SAN DIEGO – The excess and surplus lines sector is facing a critical and growing shortage of younger employees as more business continues to flow into the sector, industry leaders say.
The recruiting challenge was a topic frequently raised by attendees at the Wholesale & Specialty Insurance Association’s Annual Marketplace in San Diego last week.
To address the problem, companies should try to improve the industry’s negative image, establish training programs and fund endowments at universities, they said.
More workers are needed to handle the E&S sector’s growth, as employees age and retire, observers say. Total annual surplus lines market premiums increased 19.2% in 2022 to $98.5 billion, the fifth increase in annual premiums in a row, according to Oldwick, New Jersey-based A.M. Best.
But finding the talent to take advantage of the demand for E&S business is a challenge, attendees said.
The underwriting talent shortage was “the most frequently talked about issue” at the conference, said Tim Turner, president of Chicago-based Ryan Specialty LLC. “The industry didn’t do a very good job” of training new employees, he said.
“We are going to see attrition due to just retirement,” said Rebecca Gitig, Los Angeles-based head of U.S. primary liability at Aspen Insurance Group.
“The insurance industry is losing a lot of talent every year,” said Alan Jay Kaufman, chairman, president and CEO of Farmington Hills, Michigan-based H.W. Kaufman Group.
Intern programs are not enough to address the issue because those individuals are already interested in insurance, he said.
The industry needs to bring diverse experience and candidates into the sector, said Mike Mulray, Warren, New Jersey-based executive vice president and president of North America at Everest Insurance, the insurance division of Everest Group Ltd.
“I think we’ve made progress, but you’re coming off a low base. There’s still a lot to be done,” he said.
There are not enough people to keep up the sector’s pace of growth, said Erich Bublitz, Kansas City, Kansas-based head of excess and surplus for AmTrust Financial Services Inc.
“We probably as an industry fell down a little bit in getting ahead of the problem, but the explosion of E&S has really brought it to the forefront again, and it’s exacerbated by the fact that the industry is aging,” he said.
The question is how to address the loss of headcount and expertise that is going to develop over the next few years, Mr. Bublitz said, adding that while there is no easy solution, the first step is to talk about it.
A lot of people’s mistaken perception about the industry is that it involves filling out forms and sitting behind desks “and that we’re not in a relationship business,” he said.
The industry needs to make sure people are told that insurance is “a unique opportunity to have a very social experience,” he said.
In addition, “We need to be committed to education and development of people to invest in them and give them a career path,” he said.
Ms. Gitig said Aspen has addressed this issue with a trainee program, where recent graduates “get a taste of our business.”
In September, the company replaced someone retiring at the end of the month with a graduate of the program. The graduate completed a six-month rotation in her unit and later returned to take on the position.
“We’re trying to capitalize on the knowledge” that those with 40-plus years of experience have “before we lose them” to retirement,” Ms. Gitig said.
In addition, the insurer has tried to hire people with different perspectives and backgrounds, she said.
Mr. Kaufman pointed to St. John’s University in New York, which renamed its School of Risk Management, Insurance and Actuarial Science the Maurice R. Greenberg School of Risk Management, Insurance and Actuarial Science. The Starr Foundation, of which Mr. Greenberg is chairman, gave a $15 million donation to the university in 2018.
Mr. Kaufman, who has long stressed the need for recruiting in the industry, endowed a professorship in insurance in 2016 at the Eli Broad College of Business at Michigan State University for an undisclosed amount.
There are others in the industry besides himself and Mr. Greenberg who have also been successful, he said. “Why don’t they establish other chairs, like I did in Michigan?” he asked. “That seed money will stimulate students to think about insurance.”