Looming succession vacuum threatens future sector leadership

The most commonly cited staff conundrum across the insurance sector of late has been the ferocious battle for young talent – however, there are now fears that intermediaries are facing another employment crisis, this time concerning staff who are aged between 30 and 50-years-old.

The problem, according to market commentators, is the lack of opportunities for progression and succession, with some long-term staff finding that their path to the top is being blocked by senior management who are simply unwilling or unable to retire.

In turn, this reduces the number of available roles for employees that have knuckled down for years at a particular firm with the expectation of moving up the ranks, leading to a steady drain of experienced employees – not only leaving their companies to look for progression elsewhere, but increasingly leaving the insurance industry itself.

This trend is creating a real market-wide concern that the years ahead may see a succession vacuum, with those left working in the sector not ready for greater responsibility or leadership.

Mike Latham, chief executive at broker Verlingue UK, said this problem is very real.

“A number of brokers have sleepwalked into a succession crisis,” he explained.

“The market needs to have a clear vision of succession and while it is true that there are those who feel they are not ready to hand over the reins, we are seeing people retiring and some are looking at a better work-life balance, which has seen them hand over certain responsibilities to others and maybe look at a four-day [working] week, for instance.”

Latham emphasised that “there is a talent crisis and it is one we have to recognise”.

He continued: “It is not an easy conversation to have with one of your colleagues. However, you have to be honest and say [that while] you value their expertise and their commitment to the business, they are blocking progression.

“Many will recognise the need for change and will take up a role which allows that progression.

“Within our business, we recognise the need to train and develop staff. For far too long, the sector has simply regurgitated the talent in the market – hiring that talent but then simply not investing in it to enhance skills and create a path for progression.”

Internal hiring

Latham added that at Verlingue UK, the broker is keen to invest in the talent it already possesses.

“However good an external candidate looks, you never know what you are getting until they are in the business, so an external hire is a leap of faith,” he said.

To attract the best and brightest talent, the insurance industry may need to be turned on its head, Latham added.

He explained: “At present, we have this pyramid of roles in the business with insurance at the top.

“At the bottom, you have a wide range of roles such as human resources, risk management, data management, sales or marketing.

“We need to turn that pyramid on its head and highlight the range of jobs that we can offer. However, [this] has to come with a clear structure and strategy [that] delivers progression and succession.”

Sniffing out opportunities

Charlie Radcliffe, deputy chief executive at 40-year-old broker BPL, agreed that there are many brokers who are frustrated that their career progression has slowed or stalled as those above them remain steadfastly in position.

He told Insurance Times: “Opportunities do become difficult and [brokers] may look to move company, industry or role.”

Radcliffe noted that while much of industry’s focus is centred on attracting the next generation, the sector still needs to look at the retention of those who are in the 30 to 50 age bracket.

“I do not really hear of much concern for [that] cohort [because] everyone tends to be focused on the younger generation and creating [a] diverse talent pool,” he said.

“We need to focus on those who are already in the business and not just [people that companies] are seeking to bring in.”

Although admitting that no one company exclusively has the answers when it comes to this talent conundrum, Radcliffe believes that his firm is an outlier in terms of its strategic approach to retaining and engaging staff.

He explained: “We are in a slightly different position in terms of our senior leadership team. We have a succession planning structure in place and I am one of two deputy chief executives who fall within the 30 to 50-year-old range.

“Indeed, our chief executive and chair are young and we have a focus on making sure that the staff understand we want to provide opportunities.

“We are different as we are a staff owned business, so staff have a real interest in the company’s success.

“The older generation are reliant on the younger generation to keep the faith and ensure that [the] leadership team is actively refreshed and renewed.”

Radcliffe noted that advancements in healthcare mean that business leaders in their sixties are still keen to play an active role within their organisations.

“It is a positive that you are not losing that experience,” he added. “Our founder still works at the company. He is our former chair and is now a founding director, so we still have their experience [within the business].

“[However,] we do focus on succession planning and who will be the next deputy chief executive, chief executive or senior management.”

Trade association Biba further confirmed this succession issue as one that is a real concern for its broker members.

“Our members have told us that we need a new talent pipeline to address the skills gap we know is coming in the next five to 10 years, both in management and at entry level,” a spokesperson told Insurance Times.

Employee benefits

Steve Collinson, head of the UK people team at insurer Zurich, commented that because the insurance sector is “relationship-based”, employees that have “skills and experience honed over the years will always be vital to companies”.

Therefore, “to attract and retain these employees, companies need to ensure they’re a great place to work and consider what’s important to people as they progress through their career – like life stage benefits and flexibility”.

He continued: “At Zurich, almost eight in 10 UK employees are aged between 30 and 50, with 28% aged 30 to 40 and 51% aged 41 to 50. Their experience, knowledge and the relationships they’ve nurtured are crucial.

“Alongside this, it’s still important to build a pipeline to bring [in] younger people who can then learn from their established colleagues.”

Collinson emphasised that “great people practices should always include a strong approach to succession planning, alongside great benefits that make people want to stay with your firm”.

He explained: “We take care to seriously consider colleagues’ career and development capabilities so that when opportunities do arise, we’re able to encourage people to take on broader roles at the right time in their career.”

Stealing from other sectors

Collinson added that the insurance industry does have a fight on its hands when it comes to talent.

According to the Talent Development Report 2024, published by Insurance Times and RSA in September 2024, other sectors broker respondents believe UKGI should pull talent from include finance (85%), business admin and support (83%), professional and technical (74%) and information technology and communications (57%).

“When it comes to attracting talent from outside our industry, there is a question to ask as to whether insurance is positioned as the attractive career choice we know it can be – the challenge is to reach people who wouldn’t ordinarily consider a role in the sector,” Collinson said.

This viewpoint is confirmed by Insurance Times and RSA’s report – 80% of broker respondents cited the industry’s reputation and attractiveness as the main barrier in terms of attracting talent.

Collinson continued: “As an industry, we need to do more to make insurance attractive to people who might not ordinarily consider applying here and, in many cases, it’s for the roles we are all looking at for the future of our industry – data scientists, artificial intelligence and automation specialists, for example.”