On weekday mornings Wendy Sleat makes the journey into Cardiff city and begins the search for new recruits. Based in the Welsh capital, the executive recruitment manager is the middle of a war for talent.
Her insurance company, Admiral Group, not only has to compete with the UK’s Lloyds of London, Aviva and Legal & General, but a host of European financial services firms and Wall Street giants like Goldman Sachs, which all want the brightest graduates to lead the growth of their products and services.
There is a talent crisis in the insurance sector. Skills shortages have risen significantly in the last year, according to the Chartered Insurance Institute, the professional body. The CII estimates that 73% of insurance employers report a skills deficit, up 15% on 2013 - and 62% struggle to attract new talent.
Banks have tempted business school graduates away from the insurance corner of the financial services industry, which is in dire need of skilled managers and is starting to look at MBA programs to plug its leaks.
“There has been a strong culture of hiring MBAs, predominantly from INSEAD,” Wendy said in an interview with BusinessBecause. It is easy to see why. Admiral was founded by alumni of the global business school: Henry Engelhardt and David Stevens.
“The attraction is that you get the crème of the crop,” Wendy said. Admiral has broadened its business school roots and is now hiring from schools including Bath, Manchester and SDA Bocconi. “The net isn’t limited,” Wendy adds.
As well as Cardiff-based Admiral, the only FTSE 100 company in Wales, INSEAD is seeing demand from insurance groups Liberty and Zurich, according to Adrian Wu who manages corporate finance partnerships.
He said that MBAs are hired by insurers for general management and internal consulting roles – the latter an area of huge employment growth in 2014.
But it is still a small part of the business school’s finance portfolio and it is a similar problem at other schools across Europe.
Students are more attracted to investment banking and other areas of financial services, according to Martyn Drage, a careers consultant who specializes in finance at UK-based Henley Business School.
“[The] MBA is a hugely untapped market in the insurance sector," Martyn said. He added that insurance groups have been behind the curve in proactively and aggressively looking to recruit MBA students, and as a result are losing out to competition from banks.
This isn’t because of a lack of demand but because insurance companies have failed to actively promote themselves to business schools, he said. “There is huge pent up demand because there’s not a lot of awareness,” he added.
A survey of the CII’s 100,000 membership released this month showed that 55% of insurance employers expect to increase headcount over the next year, a 6% increase on 2013.
Ashwin Mistry, president of the CII, said that it is vital that employers make the insurance industry a career destination of choice. “Not only do we have to attract talent, we also have to develop it,” he added.
Tanya Gerrard-White is the director of HR and talent development at Markerstudy Group, an insurance firm based in the UK which employs around 3,000 staff.
She said that insurance is a market where “opportunities are abound” but that it has an “old-fashioned image”. But she added: “I believe if we can persuade the ‘maybes’ that training and mentoring a new wave of talent is the way forward, we would go some way to closing the skills gap.”
This gap is damaging the sector’s growth. An annual survey by PwC, the consultancy, found that that 60% of chief executives working in insurance believed that the limited availability of skills posed a threat to their organisation.
This may be a bigger problem for UK-based insurance groups like Legal & General because of reforms to the individual annuity market brought forward by the government earlier this year.
Large life assurers including Aviva and Standard Life have seen declines of more than 40% in sales of annuities, turning them instead towards bulk annuity deals with corporate clients.
However, most have enjoyed strong overall growth in 2014 and may be looking to expand their workforces.
Admiral employs about 7,000 people across seven countries and the growth of its customer base in recent years has coincided with the running of a strong hiring machine. During the financial crisis many services firms shed staff. “But throughout the recession we continue to recruit and grow,” Wendy said.
Admiral is introducing internships for MBAs, she said, and may widen its portfolio of business schools from which it recruits from. The firm has operations in France, Spain, Italy and the US and new hires have flexibility in where they chose to work, Wendy added. Roles are mainly in business development – consulting – and project-based work.
But insurance hiring isn’t limited to the UK or Europe. Liberty Mutual, based in Singapore, has been scooping up MBA students in Australia for its country leadership program in APAC and ASEAN, according to John Gurskey, director of the Melbourne Business School Career Management Centre.
“The markets in these regions are growing much more rapidly than Australia and require multilingual leadership talent,” he said.
One area of potential growth is fund management, a part of the insurance industry where more senior hires might typically enter, according to Martyn from Henley.
Firms including Standard Life, Prudential and Old Mutual, which was poised to float its asset unit on the US stock market last month, have asset management arms which are seen as crucial business areas because pensioners are demanding more flexibility in how they access their savings.
For life insurers, it is more important for them to be accurate in their longevity assessments because pensioners are living longer than ever before.
Insurance firms have traditionally gathered limited information on customers but they are starting to ask more detailed questions. This shift allows them to use “big data” techniques to assess life expectancy, which could help them to attract more corporate clients who are looking for products that will help them manage the risk of workers who live longer in retirement than they were expected to.
MBA students must understand the implications of data analytics, John said. “MBS students learn to analyse data in a way so meaningful [that] business solutions can be created to solve a client’s problem.” It has proved so successful that the business school plans to launch a master of business analytics program in 2015.
Research published last week by Tech Partnership, the employers’ network, and SAS UK, a business analytics firm, found that a skills shortage of managers skilled in big data techniques was fuelling a demand for 56,000 big data jobs in the UK each year.
The biggest demand came from financial services employers including insurers, which accounted for 20% of all positions advertised in 2013.
MBAs will have an advantage in the insurance sector because they develop skills in an international environment, according to Vladimir Brenner, a Bath MBA graduate who spent two years working at Renaissance Insurance, a leading firm in Russia.
“You understand the cultural differences on a much more granular level, which allows you a much stronger interaction with a customer,” Vladimir said. He added that he developed these skills while working with a diverse MBA class which was made up of students of at least ten different nationalities.
It is a sentiment echoed by John, who said that returning nationals from MBS can speak the local languages at Liberty Mutual’s locations in Asia.
“[They] understand the cultural context, and have networks already in place that allow them to grow and assume responsibility more rapidly,” he added.