Members of CICA’s NEXTGen committee discuss the development of the talent crisis, and how the captive industry has concentrated its efforts to attract the next generation of young professionals
Amid the current favourable market conditions for alternative risk (such as the continued hardening market and enduring effects of the COVID-19 pandemic), the captive industry is still navigating the talent crisis that has plagued the sector for several years. The talent crisis refers to the difficulty of attracting and retaining the next generation of talent in the captive insurance industry. The most significant challenges in doing so are largely a result of two distinct factors: lack of education around the captive sector, and misunderstandings about the wider insurance industry.
For the former, Michael Zuckerman, associate professor at Temple University Fox School of Business and board member at the Captive Insurance Companies Association (CICA), explains: “Unfortunately, most university students do not know much about or understand the captive insurance industry — neither does the risk management and insurance industry or the wider public, while many who do know about captive insurance often think it is all about tax avoidance.”
He identifies that the challenge for the captive industry here lies in educating insurance professionals not currently involved with captives, as well as those in other correlated disciplines (such as law, finance, accounting and operations management), on the advantages they can provide to the risk management process. This is affirmed by Karen Hsi, programme manager, Fiat Lux Captive Insurance Company, University of California Office of the President, who says: “One of the biggest challenges we face when it comes to attracting the next generation to the captive industry is the lack of education and publicity about this innovative insurance industry sector to colleges and universities.”
She adds that as a result of this “lack of education, understanding and exposure to what the captive industry is about”, captive insurance is usually generalised and categorised within the larger market of traditional insurance. In lacking the sufficient marketing as a niche industry that can provide many growth opportunities for young professionals, captives often struggle to compete with the big-name, fast-growing traditional insurance companies that the next generation are more likely to be familiar with. This leads to the aforementioned challenge, a problem of misunderstanding, as the insurance industry as a whole is generally typecast as a mundane line of work lacking innovation and dynamism.
This view is more likely to be held by young millennials and Gen Z, as members of the more technologically advanced generations do not tend to regard insurance as a modern, technology-focused career.
Diana Hardy, audit partner at RH CPAs, explains: “We have to shake off the cobwebs which create the perception that the risk management and insurance industry is old and boring — the reality is that it is a load of fun to help people manage their risks more profitably based on their balance sheets.”
Hsi shares the optimism that exposure to the captive sector will demonstrate its capacity to be an “innovative, engaging, fast-paced and ever-changing” industry in which a young professional can thrive and grow.
“The next generation will not get a chance to change their perceptions unless they have the opportunity early on to be immersed in the captive industry and experience opportunities like a board meeting, social networking event or a conference for themselves,” Hsi adds.
Tapping the gold mine
So there is a recognition of the challenge of a talent crisis facing the captive industry — but how to address this?
Hardy says that since the issue is rooted in perceptions of the traditional insurance market as uninspiring, which then affects all sectors of insurance, the solution lies in the effective communication of information on alternative insurance markets.
Zuckerman notes that traditional risk management and insurance employers have a standard best practice to visit college campuses and recruit students through designed internships that provide a holistic view of the organisation — but “captive insurance providers are not keeping up and must follow this simple formula”.
Therefore, the captive industry must establish its own educational infrastructure, which can range from early recruitment through high school intern and apprentice programmes to university talks and recruitment drives, notes Nick Hentges, co-CEO and principal of Captive Resources and CICA board member. These awareness sessions promote captives as an innovative industry that significantly impacts economies and everyday lives, as well as emphasising the potential for a multi-disciplinary career that encompasses, among others, accounting, actuarial, insurance broking and investment advisory roles across enterprise risk management, notes Zuckerman.
CICA has adopted a prominent role in this through its NEXTGen initiative. Launched in 2019, the committee programme advocates the vocality of young professionals in the captive industry through education, mentorship, skills training and networking opportunities. Prabal Lakhanpal, vice president of Spring Consulting Group, describes the NEXTGen initiative as “a prime example of recognising a problem and proactively working toward a solution”.
He elaborates: “One strategy the NEXTGen committee uses to create awareness and to make captives resonate with the next generation is by highlighting all of the ways that a captive can be used as a true innovation tool, and by highlighting the technological advancements we have seen in the industry.”
He adds that the task force is making a distinct effort to reach out and form relationships with schools and universities through a grassroot network to open up discussions about captives and insurance with students before they graduate.
Members of the NEXTGen committee have hosted speeches at Temple University, where they have discussed their experiences as young professionals within the captive industry, and hope to repeat at other institutions.
“So far, this has been extremely well received and we are grateful to all the stakeholders who have helped us build these relationships,” Lakhanpal observes.
Hsi recognises the efforts of the NEXTGen committee to create a student internship programme to offer students the chance to gain direct experience working in the industry at the beginning of their careers.
She notes: “The industry does a pretty good job with retaining young professionals that are already in the industry, we just need to make sure we can capture the attention of the incoming young professionals and entice them to stay in the industry.”
In addition to NEXTGen, CICA has held tracks at conferences to focus on the advancement and development of young talent, as well as including younger speakers on panels, forming a mentorship programme, and hosting the college student essay contest with Captive Insurance Times.
Hentges notes that the Amplify Women initiative has also been important in celebrating the current pool of young talent in the captive industry, adding that Captive Resources aims to build a culture of inclusivity so that professionals seek it out as an organisation to begin their career.
Outside of CICA, RH CPAs’ Hardy highlights other successful industry programmes, including the student-run captive insurance company launched by the Lacy School of Business at Butler University in 2017. This provides hands-on experience in risk management and insurance as students take on real risk, create financial ratio reports, underwrite loss experience, utilise loss control techniques and analyse losses.
Internships sponsored by the National Risk Retention Association’s (NRRA’s) Collegiate Research Insurance Shadow Programme encourage college students to build their future careers in the insurance industry, as well as provide mentors and offer access to the NRRA national conference.
Hardy also notes the Risky Business programme implemented by the Alabama Captive Insurance Association (ACIA), which she hopes can be replicated by other states in due course. The multi-entity programme offers year-round internships to students in the captive insurance and alternative risk management market segments specifically.
Interns have the opportunity to work with several ACIA member companies on a five-week rotation and gain real-world experience in different sectors of the risk management and insurance industry.
“We are partnering with some of the organisations mentioned above to provide internships, and regularly meet with different universities and colleges to educate students and help them see what a career path looks like in the captive insurance industry for those working at our firm,” Hardy adds.
Don’t drop the ball now
Looking to the future and how the talent crisis may continue to develop, Lakhanpal notes that the current global workforce shift, dubbed ‘The Great Resignation’, is causing many to reassess their careers and the long-term growth potential within the environments in which they work. In addition, there is a significant number of captive professionals planning to retire over the next 18 months, which greatly accelerates the need to pass on institutional knowledge.
Lakhanpal perceives this as an opportunity for captives “to garner interest and attract talent by showing that the industry offers the stability and the opportunity to make an impact” — an attitude that is shared by Hsi.
She says: “With the emphasis and proactive approach the industry is placing on this problem, I am hopeful that we can turn it around and be successful in our recruitment and retention efforts of the next generation of our workforce in the coming months.”
Taking an alternative view, Hentges says: “I personally do not see a talent crisis. There are plenty of talented young people looking for great opportunities — we just have to evolve from the way the industry has worked in the past and the perceptions that still linger.”
As companies look to adapt and evolve, Hardy notes that it is important to continue to view the talent gap as a long-term crisis that requires committed collaboration, while Zuckerman warns that the captive industry as a whole must learn how to best attract the talent needed to meet both current demand and future growth by sharpening the message that is delivered on campuses.
In delivering this message, Hsi recognises that there exists a divergence between what an entry-level graduate may prioritise (such as travel, work-life balance, compensation bonuses, and company retreats and bonding events) compared to a younger mid-level professional (for example, mentorship, executive-level guidance, learning opportunities and targeted feedback sessions).
However, a common factor is that the next generation of young professionals is seeking the opportunity for career growth — something that the captive industry is more than capable of providing.
“There are plenty of positions to grow into in the captive industry with opportunities to explore and learn new areas of expertise to develop and mature. The emphasis on this being an industry where you can make your career what you want it to be is a huge benefit to working in this creative sector, and will help to attract and retain talent,” Hsi concludes.
