Solvency II drives up pay

Solvency II is driving demand for risk professionals in the insurance industry and pushing up pay scales, according to executive search firm Kinsey Allen International.

The updated regulatory requirements for insurance firms operating in the European Union are scheduled to come into effect late 2012.

Combined with the lack of suitable candidates qualified to help insurance companies meet the deadline this is pushing up day rates for the right professionals.

In 2009, the average day rate for an interim risk analyst was £310. But that has now risen by 30% to £400.

Meanwhile retention bonuses have risen from 10% of day rate in 2009 to 20%. Contracts have stretched from three months to six months.

Filling gaps

Lorraine Silvester, risk consultant at Kinsey Allen International, said: “At the end of 2009, approximately 40% of the insurers operating in the UK had a fully operational Solvency II team.

“They are now having to fill the gaps which is difficult because it’s a small pool of talent. There are probably only 400 full time risk experts working in FTSE 100 insurance companies at the moment so the gaps are being filled with interim employees and external hires.

“At the moment, 70% of the interim risk professionals we are placing in insurance companies are being hired to work solely on Solvency II.”

Kinsey Allen said insurers are looking for actuaries as well as financial risk and operational risk experts with project management experience. However, those Solvency II experts with change and risk experience with the appropriate “soft skills” are in most demand.

It said retention bonuses could hit 30% of day rate and a 12 month contract will become more common by the end of the year.

Huge growth

Silvester added: “This isn’t a big industry and if the medium sized players decide they need five times as many people on the ground as they did last year - and the biggest insurers quadruple the size of their risk teams - that will have a massive effect on the sector.

“We can expect huge growth in the next two years. By 2012, when Solvency II comes into effect there will be almost 4,500 working on the regulations.

“After that, things will calm down. The smaller players in the industry will see the interim hires they have to make as a short-term necessity but the biggest players look like they’ll be taking a longer term view and will look to absorb the high quality talent they are bringing on board.

“But salaries will rise in the process, from approximately £70,000 at the moment to roughly £90,000 by the end of the year.”