Insurance: An Overheating Market

As part of the series of insights around our 2023 Insurance Salary Survey, our Associate Director for Insurance Dave Dewey shared his insights on the state of the market and the year to come. Read on for his thoughts.

After a number of turbulent years across all sectors, it’s become increasingly important for companies to prepare for the unexpected. As business practices were turned on their head at the onset of the pandemic, we have seen reliance on digital systems and technological advances increase exponentially. This enforced shift allowed the opportunity for firms to build on the momentum of the rapid changes and acted as a sink-or-swim moment for many.

In another challenging year for hiring within the Insurance sector, the priorities of Insurers looking to make career moves changed once again. Where at the start of the year we were seeing an increased demand for benefits such as flexible and remote working and a focus on wellbeing and culture to entice job moves, the prevalence of the cost-of-living crisis has pushed salaries to the top of the agenda. As consumers appear to be cutting back on their insurance spending in response to the crisis, and the FCA issue appeals for large providers to treat their customers ‘fairly’, salaries continue to remain inflated as the war for talent continues.

All of this is exacerbated, of course, by the ongoing skills shortage. With approximately 3 years of cut trainee programs, a lack of new talent, and little to no opportunities for social learning, there is a significant gap in talent and skills that will be impossible to fill. As a result of this, firms are realising the value of the existing talent they have, and the difficulty in bringing new talent onboard. Historically, if a firm was to lose a member of staff, counteroffers were not particularly common. But, as time has gone on, company attitudes have changed as they have realised the significant cost and difficulty associated with trying to replace their staff. Businesses have begun to counteroffer significantly as, although it is the more expensive option, they know it may now be impossible to replace these staff should they change roles, and it’s no longer worth the gamble. Firms cannot afford to see the drop in business, and the buoyancy of the market and shortage of talent is driving up salaries and forcing their hands. It is becoming increasingly common to see pay increases of between 20-45% when a professional is opting to make a move, a staggering increase from the normal rises you would have expected to see previously.

Although the inflated salaries we are seeing in the industry at the moment seem to be offering a short-term fix to the Insurance industry’s problems, it is certainly not a viable long-term solution. As it stands, firms are choosing to firefight by throwing money at the issue, but this is unsustainable. As these rises eat into the company’s bottom line, there must surely come a point when shareholders and owners can justify them no further: salaries simply cannot continue to leap up exponentially forever, but this begs the question of when the bubble will finally burst. Will salaries ever return to previous market rates? Or, has the market simply caught up to what people deserve? The future remains unpredictable,

As we look to the future for the sector, it has never been more important for companies to focus on agility, adaptability, and transformation as they pivot to meet the challenges the market is currently facing and is set to continue facing in the year ahead. Those firms who fail to adapt their operations to accommodate the obstacles that lie ahead are at risk of being left behind. Firms and insurance professionals alike must ensure they are equipped with the necessary knowledge to make informed and strategic judgments in their planning for the year ahead.


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