As the industry faces a deepening talent crisis, educators and industry professionals must come together to avoid calamity
It appears the insurance industry may have misdiagnosed its talent crisis.
Many talk about the talent crisis in terms of demand, explains Zach Finn, professor and director of the Davey risk management and insurance (RMI) programme at Butler University, who instead pins it as a “supply chain crisis”.
“The whole economy is not aware that the insurance industry needs 500,000 new jobs,” he says.
“The insurance industry needs to take the same medicine that they give to businesses—manage your supply chain. The industry has to come together and build its own educational infrastructure from the ground up.”
The impending insurance industry talent crisis is a threat that is becoming impossible to ignore. There are expected to be 400,000 job openings in the insurance industry by 2020, while approximately 25 percent of of the current workforce were predicted to be at ‘retirement age’ by the end of last year.
It is an issue that has been extensively discussed in the industry over the past few years. At the Bermuda Captive Conference in 2017, panelists emphasised the dangers it presented, while last year, Anne Marie Towle, captive practice leader at JLT Insurance Management, told delegates at the Vermont Captive Insurance Association (VCIA) Conference the industry needed to be more active in inspiring the next generation. At the Captive Insurance Companies Association (CICA) Conference in 2019, Temple University professor Michael Zuckerman told delegates that offering millennials “adventure” was key to solving it.
The industry has not been without action; CICA has launched a mentorship programme, a college essay contest for RMI students, and formed a professional development partnership with Butler University; the Institutes Griffith Foundation launched an RMI scholarship in January; and Strategic Risk Solutions sponsored students to attend the VCIA Conference last year. But is it enough?
A supply chain crisis
Finn has passionately advocated that more needs to be done and that the crisis extends further than just an issue of demand.
“It is an existential crisis,” he says, “95 percent of our professionals for an entire pillar of the industry are underprepared and untrained compared to where they used to be.”
Statistics provided by Finn at last year’s CICA Conference estimated that there would be 15,072 US RMI graduates between 2017 and 2020, barely a scratch on the predicted 400,000 insurance industry job openings.
Finn acquired an RMI degree in the 1990s, and held risk management roles at NCR Corporation, Hill-Rom, and the J.M. Smucker Company, rising to the position of director of risk management at the age of 27. As his career developed, he served on the student advisory committee for the Risk and Insurance Management Society (RIMS), where he tried to get universities to understand the opportunity RMI programmes offered.
He explains: “You’ve got a recession with millennials living in their parents’ basements and a whole industry starving for talent. Geez academia, wouldn’t it really benefit you all to setup more RMI programmes to create opportunities for millennials, and viable degree programmes for yourselves? It is a triple win situation. The problem was I couldn’t get anyone to engage.”
The cradle of RMI education innovation?
Eight years ago, Finn decided to take action into his own hands. He joined Butler University and had the opportunity to set up their RMI programme. The undergraduate degree was constructed to help students choose a path into the industry and was built around experiential learning.
Indiana, the state that houses Butler, has become somewhat of a specialist area of RMI education, with Butler, Indiana State University and Ball State University boasting three of the top 10 RMI programmes in the US. Ball State offers an undergraduate major and minor in RMI, a masters level RMI course, and an undergraduate and graduate programme in actuarial science. Steve Avila, professor finance and insurance at Ball State University, explains that at the school there are over 400 students taking “principles of RMI” each year and over 50 majors and minors in RMI.
Finn helped the Butler RMI students launch their own captive two years ago.
He says this was done for two key reasons: the first, giving the students a chance to learn through experience, and the second, and perhaps most important, was to prove to the industry exactly what RMI students can do.
He explains: “Butler’s a proof of concept, a way to show the insurance industry. Once we set up a captive with 20 year olds, the proof of concept has been proven. What we [Butler, Indiana State and Ball State] are trying to do is unite our powers and influence the industry. Explain to them what students with these degrees can do, so that it starts to become more expensive not to have one. We’re trying to make it more expensive to be ignorant.”
The Centre for Insurance Education
The beginning of that process is the Centre for Insurance Education, a way to scale what has been done at Butler into the US Midwest.
Housed out of the currently under construction new building at Butler’s Lacy School of Business, the Centre’s target is to support RMI programmes in Indiana, Ohio, Illinois, and Kentucky, in two key ways.
Firstly, by creating a high school outreach programme to inform high school guidance counselors, children, and parents that insurance is a viable career option, the same as finance and accounting.
Secondly, to provide support to Gamma Iota Sigma, the US RMI and actuarial science fraternity, which supports the creation and development of proper RMI programmes and the students themselves.
The number of RMI programmes is growing and according to Finn: “Gamma Iota Sigma’s resources are taxed, with many of the programmes on the US East Coast. What we’d like to do is reorganise Gamma Iota Sigma by regional conferences. We’ll have an Eastern Conference and a Western Conference.”
Currently, the centre is not in a position to discuss potential partners, but it is accepting gifts and donations, and has had serious interest from some blue chip carriers and brokers.
An educational restructure
The centre is the beginning of a new educational structure that Finn believes the industry needs to build to avoid the talent crisis.
“My proposition is it’s a supply chain crisis,” reiterates Finn, “the industry needs to stop sponsoring race cars and golf tournaments and start investing in undergraduate and graduate RMI programmes so that we have properly trained talent.”
“We need to come together and finally admit that the education system for RMI education is vastly underdeveloped.”
“I think this is one of those rare opportunities. An opportunity to not only address this talent crisis risk once and for all but to turn it into an opportunity. We basically need to redesign and develop from the ground up the educational infrastructure around insurance and risk management.”
“That investment, as long and as arduous as it may be, has a huge opportunity curve on the other end of it. Once insurance becomes a required class in every business school, all of a sudden, you have a whole new class of buyers who understand products in a way they never could before, which creates more opportunity for the industry.”
What the industry can do now
Clearly, redesigning the educational structure of RMI education will be no easy feat and may require industry-wide cooperation and collaboration, but there are more direct steps that companies can take which may have a positive impact in counteracting the talent crisis.
The first is to reach out to the students and make their presence felt, both to those already interested in RMI and those that are not.
Avila explains: “The industry need to show all the great things that insurance does. Show how it helps others and the advantages through technology that are happening.”
An opportunity for such outreach is the Gamma Iota Sigma conference, where Finn suggests that by being present at the conference, companies can put themselves in front of the top 10 percent of RMI graduates in the US.
Further than just attending the conference, Finn emphasises that backing Gamma Iota Sigma is the biggest thing companies can do to help address the issue of the talent crisis.
He expands: “Every dollar or every minute of time or talent that goes into Gamma Iota Sigma is a dollar or a minute well spent.”
“It supports the actuarial science and RMI programmes that exist and are doing things the right way, and has a mandate of trying to increase the number of those programmes. Quit trying to work out how to turn a philosophy major or an economics major into an insurance professional. Put the money in Gamma Iota Sigma and let us do it, we have got it covered.”
Another avenue where the industry’s funding can have a vital impact is the Centre for Insurance Education.
“We have a space, we have a mission, we have a vision,” says Finn. “We need capital to scale what we’ve done at Butler into the Midwest and beyond.”
“Funding it not only allows the industry to do what is right for its own existence but also to develop the kind of talent it likes and to help support where the new RMI programmes are created.”
Mindset change
William Davey put $5 million of backing into the initial Davey RMI programme at Butler University, which has now put more than 200 graduates into the industry, with 75 students currently in the programme and 80 on the actuarial science programme.
“He has created a sustainable pipeline of talent,” notes Finn, “a pipeline thats value far exceeds that $5 million by a greater amount than I could ever hope to calculate. I wonder how much money spent on sponsoring race cars and golf tournaments could have been better spent in similar investments to the investment Davey made at Butler.”
However, the impact of any extra investment is almost irrelevant without a mindset change.
Finn concludes: “I am purposely trying to disrupt the industry by giving students the skills to do more things themselves that the industry currently charges for. The industry need to open up their minds to what these students can do.”
