P&C Insurance Career Outlook #2: “Thriving in Tumultuous Times”

Continuing Education Is the Answer for Staff Retention!
In the first survey of this two-part series on the outlook for property and casualty insurance careers, CPCUs participating in the Society's Member Opinion Panel expressed confidence in their ability to weather the turmoil forecast for the industry. They also expressed doubts as to whether their employers were as well prepared to deal with the implications of these broad socio-economic trends.

Why are CPCUs so confident of the future? What tools and strategies have they found to be valuable in managing their careers through good times and bad? And, in the face a looming “experience gap” due to retiring Baby Boomers, what measures can employers take to retain experienced professionals?

These questions were addressed in the second survey of the CPCU Society's insurance career outlook series, titled “Thriving in Tumultuous Times.” Participants in the Member Opinion Panel were invited in the first half of March 2007 to describe their insurance careers, and to identify the tools they found most helpful in advancing their careers or minimizing the impact of involuntary career changes such as downsizings, etc. CPCU panelists were also asked about employer support for professional development, and their likely response if current levels were significantly reduced.

Testing the Tools
Members of the CPCU Society's Member Opinion Panel were invited by e-mail Thursday, March 1, 2007, to participate in a web-based survey on insurance career skills. Survey details include:

Methodology: Web Survey
Survey Period: March 1 through March 16, 2007
Number of Panelists Participating: 175

CPCU Career Paths
CPCUs, as represented by the Member Opinion Panel, are highly experienced professionals. Close to one-half of the respondents to this survey (45%) have more than 30 years of experience in the property and casualty insurance industry.

CPCUs are also highly mobile professionals. During their insurance careers, nearly three out of four (73%) report working for more than one insurance employer, and it is not uncommon for their résumés to list five or more (29%). Typically, these CPCUs will stay with any one employer ten years or less (65%), and 35% stay only five years at most. And while many respondents (58%) have experienced involuntary career changes (due to mergers/acquisitions, downsizings/ closures, or office relocations), much more of this mobility (94%) is voluntary, in pursuit of career advancement or for other personal reasons. More than 60% have also experienced developmental career changes, such as lateral job rotations (63%) or special project assignments (69%) across functional areas.

In the future, CPCUs are likely to be even more mobile. Just over one-half of CPCUs with 20 years or less experience in P/C insurance switched from another industry (51%). And these relative newcomers, who have already experienced multiple insurance employers (57%), tend to stay only five years at most with an employer (54%).

Career Skills
Why are CPCUs so confident of the future? What guidance can their career experiences provide other insurance professionals? And how can employers most effectively develop experienced professional staff?

According to the Member Opinion Panel, the answer is continuing education , particularly in technical insurance subjects. Two-thirds of the CPCU panelists (66%) rate continuing technical education as “very helpful” in managing their careers. Leadership and management skills development are also valuable aids (rated as “very helpful” by 47% and 43%, respectively). Training in communicating and negotiating skills, and decision making and problem solving skills are also helpful (39% rated these subjects as “very helpful”).

Professional networking, which taps into the diverse knowledge and skill sets of other industry professionals, is also a valuable career strategy. (Forty five percent of respondents say it has been “very helpful” in managing their careers.) On the other hand, traditional career development tools such as lateral rotations, mentoring, and career path planning rank toward the bottom half of the career value list, according to survey respondents.

Retaining Experience
Currently, most CPCUs answering this survey (66%) believe that their current employers are “very supportive” of their professional development. Employer support tends to be defined by CPCUs as paying and providing company time off for professional development activities (93%). Supportive employers also encourage networking (59%). A reward system that adequately reflects performance (55%) and appropriate in-house training (50%) are other ways employers can support professional development, according to survey respondents. Over the next five years, employer support is expected to remain the same (50%) or even increase (41%).

But what if this forecast is wrong, and employers significantly cut back on support for professional development? More than one-half of the CPCU Society members answering this question say that they might or definitely would change their career plans (52%), particularly those CPCUs who are relative newcomers to the industry (71% of CPCUs with up to 20 years of P/C insurance experience). Of particular concern is the fact that 10 percent of those who would change their plans say they would definitely leave their employer, and another 50% would consider leaving.

Thus, cutting employer support for professional development could have very serious implications for the retention of experienced staff, with resulting huge financial consequences.

It is widely recognized that the cost of replacing an experienced insurance professional is significant. Rule-of-thumb estimates of the cost of turnover generally range from 30% to 250% of annual compensation, up to 500% for very specialized, high level employees. For experienced professionals like the CPCUs in this survey, turnover costs would be at the upper end of the range, and could easily top $100,000 per professional lost, possibly even reaching over $300,000 per professional lost for senior managers and sales executives.

In the future, this number is likely to increase. In the first phase of the CPCU Society's Insurance Career Outlook survey series (November 2006), CPCUs expressed concern about an “experience gap” due to the retirement of experienced Baby Boomer professionals. Only eight percent expect their employers to be able to easily replace departing experienced staff members; the remaining 92% anticipate extensive delays and higher overall costs as a result.

Interested in Finding Out More?
Read the detailed findings of “Thriving in Tumultuous Times” (doc). Or, e-mail Suzanne Kinsler, marketing and sales director of the CPCU Society.