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While their departure may have been delayed by a struggling economy, baby boomers heading toward retirement pose an ongoing challenge for the insurance and brokerage industry: how to attract the next generation of talent to its workforce.
“Our industry will face a significant generational change over the next decade, one that I don't believe has begun in earnest yet,” said Mike Sicard, chairman, president and CEO of USI Insurance Services L.L.C. in Valhalla, New York.
Baby boomers are defined as those born between 1946 and 1964. And according to the Pew Research Center, millennials — those born between 1981 and 1997 — soon will become the largest living generation. They supplanted Generation X — those born between 1965 and 1980 — this year as the largest portion of the U.S. workforce.
This, however, looms ominously when considered against The Hartford Financial Service Group Inc.'s survey this year that found only 4% of millennials had insurance on their work wish list, besting only wholesale trade and utilities at 3%. Arts and entertainment topped millennials' list of preferred jobs at 40%, followed by education at 36%.
“There is an aging of the distribution force,” said Howard Mills, global insurance regulatory leader at Deloitte L.L.P. in New York. “The concern is that many of them will be moving toward retiring.”
“This is a topic of great discussion in the industry. It's a topic of great concern and it represents a very real challenge,” said Mr. Mills.
“Clearly the industry is old. It's populated by a lot of baby boomers, certainly on the distribution side,” such as brokers and sales, said Timothy J. Cunningham, managing director at Chicago-based investment banking and consulting firm Optis Partners L.L.C.
“Less than 5% of young people choosing their career paths are giving insurance a serious look,” said Kathleen Reardon, CEO of Bermuda-based Hamilton Re, a unit of Hamilton Insurance Group Ltd. “If every person who graduates from an insurance or risk management program of study goes straight into the insurance industry, we still won't fill our employment needs. So, it's not an exaggeration to say that we have a talent crisis on our hands.”
“We face a gap as experienced industry talent retires without enough experienced professionals coming in to fill the need,” said Mr. Sicard.
“The group that was 45 years old 20 years ago should have been recruiting the 25-year-olds, but did not,” said Mr. Cunningham. “Now they are age 65 and they don't have an adequate number of 45-year-olds to come in behind them.”
Many industry businesses' current workforce spans four generations, Ms. Reardon said. “These employees are a study in contrasts. Our more mature executives are the product of education and training during the "60s and "70s; our youngest, the millennials, have never experienced life before the Internet. This heralds an era of resetting how we define the work day, our work environments, and our approach to training and development.”
“The responsibility of recruiting and retaining successors in our business falls on us seasoned insurance professionals to define and articulate a career path that is rewarding and fulfills the candidate's expectations,” said Rupert C. Hall, president of Golden Bear Insurance Co. in Stockton, California.
To this end, Golden Bear established an internship that began in 2002, has included 19 students since then, and will expand to a two-year program this year, he said.
Overcoming millennials' generally unfavorable view of the industry is the challenge.
“They want careers that match their expectations, which means they want flexibility and the ability to work remotely,” said Mr. Mills.
Indeed, according to the Hartford survey, 43% of millennials say companies should promote the fact that they provide flexible work hours.
Another priority is broadening the industry's diversity, which Mr. Cunningham said may be a greater challenge for insurance brokers than insurers.
“The distribution side doesn't have a lot of diversity,” said Mr. Cunningham. “I think you see some companies on the underwriting side have had to focus a little bit more on diversity.”
For millennials that do give the industry a try, they “can find a place to have an immediate impact in an entrepreneurial environment ... while identifying and solving some of the most interesting and high-stakes problems for companies and individuals,” Mr. Sicard said.
“Simple math indicates that in order to fill the gaps in our workforce that retirement is going to create, we're going to have to move millennials into management roles sooner than we would have done under normal circumstances,” said Ms. Reardon. “We'll need to develop strategies for leadership development that appeal to millennials but don't undermine our ability to establish sustainable management.”
The Risk & Insurance Management Society Inc.'s Central Ohio Chapter wanted to do something to make a lasting impression on the sector and believed a scholarship would be perfect.