January 2, 2013 by The Insurance Institute of Canada
As you read this, the Insurance Institute and the research team at R.A.L. Consulting are analyzing the data and preparing the final report on the Institute’s latest round of demographic research. A Demographic Analysis of the Property & Casualty Insurance Industry in Canada: 2012 to 2022 will be released before the end of the calendar year.
“When the first census was released in 2008, there was quite a bit to say about the high proportion of Boomers in the industry, the low entry-to-exit ratios, and the need for more targeted recruitment,” says Margaret Parent, Director, Professionals’ Division, Insurance Institute and project lead for the demographic research studies. “Five years later, with the research reports shining a light on the industry’s labour issues and Career Connections’ awareness and engagement strategies increasing and extending, I have been very interested to see whether change would be evident.”
The Good News: Recruiting is Working
One of the key highlights of the original research was that “imbalances need balancing.” This meant that disproportionate elements in the mix (be it age, sex, geographic or occupational composition of the workforce) required strategic action to make the mix more proportionate.
In the 2007 census, the proportion of Baby Boomers in the insurance industry was larger than in the general labour force as a whole. That is, 49% of those working in the insurance industry in 2007 were between 41 to 60 years of age; compared to 45% in the general population.
In the 2012 census, the proportion of Boomers has fallen to one-third of the industry’s professional workforce. That is, 37% were between 46 to 65 years of age, which tracks exactly with the 37% of Boomers in the general labour force.
“It is important to note that when we look at pure numbers, not proportion, this does not necessarily mean that there has been a decrease in the number of employees in the Boomer cohort,” explains Richard Loreto, president of R.A.L. Consulting Ltd., and author of the research reports on behalf of the Insurance Institute. Loreto also previewed the findings at the Top Broker Summit, presented by Canadian Insurance Top Broker. “What the data is suggesting, from the preliminary analysis, is that with the growth in the industry, and the recruitment over the last five years, the imbalance of too large a Boomer proportion has become somewhat more balanced by recruitment of the Echo cohort.”
Indeed, the Echo cohort has more than doubled in proportion overall since 2007. Then, only 12% of the insurance industry workforce were between the ages of 15 to 27. Today, fully 27% of the industry’s workforce are between the ages of 17 and 32.
This increase in the Echo cohort is across every province, every region, every company type and size, as well as every occupational category (except management).
“The rise in the Echo share is an indicator of substantial recruitment activity,” says Loreto. “The data from 20 companies who participated in both the 2007 and 2012 census, clearly indicate that they have grown their collective workforce. Full-time employees working in the targeted occupations for these companies have increased by 40%.”
We then looked to see whether entry-type roles of sales and service, for example, might now be overrepresented in the industry sample. “In absolute terms, the greatest gains are registered in the claims and sales and service categories, respectively,” continues Loreto. “However, substantial growth has not altered the occupational shares of the total workforce to a great extent. Instead, it appears that recruitment has allowed these companies to maintain occupational shares in 2012 that closely approximate the occupational shares of 2007.”
The growth across all occupations is influenced by the Bust cohort, which includes those who were 28 to 40 in 2007 and are now 33 to 45 in 2012, and is representative of about one-third of the workforce. This is the core working group moving into management and it is relatively stable. Within the management category, the share for the Bust cohort has grown by 16% while the Boomer share has fallen by 19%.
“The overall stability of the Bust share implies that companies are having a degree of success in retaining employees in an age group where the probability of exit for reasons other than retirement is high,” says Loreto. “This is important since the property and casualty insurance industry has a higher reliance on this smaller cohort than is the case in the broader labour force.”
The Not-So Good News
The initial research concluded that the industry had a too high reliance on the Boomer cohort, given that the Boomer proportion in 2007 was 49%. Looking ahead 10 years from 2007, the research projected a potential decrease in the industry’s professional workforce of 25 percent due to retirement (12% anticipated by 2012 and the additional 13% between 2012 and 2017).
Final analysis of the last five years, plus further retirement projections for 2012 to 2022, is still forthcoming for the final report.
“These preliminary findings can’t give us the full picture at this time. But I’m curious to see whether the economic downturn of a couple of years ago slowed the rate of retirement from the industry,” says Parent. “The preliminary data suggests that we haven’t seen the retirement numbers in the last five years that were projected. If that is the case, the projections for the next five years may be even more significant.”
The other interesting statistic that comes out of the preliminary findings is the entry-to-exit ratio. This is a comparison to the overall labour force and uses a minimum standard that for every person that retires, there should be one new worker to replace them. However, the industry’s entry-to-exit ratios remain very low. For every 10 people ready to retire (between the ages of 55-64), the industry is only recruiting four (under the age of 25), virtually unchanged from five years ago.
But according to Loreto, “While not reflecting an increase, it’s half a good news story. The industry’s entry-to-exit ratios had been in a pattern of steady decline for some years. With the decrease in the Boomer cohort, if there had not been the level of recruitment to increase the Echo cohort, the ratios would have bottomed out completely. The level of recruitment over the last five years managed to mitigate the potential impact of the Boomer departures. That, at least, is a good thing. But (the number of Echo workers) was low to begin with, and even this level of recruitment will not offset the pending retirements predicted over the coming five years.”
When the final report is published, it will be a comprehensive analysis of the data and complete with retirement projections and discussion, and will draw conclusions and make recommendations on the industry’s readiness to recruit and retain at the levels required.
“The Insurance Institute of Canada is proud to have conducted this important demographic research study of the property and casualty industry on its behalf,” says Peter Hohman, president and CEO of the Institute. “We know that the first two studies have provided information that was of value to our stakeholders and the industry. We know it has informed the initiatives of the Institute’s Career Connections program, the FCIP program and other professional development offerings. We anticipate that this third study will provide further information for employers’ recruitment and retention strategies and that collectively, these demographic studies will help to to address their future human resource requirements.”
Watch for further information about the release of the report coming December, 2012 and for information about a series of seminars on the demographic research to be presented by the CIP Society in several locations across the country in February and March 2013.
The research discussed here is from the Insurance Institute’s third study on the demographics of the insurance industry’s labour force. The two previous studies, A Demographic Analysis of the Property & Casualty Insurance Industry in Canada: 2007 to 2017 (2008) and the Recruitment and Retention issues in the Property & Casualty Insurance Industry in Canada (2009), are available for review here.
Copyright 2012 Rogers Publishing Ltd. This article first appeared in the November 2012 edition of Canadian Insurance Top Broker magazine.
This story was originally published by Canadian Insurance Top Broker.