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Executive’s Desk: Insurance industry struggling with talent gap

There is a huge talent gap in the insurance industry, with more jobs available than there are workers to fill them. Yet not many students are pursuing careers in insurance. Why is that?

New Mexico State University finance professor Mike McGonigle teaches an insurance and risk management class in the College of Business. Fewer students are pursuing insurance as a career path, creating a talent gap in the industry, with more jobs available than workers to fill them. (Darren Phillips/NMSU)

New Mexico State University finance professor Mike McGonigle teaches an insurance and risk management class in the College of Business. Fewer students are pursuing insurance as a career path, creating a talent gap in the industry, with more jobs available than workers to fill them. (Darren Phillips/NMSU)

According to the Bureau of Labor Statistics, the median age of insurance industry workers in 2013 was 44.7 years old; for all industries, it was 42.4 years old. Of the 2,639,000 insurance industry workers, only 131,000, or roughly 5 percent, were 20 to 24 years old. In contrast, 640,000 insurance industry workers were age 55 or older, which means roughly one quarter of these workers are nearing retirement.

The talent gap in the insurance industry is much greater than in other industries. The percentage of workers age 55 and older is roughly 30 percent higher than other industries, according to 2011 data from the Griffith Insurance Education Foundation.

The main insurance-related career paths are actuary, agent, claims adjuster and underwriter, with entry-level education requirements ranging from a high school diploma to a bachelor’s degree. The mean annual wage for these four careers in 2014 ranged from $63,500 to $110,090, according to the Bureau of Labor Statistics.

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In 2014, the annual mean wage of all occupations in the U.S. was $47,230, which is $16,270 less than the lowest annual median wage of the aforementioned insurance-related vocations. Insurance industry wages are relatively attractive, especially when some vocations require only a high school diploma.

In addition to highly competitive salaries, insurance industry jobs are stable because insurance is often required institutionally, as with car or home ownership and mandated health insurance. For that reason, the industry is unlikely to disappear soon.

Insurance Business America forecasters predict roughly 200,000 new jobs in the insurance industry by 2022 and say recent trends indicate producers will soon hit a historic job growth peak.

In addition to high salaries and job stability, insurers provide many career advancement opportunities, especially for high achievers.

Careers in insurance don’t seem to be well known or perceived as glamorous or exciting by millennials – those born from 1980 to 2000. Surveys by the Griffith Insurance Education Foundation found that only 5 percent of millennials were familiar with careers in insurance, that young employees view insurance as “boring” and only 5 percent of students in the millennial generation describe themselves as “very interested” in working in the industry.

For some reason, the insurance industry has a very bland reputation, but this is a misconception. Companies understand this and know they must address it.

Some insurers are recruiting future workers while they are in college or even high school. Training new employees is expensive: For example, training a college graduate may take two years and cost $100,000. Young students who prepare for an insurance industry career by completing appropriate coursework will cost less to train. Hence, insurers benefit from attracting college-age millennials.

Research on millennials is crucial to attracting them as workers. Insurance industry blogger Jim Schubert has suggested six tactics for attracting young adults to the insurance industry. These include posting job opportunities where millennials spend much time, such as social media; bringing a firm’s young agents to events that attract millennials; ensuring that millennials know there is much job flexibility and a high earning potential; ensuring adequate sales training and use of social media as a marketing tool; inspiring new agents by pairing them with a hardworking and successful mentor; and structuring commissions and other rewards to encourage sales.

Insurers can reduce the talent gap in two ways: They can better educate students and recent graduates about career opportunities by attending career fairs on campuses; and they can run more and better job advertisements online as most millennials are comfortable using the Internet for career searches.

Mike McGonigle is a faculty member and director of the Insurance & Financial Services Center in the College of Business at New Mexico State University. He can be reached at mikemc@nmsu.edu. Melissa Rogers is a 2015 graduate of the NMSU College of Business.

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