because we realize what a great industry it is. But we don’t do a very good job of promoting it. So that’s to your second point.

To your first point about the actual compensation and what goes into that makeup, obviously compensation is top of the list. It always has been, probably always will be. And certainly with the inflation factors today, we don’t see that changing. But what we do see beyond that, flexible work arrangements. I think we all know hybrid is here to stay in one shape form, but that clearly is important to people. And I think that also feeds into that economic piece because there’s cost associated with going into the office.

Good healthcare and benefits. And when I say benefits, health and dental, that’s one thing. But what we really saw in this demographic report was the importance of mental health. In the prior two years, when you looked at what was important to recruit people, mental health was down at the bottom of that list. When we asked people what was important to stay with their existing companies, mental health jumps up to second after compensation for the coming few years. And I think that is a huge shift, and I think speaks also to what we’ve all been dealing with through COVID, which is that the stress from work, life, and everything else going on, we’re going to see that more and more, that becomes more important, maybe not more important than compensation, but relatively more important than some of the other things that we might think of in an employer package.

Pete Tessier:

Brad, one thing I know from talking to fellow brokers and other industry people, whether the company side, the claims adjusting side, and all the entities in between, is that when it comes to attracting new talent, there is, one, a big pressure point on entry compensation. The other part is there is a huge issue when it comes to movement, upward trajectory. How fast can I get someplace? We have a demographic that expects to move quickly. We also, as an industry, are trying to pull people in who can literally make $50,000 a year doing nothing other than making TikTok videos.

And I’ve always said this from an organizational standpoint, people are great, but we only see their best foot forward when they apply for a job because they want to get the job. But every time we hire someone, it’s a little bit like a lottery ticket. And we need to increase our chances of having a winning lottery ticket. And the only way to do that is to get more and find people who are suitable to the industry. Because insurance is kind of an inverse world. We live in the inverse of how logic outside of it happens. So where my question goes is what do you think you’re going to see in the future that helps people attract in, like you mentioned mental health, but how are we going to address competition from outside of industry on things like compensation and upward trajectory for career opportunity?

Brad Neal:

Yeah, great question. The one thing that’s clear in our research is that the most  competition for staff is internal. So it’s us as an industry trying to pick people off from other companies. And I think you also noticed that, I know your last podcast was on MGAs. I think that’s also driving part of this within the intra industry competition is the rise of the MGAs and the fact that they’re looking for seasoned commercial underwriters to come and do their highly specialized underwriting. So we’re seeing that within the industry.

Outside the industry, I think it comes back to understanding what makes this industry great. People that are in it get it. But when you’re outside the industry, I think a lot of people see it as home and auto. And auto’s at best a grudge purchase. And people don’t see the opportunities that the new cyber world, the new MGA world, there’s a lot of opportunities here in this industry. And I think that’s what we as an industry have as a challenge in front of us for the future. Did that answer your question?

Curt Wyatt: 

Oh, for sure. Yeah. And it sort of leads into one big part of the study, which is the concern around senior underwriters and underwriters in general, either moving within the industry, whether it be out to a retail broker channel where potentially they have programs they need underwriting in-house, or like you just described, Brad, the MGA and the increase in the number of MGAs that are specializing in different types of underwriting and need people with experience. And our large insurers in the past have been pretty good, I suppose, at keeping up to the trend of people coming and going. And the industry sort of, like you say, trading within itself.

How do you see that pattern maybe changing in the future? Do you guys, through your research, have you picked up on any changes or are you seeing any differences in enrollment in classes? Has it picked up? Are we developing more underwriters than we have in the past? So that our listeners can sort of get an understanding that, oh, okay, it’s a challenge, but we’re at least going in the right direction here. We’re going to, not fix, maybe help the problem continue to find new people, let’s say, or train new people.

Brad Neal:

Yeah. And I think that’s a perfect question for that because it highlights the fact that we’ve got a lot of people in the industry, maybe in a personal lines role, that want to get into commercial lines or they see an opportunity in commercial lines. And I think just think by its nature, because commercial lines is more complex, inherently more complex, it leads to that need for more education. And it’s not something that you can just take a three-week course, and all of a sudden you’ve got that education. It needs to happen over time. And I know we have a program that does that. It moves you through, from a starting personal lines underwriter to an intermediate commercial underwriter over nine months. I know there’s a number of college programs that are out there that give you some indication there. IBAO’s got some great partnerships there.

But I think unfortunately it comes down to you need the education to understand what is going to happen. And that only comes through time. It may not have to be seven years, we’re not making brain surgeons, but it is complex information, and you do need to understand the fundamentals to be able to understand the subtleties that come with more complex commercial. And that just takes time. And I think you also mentioned earlier the brain drain that’s happening. I think there’s a great opportunity for some of those senior people, whether they be underwriters or managers, to come back and help some of those individuals, whether they be junior commercial today or personal lines, develop into those more senior commercial roles because that is where the future of the industry is going to lie as well.

Curt Wyatt:

Brad, our industry has changed. I mean, at one time when I started, we had the three-part memo, and now we’re onto portals and all these other things. And as a result, it’s had to change the way we work. What are you seeing that the skillset needs to change, and what are you seeing as an organization on how you can address that skillset requirement as we move forward?

Brad Neal:

Yeah, great point. And we’ve seen this come out very loudly in the demographic research is the change in soft skills becoming more important and technical skills maybe taking a backseat for those newer employees. HR professionals are looking for adaptability, flexibility, critical thinking, collaboration, and teamwork. And I think a lot of that comes out in the last couple of years through COVID. Managing at a distance requires managers to rethink how they’re interacting with employees, and it really highlights the importance of relationship management becoming more integral.

And I think that is something that we need to just be aware of as the industry, and hopefully I think we are very good at that in the industry with the relationship management, but hopefully people outside the industry that might be looking to get into the industry see that as a positive. That it is a people business. We do have great relationships within the industry amongst people, and that is also a draw for people. But it really is very clear that those skills of adaptability, flexibility, critical thinking, collaboration, have become more important from an HR perspective and what they’re looking for in some of these newer industry professionals.

Pete Tessier:

Brad, one thing we’ve heard in the past is the contradicting view that insurance brokers have of themselves versus what the public sees valuable from insurance brokers. When you did the survey, how much input did you have from insurance brokers, and what did they see as top skills because they’re the ones making the loudest noise about the challenges in this marketplace when it comes to finding people, skilled people, licensed people? What did the survey point out?

Brad Neal:

That’s a great question because I was surprised at what came up in that context. The largest cohort we had responding to the survey were brokers by percentage. And when you looked at the skills that they valued, I think I might’ve mentioned earlier that adaptability, flexibility, critical thinking, collaboration, that was all part of it, and that was really not surprising. What was surprising is that advising actually came at the bottom of what skills they found were most important. And having been a broker myself in the past, the advice you give is really the unique competitive advantage you provide. So I just thought that was interesting from a valuing skillset perspective that it came in below some of those other skills such as collaboration, critical thinking. But I guess if you put those two together, you should be able to provide advice. So maybe it was just a definitional issue, but it did come in at the lowest part of the chart for importance.

Pete Tessier:

Brad, earlier I brought up the idea of companies and entities in the insurance ecosystem going through transformation and such. I think going back to what you’ve just answered here, I think one of the problems we have as an industry is are we diversifying the way compensation and opportunity are arriving in traditional incumbent players versus the opportunities that may happen in newer, more, how shall we say this, nimble entities where people can come in with their experience, get small equity stakes, have some sort of ownership in it?

And I will be really blunt. I think the industry has absolutely seen huge financial windfalls to those in the distribution channel who have started something, bought something, grown something to the point that why would I go and work for someone else when I can get an equity stake and build something myself that one of these entities is probably going to take a shot at. Do you think we’ve got to modernize how we bring top people into the industry and keep them? Because there’s a lot of things that could be done, but insurance is very different in how it works, right? It’s staid. And when you’re an incumbent player, as I’ve said before, change doesn’t just happen slowly in insurance. It happens glacially slow. And we don’t see a lot of dynamicism from our incumbent entities. Am I picking up on this right, or do you think I’m way off the wall like most people say?

Brad Neal: 

I don’t know that, I know our demographic research doesn’t speak to that directly, but I wouldn’t disagree with the slow to adapt comment. And I know that private equity money has certainly changed the M&A game, and we see that every time we pick up the Canadian Underwriter as well. So I think there are changing benefits, rewards for individuals. But how that attracts people, I don’t know if that’s just taking somebody who’s got a great idea. I just don’t see a lot of disruption coming from outside the industry at this point. It seems to be the M&A and consolidation being driven by the financial aspect that’s moving a lot of this forward right now. I’m not personally seeing a lot of new innovative products coming out from the mainline players, but maybe that’s to your point. But I also don’t see innovative products being quickly delivered by some of the more nimble players either.

Pete Tessier:

Brad, I want to just sort of say thank you because you’ve really shed some light on some things. And what the Institute’s doing, providing this guidance back to the industry, and how it sort of fits together. And just before we go to close here, where can people find this report? How can they access it? That’s an important thing to know.

Brad Neal:

Yeah, thank you for the opportunity. It’s on our website, insuranceinstitute.ca, under research reports and demographic research.

Curt Wyatt:

That’s awesome, Brad. And people go check it out. Like I said earlier, it’s 70 pages, but it’s a quick read, and it does point you in a lot of directions on things that you should be thinking about as management and where you’re going with your organization. And thank you again to the Institute to continue to help our industry see where it needs to be and give it the tools we need to be successful in the future.

Brad Neal:

Okay. Thank you very much for the opportunity, Peter and Curt.

Pete Tessier:

Hey, you’re very welcome, Brad. Thanks for joining us on What’s On Dec?

Outro: Thanks for listening to What’s On Dec?, the Canadian Underwriter podcast.