Succession planning: Handing over to the next generation

Selling or transferring ownership of a business is just one element of succession planning. Firms looking to put in place a clear succession plan must also think about their recruitment strategy.

According to RWA Consultancy, the ageing workforce that characterises the UK general insurance broking community has resulted in a significant rise in “crisis situations”, that have threatened the ongoing operation of the business. 

It reveals that ill health (in particular dementia) and personal tragedy – affecting either the business owner or his or her loved ones – are just some of the crises that have affected its clients over the past couple of years.

“In 2017 we had four cases of firms where a sole owner or key owner has been diagnosed with dementia,” RWA founder Robin Wood revealed in a blog. “In three cases we were able to move quickly and involve family lawyers and accountants, but in the fourth it was a member of staff who warned us.

“A succession plan not only tells the FCA how you intend to deal with retirement, death, tragedy or serious illness, but it also tells others what your intentions are.”

There is a clear link between successful succession planning and talent management, according to the Chartered Institute of Personnel and Development. 

However, a survey of 250 brokers across the UK found that many are struggling to recruit talented individuals aged 30 and below. The research, carried out by FWD on behalf of Ecclesiastical, suggested this was down to a lack of understanding about what insurance brokers do as well as a negative perception of the sector among millennials. 

Clash of the generations?

Nearly half of those surveyed said they were concerned about a talent shortage. Succession planning was cited as one of the three main reasons for wanting to attract young talent, but, interestingly, it was older brokers (aged 46 and over) who were less likely to want to hire more young people. 

While the top three strengths of young brokers were cited as IT skills, enthusiasm and innovative thinking, the three biggest weaknesses were seen to be poor verbal communication, literacy and technical knowledge.

Individuals born before 1980 are described as ‘digital immigrants’ versus the ‘digital natives’ born after the launch of the internet. The two generations tend to prefer different ways of working – a further challenge to overcome for more traditional broking firms. 

Ecclesiastical commercial director Adrian Saunders said: “The industry needs to evolve and adapt to technological advances and competition from disruptors, and younger people have the skills to do this. 

“Tech savvy young talent can bring fresh ideas and new ways of thinking, so it’s vital that we do more to promote the diverse and exciting career opportunities available to young people in the insurance industry.”

According to Graeme Trudgill, executive director at Biba, the broking body’s main manifesto commitment to address any skills gaps in the sector is stepping up a gear.

“We don’t want insurance broking to be an invisible career, so we are delivering on our commitment to attract and retain young talent by launching a new careers in insurance broking document this third quarter. This work has been led by our young broker ambassadors and focuses on some of the roles in broking, such as account execs, business development and claims advisers.

Learn and experience

“It points out why insurance is important, how brokers are at the heart of matters that can bring about societal change, and what people can learn and experience, describing all the best reasons why people should choose insurance as a career,” he said. 

“We are also highlighting what a massive sector insurance is, as well as being a diverse  and innovative profession where brokers from a vast variety of backgrounds are the innovators, developing new products and services for emerging sectors and new risks such as the sharing economy, cyber and intellectual property.

“Our overarching aim is for the work of our committees, working groups and Young Broker Ambassadors to attract new talent, improve professionalism, embrace technology and help with ongoing succession in broking firms,” said Trudgill.