What a difference a decade makes

Most people in the insurance industry are bracing for the seismic shift that is anticipated over the next decade as automation, artificial intelligence and machine learning are predicted to make “simple risks” easy to manage. But many in the industry may not appreciate that a seismic shift has already taken place in the past decade.

In 2007, the largest cohort of employees in the insurance industry was baby boomers. By 2017, that had changed; the largest cohort was now millennials.

Michael Burt, director of industrial economic trends with the Conference Board of Canada, conducted the Insurance Institute’s latest demographic research study on the industry’s workforce. According to Burt, Canada’s general labour market has seen a similar shift in recent years, “but not as strong a shift as the research is showing for the P&C insurance industry in Canada.”

Breaking down the numbers

In 2007, the Insurance Institute’s first demographic research study showed that half of the industry’s workers were over 40. Forty-nine percent of the workforce were boomers, then aged 41 to 60. And with a median retirement age of 60, the research projected a 25% decrease in the workforce due to retirements expected between 2007 and 2017. The share of boomers in the industry and the early retirement age were out of step with the general labour market in Canada.

In 2012, the Institute’s second research study showed that employers had acted on recruitment recommendations and successfully increased the millennial cohort from 12% in 2007 to 27% in 2012. The proportion of boomers had dipped to 37% of the industry’s workforce, which was more in keeping with the general labour market in Canada. With the industry’s average retirement age still younger than the general labour market at 60, the findings projected a 28% decrease in the industry’s workforce over the next decade.

In 2017, initial findings from the Institute’s third study show that the proportion of boomers and the proportion of millennials have flipped from 37% and 27%, respectively, in 2012, to 27% and 39%, respectively, in 2017. The industry has a much higher concentration of millennials than average, making it much younger than the general labour market in Canada.

According to Stats Canada’s 2016 Census data, the general labour market is now split roughly in thirds between millennials, Gen Xers and boomers. “So, for the P&C insurance industry to have such a significant increase in the proportion of millennials and for the share to flip with the boomers is pretty dramatic, particularly over a five-year period,” Burt says.

“A couple of reasons may account for this,” he continues. “First, the industry has fewer boomers than the general labour market (27% in the industry versus 31% in the general labour market) due to early retirements. As well, the industry has fewer Gen Z members than in the general labour market (at just 1% for those aged 21 and under versus 6% in the general labour market), which may not be surprising given the industry’s median age at entry is closer to 30.”

Attracting millennials to insurance

Contributing factors to the influx of millennials over the past decade are increased awareness about the great careers insurance offers and more opportunities for education as a pathway into the industry.

1. First, there has been a significant increase in post-secondary programs offering a direct pipeline into the industry.

The number of full-time college programs offering a business of insurance program—with potential credits earned toward the Institute’s Chartered Insurance Professional (CIP) designation—has increased substantially since 2007, when there were just four. Now, there are 12 programs, with more than 400 candidates who have chosen to study insurance and are seeking to work in the industry.

Employers are recognizing the valuable pipeline provided by these programs, with some or most credits going toward graduates’ CIP designations. For the new entrants to the industry, it’s the 95% to 100% job placement rate at program’s end that is attracting millennials, university graduates and career changers to study and work in insurance.

2. Second, there has been a significant increase in the promotion of insurance careers.

The Insurance Institute’s Career Connections program has seen a substantial increase in awareness of and engagement in insurance careers over the last decade. In the early days, many potential candidates would have indicated they were not at all interested in exploring a career in insurance. Now, potential candidates are curious about how their analytical skills could be used for cat modelling rather than capital markets in banking.

Some highlights of how the industry can continue to attract young talent:

• Promoting insurance as a stable industry with full-time employment opportunities works well, as the gig economy impacts employment prospects for youth.
• Positioning the P&C insurance industry as being at the forefront of gamechanging issues—like artificial intelligence, big data, autonomous vehicles, extreme weather, cyber security, and other national and global risks—sparks interest and brings relevance to insurance and emerging issues.
• Emphasizing that most employers in the industry offer an excellent value proposition that includes paying for continuing education and earning professional designations is appreciated by potential candidates looking to grow their knowledge and competencies.
• Being able to state that 87% of employees in the P&C insurance industry are satisfied with their careers in the industry resonates with candidates looking for satisfying work.

One of the additions to the 2017 demographic research study was a series of employee engagement questions. We are confident that the strong employee engagement we uncovered will resonate with potential new recruits to the industry:

• 64% strongly agreed that they contribute to their company’s success;
• 56% strongly agreed that they are proud to work in the insurance industry;
• 50% strongly agreed that there is a clear link between their work and their company’s goals and objectives.

Burt notes that, “In a Conference Board of Canada study on employee engagement, it is estimated that just 27% of Canadian employees across all industries are highly engaged in their work. For the industry to have such high engagement scores is very impressive.”

It is a great news story that the face of the industry’s workforce is more youthful and more engaged today than it was 10 years ago. This is just one of many findings to come from the Insurance Institute of Canada’s decade of demographic research. The 2017/2018 reports are due to be published in September 2018. More information is available at: www.insuranceinstitute.ca/research.

By Margaret Parent, Director, Professionals’ Division, The Insurance Institute of Canada
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Copyright © 2018 Transcontinental Media G.P. This article first appeared in the May edition of Canadian Insurance Top Broker magazine

This story was originally published by Canadian Insurance Top Broker.