Our current times are so eventful and uncertain that the recent World Economic Forum at Davos coined the word ‘polycrisis’ to describe them. Despite this, AJG Re’s James Vickers’ comment to the Insurance Insider that, “many reinsurers’ cat portfolios will be ‘acceptably profitable’ in 2023 after years of poor returns,” was a display of calm pragmatism and a reflection of our industry’s ability to endure turbulence.
Where the financial and technology markets are seeing retrenchment and redundancies, Insurance is more robust in spite of weakness in some lines and a slowing of growth in others. Hiring remains very much part of most insurance companies’ strategic growth plans into Q1 of 2023, albeit mainly at a more measured pace than we have seen in Q4 2022.
DEI remains a key recruitment issue. An interesting recent statistic is that a third of the people in senior ESG roles are women and two thirds of new hires in 2022 were women. Although less so at a senior level, similar proportions apply across the insurance industry. There are two parts to this equation. The first is that concrete steps are being taken in most areas of financial services to address gender imbalance. The second is that there is not an infinite supply of women; many companies are finding it hard to retain female talent. This reflects our experience at the Sheffield Haworth Insurance Practice, where two thirds of the people that we placed in 2022 are women.
Progress in other areas of DEI has been slower. There are traces of success in terms of ethnic inclusion but very little progress has been made in finding proportionality in sexual orientation, age and disability. In this area retention is again an issue. Company cultures have to change to broaden inclusivity in a sustainable manner.
Recent progress in InsurTech is also front of mind for most senior leaders and this is impacting hiring. Five years ago, a technology-driven Specialty insurer was a prophesy. Now the demand for tech talent is ever increasing as digital players take an increasing share of the market – whether on a volume line like SME Cyber or at a digital-following syndicate like Ki.
It is not just new entrants that are seeking tech talent. Traditional insurance entities are working with technology companies to improve their profitability through operational efficiency and pricing.
Finally, with the UK government looking to entice retirees back to work, let’s turn to the question of age. The London insurance market is not getting any younger. 50% of the people working in the market are 40 or above. In 2014 it was just 44%.
There is an argument that experience is more important in the current market as more of the junior roles are done electronically. But let’s not deceive ourselves; the ageing market is a problem. Many companies are looking at what will attract Generation Z who see the world in a new way. They do not work to have a lifestyle; their work is part of their lifestyle. This raises questions of educational fulfilment and home/office balance. Maybe now is the time to get rid of those cheap and heavy laptops and give them some kit that’s a pleasure to use.
Having looked at some of the longer-term industry talent trends in 2022, let’s take a look at some of the key moves we saw in Q4 2022 and what they indicate about what’s going in the market.
Insurer moves in Q4, 2022
The talent market remains buoyant within UK underwriters. Rates are still generally strong, and in many cases stamp capacities are increasing. Underwriters have good reserves and recent stamp increases show a confidence that was also reflected in recruitment.
Other than Cyber, which we deal with in a later section, Q4 has seen a lot of moves in the Marine sector, with many open senior level roles being filled, particularly at Talbot and Chubb:
The long-term trend of digital transformation has remained significant in 2022. Larger players, especially at the reinsurance end of the market, have been quietly developing their future operating models for some time, often combining with smaller tech firms as part of their build process.
At the same time, smaller, alert companies who lack huge infrastructure budgets have been working with InsurTechs that provide point solutions principally to automate process or to refine pricing. There has also been a trend for insurers to take on more and more tech development inhouse with data scientists, data analysts and developers being hired in increasing numbers.
Recent research suggests that, in the wake of venture capital tightening, InsurTechs are struggling and the market will rationalise. Some will fail, others will be swallowed. This makes them less reliable partners to large insurers who might easily decide to do this for themselves. This is likely to free up tech developers, so we think this migration towards inhouse tech development is only likely to increase in the months ahead.
Environmental, Social and Governance (ESG) is the third area that warrants a mention. The pressure to articulate and report a carbon footprint and to plan a route to net zero requires a lot of work. This is creating roles which are increasingly being filled by talent coming from other sectors. According to Tom Eager , Head of ESG Search at Sheffield Haworth, candidates are coming from asset management, academia, government, and other industries to fill the gap which is often not adequately resourceable with insurance folk.
Finally, it is worth a special mention for Everest Insurance, who look wonderfully positioned for the coming months. Their new Specialty leaders have been arriving over the last few months, according to Insurance Insider’s Talent Tracker. With serious industry leaders like Tim Powell now in place, they look set to have a very exciting 2023.
Broking moves in Q4, 2022
The Association of Executive Search and Leadership Consultants (AESC) reported that 2021 was “the strongest year on record” for the executive search industry. This was also the story for broking where, in the context of rate-led brokerage increases and Covid-led reductions in operating costs, there was plenty of money to be invested in headcount. All the brokers participated, but the largest were probably the most active. This has created a wage spiral so that brokers are no longer the poor relation of underwriters when it comes to salaries.
Throughout 2022 – particularly the last quarter – hiring slowed to a pace more typical to that seen pre-2021. Based upon reported hiring, Aon and Marsh were relatively quiet in Q4 but they have made large numbers of hires over the last couple of years. Other leading brokers remained active in their pursuit of talent in Q4. For context, the number of reported senior hires for Q4 runs:
The Consilium acquisitions include the Financial Lines team of six that moved from Ed. BMS took three from Marsh to build out Specialty binders. Howden and Miller have been building out their Bloodstock teams. The busiest lines in terms of talent movement were Financial, Bloodstock, PV and Cyber. With rates still hardening in most lines, we expect to see a continuation of this activity in Q1.
InsurTech talent trends in Q4, 2022
Q4 was challenging for many InsurTechs. Although large, technology-led MGAs in growing sectors such as SME Cyber sector went from strength to strength, smaller InsurTechs offering point solutions were hit by a massive reduction in venture capital. Indeed, according to CB Insights, Q4 2022 saw the lowest quarterly InsurTech funding since Q2 2018, and the lowest number of InsurTech deals since Q4 2019.
This reduction in funding levels looks set to continue for some time and, as the revenue raised in previous funding rounds gets spent, several InsurTechs will founder, collapse, or get acquired – likely at significantly reduced valuations. We have not seen any InsurTechs collapse yet, but without investment, hiring will necessarily slow.
In hiring terms there are huge opportunities and heffalump traps. Data scientists may be about to become affordable again. However, with Amazon entering the home insurance market, Apple planning to write health insurance from 2024, and insurers likely to continue to build out their inhouse teams, these corporate employers may feel less comfortable, less entrepreneurial, and simply less exciting than the fast-moving InsurTechs that many have cut their teeth in.
Genuine areas of growth still remain in the InsurTech space despite the challenging funding environment. Profitable InsurTechs are certainly hiring. The most successful seem to be the tech-driven MGAs, particularly in Cyber. The next few quarters should also see tech companies with strong balance sheets acquiring companies and teams.
Cyber insurance talent moves in Q4, 2022
Cyber continues to be the most active area of the market both in terms of revenue growth and hiring. In declaring their Q4 financial results Marsh reported a 28% increase in rates quarter on quarter, slowing from 53% in Q3. Market insiders say – off the record – that there are carriers that retreated from this market fearing that rates would fall behind claims, but all reports seem to suggest that the market is still strong and that many of those players want back in even though there are some signs that the market is slowing.
Brokers and underwriters alike are seeking cyber talent, and the supply is short. Reported senior level moves in Q4 show talent moving between broker and carrier, carrier and MGA. This is certainly the area where we at Sheffield Haworth are currently busiest. Notable Q4 market moves in Q4 include –
The arrival of new players in the London market is also bringing new jobs to the market. They start with a general manager but soon build finance, claims, actuarial, and underwriting skills around them. Candidates in this sector are having to decide whether to bet their careers on new entrants with clever technology or back the traditional market.
In all likelihood, the best of the InsurTechs will be bought up by the traditional market in a few years’ time so why not enjoy being at the vanguard of change for a while?