Where brokerages stand on increasing compensation to attract talent

Few Canadian P&C brokerages are looking at increasing compensation to attract and retain talent, even as they continue to try to distinguish themselves from their competition, a new industry report found.

Like many industries, insurance has seen a shortage of talent and also an ever-present “war for talent.” However, only one in three brokerages who participated in Smythe LLP’s 2023 Property & Casualty Insurance Brokerage Report said they plan to increase compensation as a way to attract and retain talent.

“Brokerages have increased wage expenses significantly over the last two years, and so are now turning to alternative methods to appeal to top talent in the industry,” said the report, released Tuesday. “One strategy that was popular with the respondents to our survey is flexible work arrangements — 80% of them indicated that they plan to allow employees to work flexibly, i.e., not requiring in-person office attendance, flexible working hours.”

Smythe’s survey included 111 broker participants. The survey found nearly six in ten respondents (59%) had hybrid work arrangements at their brokerage, while 27% were “fully mandatory in the office” and 14% were fully flexible.

But it appears brokerage size plays a major role in workplace flexibility.

“Almost half of all smaller brokerages (i.e., those with fewer than 25 employees) said they are back to office full-time, a strong indication that the size of the firm does impact where it falls on the spectrum between fully remote and fully in-office,” Smythe’s report read. “This could be because of the cost-prohibitive nature of implementing the security, communications and technological infrastructure required to maintain workforce cohesion at that size.”

At the same time, even though most respondents embraced flexible work arrangements, they weren’t sure it was positive. Only 18% said working from home would have a positive impact, with 46% saying it would have a negative impact and 36% were neutral.

For talent retention and attraction strategies, 79% of brokerages said they plan to enhance their internal training, mentoring and coaching programs to help employees improve their skills and knowledge. “An additional benefit of this is that training programs have been found to help create a strong internal talent pipeline, reducing voluntary turnover and enabling more promotions from within the company.”

Another popular strategy was introducing or enhancing employee engagement programs such as social activities, team-building events and retreats, which improve morale and job satisfaction (with about 50% of brokerages saying they were planning to implement this strategy).

Canadian Underwriter’s 2023 National Broker Survey found similar results, with 55% of 150 polled brokers saying employee recognition programs have been beneficial to improve brokers’ performance over the past two years. Performance-based compensation was important for 69% of respondents.

In Smythe’s report, nearly one in three brokerages (29%) also said they were considering offering equity ownership to their employees.

CU’s 2023 National Broker Survey found similar results in recent years, with only 14% saying employee share-ownership plans improved brokers’ performance, down from 22% in 2022 and 21% in 2021.

Outsourcing certain functions has limited appeal — only 20% of brokerages are already using or considering outsourcing as a viable option over the next two years, with 54% disagreeing this is the case.

 

Feature image by iStock.com/iQoncept