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The Insurance Industry’sIndustry s“Talent Gap”Griffith FoundationInsurance Education & Career SummitAtlanta, GASeptember 25, 2011Steven N. Weisbart, Ph.D., CLU, Senior Vice President & Chief EconomistInsurance Information Institute 110 William Street New York, NY 10038Tel: 212.346.5540 Cell: 917.494.5945 stevenw@iii.org www.iii.org
The Industry EmploysYYoungerWWorkerskinipto their NumbersProportionin the Labor Force2
Age Distribution: P-C Workersvs. the U.S. Labor Force, 6%25%27%0%40%25%27%22%%11%14%ReinsurersU S populationU.S.65 55-6445-5435-4425-3416-24162423%0%Personal LinescarriersCommercialLines CarriersBrokersIt appears that the workers at P-C personal lines carriers are, in general,younger than,than and commercial lines employees and brokers are no olderthan, the U.S. workforce in general.Only reinsurance workers might be a little olderSources: McKinsey, Building a Talent Magnet, Exhibit 2; BLS; Insurance Information Institute3
1 in 3 in this age groupare working. Virtuallynone of them are .88%255.2%255.2%26.3%26.5%26.2%28%The brown barsindicate 2.3%Labor Forceparticipation 7%31.0%31.4%30.9%31.2%%31.6%31.3%31.5%%31.4%Labor Force Participation Rate,Ages 65-69, Quarterly, 001.322001.122000.322000.11 999.31 999.11 998.320%1 998.122%The labor force participation rate for workers 65-69 might grow even faster in the futureas seniors find they can’t fully retire on their meager retirement savings.Not seasonally adjusted. Sources: US Bureau of Labor Statistics, US Department of Labor; Insurance Information Institute.
Does the P/C InsuranceIndustry Pay as Well asOther Employment?5
Average Hourly Earnings, Employees inSelected Financial Services, Mar 2006*–May 2011P‐C carriersCommercial bankingIns Agents & BrokersSecurities brokerage 40 35 30 25Jun 11Mar 11Dec 10Sep 10Jun 10Mar 10Dec 09Sep 09Jun 09Mar 09Dec 08Sep 08Jun 08Mar 08Dec 07Sep 07Jun 07Mar 07Dec 06Sep 06Jun 06Mar 06 20From April 2007 through October 2009, average hourly earnings at P/C insurerswere essentiallyti ll flflatt att aboutb t 29 29. InI theth 21 monthsth sinceithen,thaverage hourlyhlearnings grew by roughly 3 (nearly 10%), but lost 1 in June and July 2011*start of BLS series; not seasonally adjustedSource: t6
Can We Attract New Hiresto a Shrinking Industry?7
U.S. Employment in the DirectP/C Insurance Industry: 1990–2011*Thousands525500475As of May 2011, P/C insurance industry employmentwas down by 33,60033 600 or 6.8%6 8% to 457457,500500 since therecession began in Dec. 2007 (compared to overallUS employment decline of 5.2%).450'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11*As of May 2011; Not seasonally adjusted; Does not including agents & brokers.Note: Recessions indicated by gray shaded columns.Sources: U.S. Bureau of Labor Statistics; National Bureau of Economic Research (recession dates); Insurance Information Institute.8
U.S. Employment in theReinsurance Industry: 1990–2011*Thousands484440As of May 2011, US employment inthe reinsurance industry was up by400 or 1.5% to 27,300 since therecession began in Dec. 2007(compared to overall USemployment decline of 5.2%).36322824'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11*As of May 2011; Not seasonally adjusted; Does not including agents & brokers.Note: Recessions indicated by gray shaded columns.Sources: U.S. Bureau of Labor Statistics; National Bureau of Economic Research (recession dates); Insurance Information Institute.9
U.S. Employment in InsuranceClaims Adjusting: 1990–2011*Thousands60Katrina, Rita, WilmaFrom 1990 to 2008, the number ofclaims adjustersjgrewgbyy an averagegof about 1.5% per year. Some of thisslow growth may be due to use ofnew ul-94Oct-93Jan-93Apr-92Jul-91Oct-90Jan-9040Since October 2008, when employment peaked at 56,200, about 8,000 adjuster jobs wereshed Some of this may be due to strategies to pay small claims without adjustmentshed.adjustment.*As of June 2011; Not seasonally adjusted.Note: Recessions indicated by gray shaded columns.Sources: U.S. Bureau of Labor Statistics; National Bureau of Economic Research (recession dates); Insurance Information Institute.10
Is the Recent Declinei theinth NumberNb offAgents/BrokersTemporary or Permanent?Is it a Result of a Trendto Online Shopping for Insurance?11
U.S. Employment in InsuranceAgencies & Brokerages: 1990–2011*Thousands700650600550As of May 2011, employment atinsurance agencies and brokerageswas down by 37,900 or 5.6% to641 700 since641,700iththe recessioni bbegan iinDec. 2007 (compared to overall USemployment decline of 5.2%).500'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11*As of May 2011; Not seasonally adjusted. Includes all types of insurance.Note: Recessions indicated by gray shaded columns.Sources: U.S. Bureau of Labor Statistics; National Bureau of Economic Research (recession dates); Insurance Information Institute.12
Ideally, Where Do YoungPeople Want to Work?13
Top 150 Organizations Where YoungProfessionals Want to WorkGroupT 50TopRanked51 10051-100Ranked101-150InsurersOrganization (% naming)Googleg ((#1: 24.8%)) Apple ((#2: 13.5%))Disney (#3: 9.4%) U.S. State Department (#4: 9.3%)Amazon (#5: 8.8%) FBI (#6: 8.3%)BerkshireNordstrom (#51: 2.3%) U.S. Air Force (#52: 2.3%)(#61: 2.1%)2 1%)Federal Reserve Bank (#53: 22.2%)2%)USAA (#81: 1.65%) Accenture (#54: 2.2%) Time Warner (#55: 2.2%)Liberty Mutual(#126: 0.65%)Travelers(#128: 0.64%)NY Life(#130: 00.51%51%Hartford(#135: 0.45%)Munich Re(#143 0(#143:0.16%)16%)Sources: Universum survey of 10.306 professionals with 1 to 8 years of experience, November 2010-January 2011,at t COMPANIES0321 20110321.html14
How Will We Know We’veWe veClosed the “Talent Gap”?By Attracting People from the MostPrestigious Universities?15
Top 10 Insurance Companies, CEO’sand College InformationRankCompany1Berkshire Hathaway2American InternationalGroup3State Farm Insurance Cos.4MetLifeCEOWarren E. BuffettCollegeColumbia Business SchoolUniversity of Nebraska–LincolnRobert H. Benmosche Alfred UniversityEdward B. Rust Jr.Southern Methodist UniversitySteven A. Kandarian Clark UniversityGeorgetown University Law CenterHarvard Business School5Prudential Financial6New York Life Insurance7Liberty Mutual InsuranceGrouppJohn R. Strangfeld Jr. Susquehanna UniversityDarden School of Business at the Universityof VirginiaTheodore A. Mathas Stanford UniversityUniversity of VirginiaEdmund F. KellyyQueen's University,y, BelfastMassachusetts Institute of Technology8TIAA-CREF9Allstate10Massachusetts Mutual LifeInsuranceRoger W. Ferguson Jr. Harvard UniversityNorthwestern University's J.L. KelloggThomas J. Wilson Graduate School of ManagementRoger W. CrandallDegree/MajorMS in EconomicsBS in Business AdministrationBS in MathematicsJD & MBABAJDMBABS in Business AdministrationMBAABJDBachelor's DegreegPhDB.A. in Economics magna cumlaud,JD & PhDMasters degree in managementUniversity of MichiganBS in Business AdministrationUniversity of VermontBachelor's degree in EconomicsNote: Top companies as featured in Fortune 500. Source: Insurance Information Institute.16
Top 11-20 Insurance Companies, CEO’sand College InformationRankCompanyCEO11Travelers Cos.Jay S. Fishman12Northwestern MutualJohn E. Schlifske13Hartford Financial ServicesLiam E. McGee14Aflac15NationwideUnited Services AutomobileAssn.Josue Robles Jr.16171819ProgressiveCNAChubbDaniel P. AmosStephen S.RasmussenGlenn M. RenwickThomas F. MotamedJohn D. FinneganCollegeWharton School of Business at theUniversity of PennsylvaniaBA in Business & MS AccountingPepperdine UniversityMaster's degree in BusinessAdministrationLoyola Law SchoolLaw DegreeUniversity of GeorgiaBSBachelor’s degree in BusinessAdministrationUniversity of IowaKent State UniversityIndiana State UniversityyBBA in AccountingMaster's in businessadministrationUniversity of CanterburyBAUniversity of FloridaMSAdelphi UniversityBS in BiologyWidener UniversityWharton School of the University ofPennsylvaniaJDPrinceton UniversityFordham Law SchoolRutgers University20Lincoln NationalDennis R. GlassDegree/MajorUniversity of Wisconsin–MilwaukeeNote: Top companies as featured in Fortune 500. Source: Insurance Information Institute.MBABachelor's Degree in PoliticalScienceLaw DegreeMaster's in BusinessAdministrationBA and MBA in BusinessAdministration17
Top 21-30 Insurance Companies, CEO’sand College InformationRank2122CompanyUnum GroupGenworth FinancialCEOThomas R. WatjenCollegeDegree/MajorVirginia Military InstituteBSUniversity of VirginiaMBADennis J. ManningNotre Dame UniversityBachelor's Degree in BusinessAdministrationBS Business Administration & MBAMichael D. Fraizer23Guardian Life Ins. Co. of America24Principal Financial25AssurantRobert B. PollockDrake UniversityUniversity of WisconsinMadison26Reinsurance Group of AmericaA. Greig WoodringUniversity of MichiganBSUniversity of IllinoisMSBBA27Thrivent Financial for LutheransBradford L. HewittUniversity of WisconsinBS - Math28American Family Insurance Group David R. AndersonUniversity of WisconsinBS - Finance & Marketing & MBA29Fidelity National FinancialUniversity of Notre DameBAUniversity of MiamiMBAUniversity of IowaBA & MA30Mutual of Omaha InsuranceGeorge P. ScanlonDaniel P. NearyNote: Top companies as featured in Fortune 500. Source: Insurance Information Institute.18
Insurance Information Institute Online:www iii orgwww.iii.orgThank you for your timeandd your attention!tt ti !
P‐C carriers Commercial banking Ins Agents & Brokers Securities brokerage 35 30 20 25 Mar 06 Jun 06 Sep 06 Dec 06 Mar 07 07 Sep 07 07 Mar 08 Jun 08 Sep 08 Dec 08 Mar 09 Jun 09 Sep 09 09 Mar 10 10 Sep 10 10 Mar 11 11 From April 2007 through October 2009, average hourly earnings at P/C insurers ti ll fl t t b t 29 I th 21 th i th h l 6
