Those who are managing the world’s biggest risks are neglecting one of the major hazards for their own business – continuity of skills. David Banks looks at the talent crisis facing the London market and its interests abroad.

A reinsurance CEO in 2008 will take justifiable pride in his or her senior team of underwriters, but the truth is they often represent a thin blue line protecting the company’s interests. What if, for example, a senior cargo underwriter decides this is the year he wants to take early retirement? Experienced staff at the highest levels are few and far between and managers fear that the more specialised professionals are becoming increasingly difficult to replace.

It’s all a far cry from 20 years ago when reinsurers and senior risk managers could afford to become familiar with a range of lines, with less rigidity and fewer regulatory obligations. As one CFO puts it: “Technology and regulation play their part in creating a much more defined role for any senior executive nowadays. Add to that some truly complex and evolving negotiating strategies in every line and you have a landscape of some very deep niches.”

As reinsurance becomes more global and enters new markets, practitioners require unique soft skills and local knowledge, as well as an understanding of local legislation, creating more and more complex and costly requirements of risk modelling and risk assessment on the part of both reinsurer and reinsured.

New business streams and more defined specialisms usually mean talent must be brought in from outside, according to Helen Crofts, director at EJS Search, an insurance-sector recruitment agency. “No matter how good talent and succession programmes are, it has to be healthy for an organisation to bring in new blood with a different company culture. Make no mistake, recruiting people is a costly exercise. Drafting the advert, publishing it, analysing applicants, bringing them in, then training them up. All of this is expensive.”

Many senior staff are not in a position to pass on their knowledge. “Buying strategies can be a closely guarded secret. A reinsurance professional will scarcely have the time or inclination to share his knowledge with his own colleagues let alone contribute them to a professional development programme,” explains a senior underwriter.

Fit for the future

“The CII has noticed a rapidly growing proportion of foreign students taking its courses, versus a very slow take-up by UK applicants

Training a cadre of would-be executives and planning for succession would be the obvious answer to the current skills shortage. However, according to Elliot Lane, spokesman for the CII, companies have become wary of operating their own training programmes. “At a seminar hosted by an insurance company, a director of a competitor company said, ‘I wish you hadn’t closed your reinsurance academy, because we poached some of our best people from you’,” he reveals.

The problem should not be so severe in the UK, which is a huge exporter of insurance talent. However, the Chartered Insurance Institute has noticed a rapidly growing proportion of foreign students taking its courses, versus a very slow take-up by UK applicants. “All these other markets, particularly in Asia are becoming more advanced and increasingly interested in higher levels of training. It is a message we feel obliged to point out to the market in the UK,” adds Lane. “It shows that insurers and reinsurers can’t sit ostrich-like and say they are not interested in overseas competition.”

Enlightened diversity

“Employers have to consider whether the staff they take on have the functional basics, as well as the soft skills, because these are really important for insurance and broking,” says Crofts, who is also chairwoman of the Women’s Insurance Network. “Softer skills enable professionals to react to the public, show empathy, understand clients’ problems and articulate them.” Despite the level of recruitment from one firm to another, recruiters still find many candidates worried about making the jump.

Individual employees are motivated by different things. For some it is purely salary-based, while others look for reward and recognition through bonus schemes, investing in training and feeling part of a company culture. Crofts also highlights the importance of diversity and of enabling men and women to progress. “Men and women’s behaviours are different and I think that the enlightened companies know that diversity is important in organisational success. However, there are still very few women in the most senior roles, so women do not have role models.”

David Banks is deputy editor of Global Reinsurance.