The insurance industry, once a beacon of stability in a shifting economic climate, is now facing increased challenges in talent acquisition.
A confluence of factors is creating major recruiting headaches for companies. The U.S. workforce is aging, worker priorities have changed post-pandemic, and technological leaps require new skill sets. All this while businesses grapple with cost-cutting and attracting proven professionals.
Talent shortage and increasing skill gaps
MarshBerry’s 2024 Insurance Agency & Brokerage Compensation Study found that the insurance industry could be facing a significant shortage of skilled workers as soon as 2026 – with projections by the U.S. Bureau of Labor Statistics indicating the industry could lose nearly 400,000 workers due to retirement.
The overall U.S. labor force has diminished in the past 20 years, making it harder for insurance brokerages and agencies to find qualified people, let alone with specific insurance industry experience. Fewer young people entering the workforce, due in part to smaller family sizes in younger generations, means there’s a smaller pool to replace the aging population exiting the full-time workforce through retirement. In addition, others have opted for part-time work, or moved to gig opportunities (such as Uber or Instacart), or caregiving roles, further tightening the available pool.
Increased compensation expectations
The rising costs of living are squeezing wallets, leading to demands for higher wages just to keep up. A Bankrate report shows wages lagging behind inflation by three percentage points.1 This is especially true within insurance, where specific skills are in high demand. Companies in this industry need to offer more competitive salaries, that mirror the national landscape, just to be viable. However, many smaller brokerages are hesitant to adjust their compensation plans, or worse, can’t.
Adding to the pressure, several states have implemented pay transparency laws. These laws empower workers with information to negotiate for better salaries. Overall, these factors are putting pressure on companies to ensure their compensation strategy is aligned with modern standards.
Poor workforce strategic planning
Changes in the workplace, the job market, technology, company growth, or business strategy often necessitate quick adaption by both companies and employees. With more jobs than available workers, individuals are increasingly seeking (or being presented) opportunities beyond their current employers, even in different occupations and industries. This shift in workforce behavior demands that companies better understand and plan for future workforce needs to achieve their long-term goals. This planning should begin by analyzing and forecasting workforce supply and demand, identifying gaps, and determining appropriate talent management interventions.
Leaders and owners in insurance brokerage must be aware of these issues and root causes. By understanding these factors, they can better address the current hiring challenges and prepare for future developments.
Solutions for broader talent reach
While a complete overhaul of recruitment practices may not be necessary, many firms can benefit from strategic refinements. A long-term commitment to these enhancements can lead to significant improvements in attracting high-performing insurance professionals, ultimately, driving greater performance and client value. The following strategies offer a starting point for achieving these objectives:
- Improve employer brand and value proposition. Competitive job seekers today prioritize experiences that contribute to professional growth and a healthy work-life balance, rather than simply attractive amenities or a “family atmosphere.” What truly differentiates your company culture? Do you cultivate an environment where asking questions is encouraged and learning is a continuous process? Do you believe in inclusivity, ensuring all voices are heard and valued? Does your leadership team provide guidance and genuinely invest in others’ successes? How do you do these things? 92% of workers are open to opportunities with exceptional company cultures.2 Articulating yours will unlock more doors than anything else.
- Reevaluate your compensation strategy. To attract and retain high-performing employees, companies must move beyond solely offering competitive salaries (although that is a perk). A comprehensive compensation strategy now encompasses transparency in pay scales and decision-making processes, fostering trust and a sense of fairness.
To compete with larger companies, smaller insurance brokers may need to make adjustments to match the national standard of compensation, not local standards. This is because prospective employees have options well beyond the local market. Agencies are now competing with remote jobs or comparable roles in different industries. As a result, recruiters need to search for candidates beyond the traditional insurance industry pools.
Non-salary benefits that focus on employee well-being, professional development and sense of purpose are quickly becoming table stakes for attracting the best talent. Flexible work arrangements such as remote work options and compressed workweeks cater to the evolving desire for work-life balance.
Investing in employee well-being through wellness programs, student loan assistance, and similar perks demonstrates a commitment to employee health and reduced stress.
Professional development opportunities like conferences, tuition reimbursement, or in-house training programs signal a company’s dedication to employee growth and future potential.
Recognition programs should extend beyond traditional annual raises, incorporating spot bonuses, peer-to-peer recognition, and personalized rewards to acknowledge individual contributions and boost morale.
Finally, highlighting the company’s mission and social impact can resonate with purpose-driven employees, particularly younger generations.
By combining competitive compensation with a focus on well-being, growth, and purpose, companies can craft a modern compensation strategy that attracts and retains top talent in today’s competitive market. - Lean into AI and technology. To attract the passive candidate, integrate AI into your recruiting process. AI-powered tools such as resume parsing technology, talent pool analysis, and chatbots can all help build pipelines, increase candidate response, and automate time-consuming processes. The right technology will also offer data to improve candidate quality, enhance the candidate experience, and ultimately make more informed and strategic hiring decisions.
- Increase your retention strategies. Instead of relying solely on external searches, companies that prioritize developing their existing workforce gain a significant advantage. By implementing internal talent development programs like career paths, mentorship programs, and learning resources, they can not only save time and money on recruitment, but also boost employee engagement and retention, leading to a more innovative, problem-solving workforce with higher morale. This focus on internal development fosters a culture that invests in its employees’ success, creating a loyal and skilled talent pipeline for future promotions and ensuring a smooth succession plan.
Recognizing that knowledge is the cornerstone of a thriving workforce, embrace bold changes to empower your team. Forward-thinking planning, adaptable recruiting, and strategic talent retention will unlock organic growth, new business opportunities, and a healthier bottom line. The rewards for investing in your people are substantial.
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