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The Insider’s Outlook for the P/C Insurance Industry and Careers
CPCU Society Member Opinion Panel Survey, November 2006
CPCUs Are Prepared, Employers Not!
The property and casualty insurance industry is changing, and is likely to change even more in the future. Consolidation in the financial services industry, increasing use of technology and the internet to enhance productivity, and a wave of retirements as Baby Boomers exit the workforce are only a few of the external forces expected to buffet insurance careers over the next five years.
What impact will these broad socio-economic trends have on the industry and insurance careers of the future? In this first survey of a two-part series on insurance career outlooks, conducted in late November 2006, members of the CPCU Society’s Member Opinion Panel were asked for their “insider” views on the industry’s future, and what any impending changes would mean for their careers. Specifically, panelists were asked to rate the likelihood that they, and their segments of the business, would experience the following:
- Continued consolidation of the financial services industry, resulting in fewer independent insurance organizations, more insurance companies owned by non-insurance entities, and more cross-selling of insurance and other financial products.
- More regulatory pressures, particularly at the state level, stemming from a loss of consumer confidence, compounded by a growing risk of class action litigation.
- Greater integration of productivity-enhancing technology into day-to-day insurance operations, such as the use of the Internet for direct marketing and call centers for customer service.
The panel was also asked to evaluate the significance of an expected generational shift in the insurance industry, as experienced Baby Boomers start to retire. Combined with an apparent lack of interest in the insurance industry among recent college graduates, some experts predict an “experience gap” in the near future. Members were asked what steps they would recommend the industry take to counteract such a shortfall. Finally, CPCUs were asked how prepared they and their employers are to deal with the industry’s future.
Gauging the Outlook
Members of the CPCU Society Member Opinion Panel were invited by e-mail November 14, 2006, to participate in a web-based survey on the insurance industry outlook. Details of this survey include:
Methodology: Web Survey
Survey Period: November 14 to December 1, 2006
Number of Panelists Participating: 181
CPCUs: Confident of the Future
CPCU Society members expect that they and their companies will experience all of the above changes over the next five years. Based on average ratings by panelists, the expanded use of call centers for customer service is considered the most likely event to occur, with an average rating of 3.64 on a four-point scale, where four represents “very likely” and one “very unlikely”. A decline in the number of independent insurance organizations and a greater emphasis on the cross-selling of insurance and financial products are tied for the second most likely occurrence, with average ratings of 3.40 each. Expanded use of the Internet for marketing ranks as the fourth most likely event (with an average rating of 3.38), followed by a greater risk of class action lawsuits (average 3.25 rating), more insurance companies owned by non-insurance entities (3.15), and increased industry regulation (3.14).
Despite their forecast of significant changes ahead, CPCUs responding to the survey expect the impact on their careers from these changes to be very limited. In fact, respondents consider that the trend toward more cross-selling, fewer independent insurance companies, greater regulation, and the expanded use of call centers will all have a slightly positive influence on their careers. Only the trend toward more insurance companies owned by non-insurance entities, and increased class action litigation, are considered potentially harmful, and even then only very slightly.
Why are CPCUs so confident about the future? When asked, almost all of the panelists claim that their training and experience have prepared them well (42%) or even very well (55%) for the challenges ahead.
Watch Out for Gaps!
CPCUs are concerned, however, about the preparedness of their industry to deal with the upcoming wave of Baby Boomer retirements. Combined with a projected shortfall in the number of new entrants with the needed technical and subject skills, two-thirds of survey respondents (66%) foresee an “experience gap” forming in the next five years if nothing is done. Suggestions to counteract such a gap include:
- More aggressive recruiting efforts, including expanded internship and college and high school outreach programs
- Accelerated and improved training programs for faster competence
- Programs to retain the accumulated knowledge and experience of retiring professionals, including flexible scheduling, mentoring, and consulting options
- More competitive industry salaries and benefits, and better-defined, accelerated career paths
- Greater positive visibility for the insurance industry and its career options
Employers Challenged
On the other hand, CPCUs are considerably less confident that their employers will be able to weather these future changes as well. Companies are expected to face significant challenges when replacing seasoned insurance professionals like the Panel members, a likely situation with upcoming Boomer retirements. Only eight percent think such individuals will be readily replaceable at the same pay, and another five percent believe replacements can be found, but only at a higher salary. Fully three-quarters of the Panel expect employers to encounter significant delays, due to time spent either searching for or training one or more replacements.
Interested in Finding Out More?
Read the detailed findings of “Industry Outlook from the Inside” (doc). Or, e-mail Suzanne Kinsler, marketing and sales director of the CPCU Society.
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