Insurance industry still faces recruitment, retention challenges

One of the biggest challenges – some would say crisis – facing the insurance industry is employment recruitment and retention. There are a record number of unfilled jobs in the industry, with total employment down 85,000 from 1.56 million just two years ago. One survey recently showed a 10-year low in layoffs and a 10-year high in the number of people who are quitting.

Moreover, say talent consultants, the industry is “aging out,” with a huge number of workers facing retirement in what has been called the "great retirement." And recruiting new talent is a challenge as insurance doesn’t top the list of opportunities for young people or college graduates seeking employment. The U.S. Bureau of Labor Statistics in the first quarter of this year said there were 386,000 jobs available in the insurance sector in technology, actuarial, analytics, claims, and underwriting. An annual insurance industry labor market study by the Jacobson Group this year found recruiting difficulty remains high, with companies saying that nearly all positions are still difficult to fill.

In total, 25% of companies said the ability to recruit and hire talent has become more difficult compared to the prior year. About 29% of Life/Health companies feel it has worsened compared to P&C companies at 23%. Large companies had the most difficulty, with 27% responding that it was more challenging, compared to 21% and 20% for small and medium-sized companies, respectively. Total industry turnover, voluntary and involuntary, was nearly 15% for the previous 12 months.

Advisor recruitment cited in financial performance

In light of this, a line in Northwestern Mutual’s annual financial results in February jumped off the page. The company partly credited its record financial performance with its investment in new advisor recruiting and development, ”which ended the year with nearly 7,500 full-time financial professionals, the largest and most diverse group in the company’s history.”

Asked if Northwestern Mutual was an outlier compared to its industry peers when it comes to recruitment and retention, officials there agreed it probably was, but also agreed the hiring challenge is a tough one.

”The industry does not have the capacity to meet the demands and the needs of society in this country,” said John Roberts, Northwestern Mutual vice president of Field Talent & Performance. “There are fewer financial advisors than there were 15 years ago and the average age of our financial advisors is getting older every year. We're not replacing that talent with new talent.”

But Roberts believes Northwestern Mutual has an advantage over its peers when it comes to recruitment and retention. The company has grown the number of financial advisors successively every year since 2011.

”One of the things that we pride ourselves on at Northwestern is that 99% of the new advisors that we license and register every year are organic,” he said. “So, it's new talent to the industry that we are training, developing, and setting on the path of being able to build a financial planning career and impact their communities.”

Employee retention a struggle

Still, it’s a low yield strategy, Roberts said, when it comes to employee retention. The company recruits between 2,500 to 2,700 new full-time advisors every year and within five years just 300 to 350 are still with the company in a full-time capacity. That sounds low but probably is a higher ratio than the industry as a whole.

“When you look at Northwestern relative to the industry we stand apart because most of the industry seems to be focused on finding talent that might be a better fit from someone else's model for their model, and it’s kind of trading talent from one broker dealer or one RA or one insurance carrier to another,” he said, “ There are a few out there that are doing organic growth, but we’ve committed to bringing more advisors into the industry. We think it’s easier to wire people from the beginning than to try and unwire them from where they were. So, I do think we’re a little different in that regard.”

Nevertheless, Roberts said, recruitment is “damn difficult” in the current environment.

“Being a mutual company, we have a little benefit of not needing to meet quarterly earnings requirements, we can make investments that have a really long tail on them,” he said. “I think for a company that has a more short-term approach, it's really challenging. But it's really tough, either way. The insurance space is certainly not attractive for Gen Z, or for new job seekers.”

Roberts said the key to improving recruitment in the insurance industry is to diversify the ranks and have a workforce that’s reflective of the market it needs to serve.

“About half of our new advisor recruits are women or people of color,” he said. “That has been the predominant source of growth for us over the past five or six years. In fact, if you were to look at just our white male advisors, we'd have very modest growth. So, I think that's number one is if we're going to grow, and we're going to attract new talent, we've got to continue to diversify.”

Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].

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Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].