The Hunt is On: The Great Underwriter Shortage

Posted by Richard Jacobson

The Great Underwriting ShortageThe search is on for qualified underwriting talent. Amid a growing number of positive labor trends—including low unemployment rates and positive staffing increases—a number of key insurance functions are feeling the pinch. Underwriting positions, in particular, are becoming more and more difficult to fill. As a result, the war for insurance underwriting talent is heating up.

Following the recent recession, the industry has undergone a significant rebound. Unemployment rates have dropped, indicating a return to full employment. Unfortunately, in this movement toward being fully staffed, insurers have depleted the potential talent supply. As the supply of incumbent professionals fails to keep up with the growing industry demand, the competition will only become more fierce. 

Insurance organizations are now finding it increasingly difficult to recruit for their open underwriting positions—and that difficulty is only predicted to heat up. Insurers must now focus on what is behind this growing shortage and develop strategies to keep their departments fully staffed.

Health Care Reform Leads Push for More Health Underwriters

According to the Bureau of Labor Statistics (BLS), the health insurance sector is expected to see relatively high stability and growth in the next 5 years. The introduction of health care reform requiring more people to purchase health insurance paired with an aging population is placing more and more demand on the health insurance market. This greater need for health underwriters comes at a time when the Baby Boomer generation is heading into retirement at a vast rate, creating a diminishing pool of specialized underwriting talent.

Aging Population Drives Life Underwriting Shortage

Underwriting Shortage - Life, Health, Property and CasualtyA significant portion of the workforce—as high as 25 percent—will be nearing retirement age within the next five years; and the life industry is not immune to this mass exodus. According to the most recent Academy of Life Underwriting (ALU) Life Underwriter Census, nearly 50 percent are over the age of 50.

The need for life insurance underwriters is also expected to skyrocket in the coming years. As the large Baby Boomer generation ages, it is predicted that more people will be investing in coverage to provide their families with piece of mind.

As life insurers turn toward young professionals and Millennials to help fill the talent gap, they are coming face-to-face with a number of recruitment challenges. Unfortunately, the rate of individuals taking advanced professional designation examinations—including ALU exams— is on a downward trend.  Meanwhile, a lackluster industry image is drawing young professionals closer to careers in industries that are more aggressive in their recruitment efforts and are perceived as more attractive or glamorous. 

Property and Casualty Faces High Underwriter Turnover Rates

The property and casualty industry faces similar issues as organizations place increased emphasis on underwriting to generate profitability. Currently, the growth rate for insurance underwriters is nearly 6 percent—a number that is only expected to increase. Unfortunately, the incoming labor force is not regenerating talent in this sector. Additionally, according to the BLS, the aggregate estimated turnover rate for underwriters is estimated at 15 percent for the next ten years. Combined with historically low unemployment and growing industry demand, the property and casualty insurance industry is beginning to see a significant shortfall of necessary incumbent talent.

It is clear, now more than ever, underwriting professionals for each sector are in high demand but undoubtedly low in supply.

Education as the Key to Unlocking the Underwriting Talent Puzzle

Developing the new generation of underwriting talent—first and foremost—requires industry efforts to raise awareness of the profession. The majority of recent graduates and young professionals are unaware of the ways in which their current educational backgrounds, job experiences and interests can be applied to positions within the insurance industry, including underwriting.

Insurance companies need to develop relationships with local education providers, attend onsite recruitment fairs and step up their internship programs in order to educate the next generation. Life and health insurers should consider targeting students and graduates with a background in life and medical sciences, as it can help reduce the learning curve for medical and life underwriting roles. Property and casualty insurers should focus on recruiting individuals with degrees in business, marketing or mathematics. 

Education and outreach is the key to informing today’s young professionals about the wide range of unique and exciting job opportunities available within the insurance industry. It is the industry’s responsibility to promote how successful and fulfilling an insurance career can be. Join the growing Insurance Careers Movement, a grassroots effort to build awareness of insurance as a stable, rewarding and limitless career path and help amplify the industry’s message and reach. 

Uncovering Interim Solutions to the Underwriting Shortage

Underwriting ShortageUnfortunately, not all organizations have the time to develop underwriting talent from the recent graduate level. They have understaffed underwriting teams with open positions or critical projects that need to be addressed by tenured individuals. In order to fill these immediate needs, forward-thinking organizations are turning to contract subject matter experts. 

Partnering with a staffing firm, specifically one with an insurance industry focus, is a great solution for bringing on experienced contract underwriters. Niche firms often have unique access to a bench of highly-skilled professionals that can be leveraged to provide a stop-gap while a permanent position is filled or offer hands-on expertise for a special project or assignment. These experienced underwriting professionals have the knowledge and hands-on work experience to jump right in and get started. Partnering with a staffing firm for a contract professional also allows insurers to maintain control over the development and length of the employment contract, while alleviating the time-consuming task of finding and sourcing potential interim professionals.

Employing highly-skilled contract subject matter experts, while simultaneously creating awareness of insurance as an industry of choice to build the underwriting talent pool, are just two ways insurers can start replenishing our diminishing supply. How is your organization dealing with the critical skills gap?