Is the insurance industry talking the talk but not walking the walk when it comes to training staff? Veronica Cowan asks why investment in professionalism is still frequently questioned on cost.
A survey by the Chartered Institute of Personnel and Development shows that, even during the recession, many organisations are experiencing recruitment difficulties because of a lack of specialist skills. So, the obvious thing to do is train staff up to become qualified professionals, but some commentators feel insurers talk the talk but don't necessarily walk the walk.
"We can get frustrated by an industry that says the right things but does not follow through," remarks Philip Gennoy, HR director at Allianz Insurance, who adds: "We expect our lawyers, accountants and HR personnel to be professionally qualified, so why not insurance staff?" Good question, given that investing in professionalism demonstrates a wish to reassure customers, regulators and investors. But Mr Gennoy points to "short-termism and lack of foresight in the industry" which, meanwhile, "bleeds money and offers poor shareholder return. We have to invest to get the return. Profitability depends on talent."
However, a common reason cited by insurance companies for not investing in minimum professional standards, such as those required by the Aldermanbury Declaration and associated chartered status, is cost. Not just the cost of the investment necessary to implement training programmes and structured pathways for career development, but the cost to the business when high-flying, qualified employees are lured elsewhere.
Buying in skills
The fact insurers sometimes have to buy in skills speaks volumes. Gordon Vater is operations director of the Resources in Insurance Group, which provides skilled claims personnel to several insurers, often using the commercially savvy people insurers laid off. He recalls a claims director remarking to him recently that people have lost the ability to negotiate. Getting paper qualifications won't fix that, since commercial judgment comes with experience, but they do set a baseline.
And yet others, who have invested in this area, are convinced it is not only cost-effective but essential in developing a profitable, prospering business as well as a vital tool in attracting talent and retaining it.
So, is it possible to put a price on professionalism? Has anyone yet sought to quantify the benefits secured and calculate the return on investment? Can it be measured via reduced employee turnover rates, for example, or improved client retention?
Trust and confidence
Insurers may not have caused the financial meltdown that triggered the recession, but the industry has reputational issues of its own. And, as the Chartered Insurance Institute approaches 100 years of being granted a royal charter itself, it wants to see people trained and qualified to inspire high levels of trust and confidence — in turn raising the industry's standing with the public.
Research by the institute found that the word 'chartered' is associated with professionalism among consumers, prompting it to embark on heavy promotion of obtaining this status to individual practitioners, as well as corporate entities. The CII has called on insurers and brokers to sign up to the Aldermanbury Declaration and thus commit to a common framework for raising professional standards in the general insurance sector. By the end of 2013 it wants to see every firm exceeding a minimum threshold in terms of staff qualified to advanced diploma level. It is hoped the first approved firms will emerge this summer, aspiring to rival the established professions in terms of clearly documented training, qualifications, continuing professional development and consumer redress.
Angus Tucker, chief operating officer of Lorega Solutions, and principal of the Lorega Academy, is working with the CII to develop a training programme that can accredit its graduates with CII as well as Chartered Institute of Loss Adjuster status. He believes you simply can't put a price on professionalism, because loss adjusters must have the correct qualifications to properly adjust claims. "It's almost impossible to measure the cost of not using them," he says. "Our raison d'etre is education and qualification. The fact that individuals might leave once qualified is a business, not a professional, issue. To survive you need professional staff, so you have to provide them with incentives."
Paul Meehan, customer experience director for Axa, whose previous firm, broker Smart and Cook — which had chartered corporate status — was bought by Axa, wholeheartedly supports the CII initiative. He says Axa is already looking at achieving the correct percentages to achieve corporate status. "It gives you a competitive advantage," he claims, "and if we hold ourselves out as advisers we have to demonstrate we know what we are doing. The only way is qualification. Otherwise you are just searching for price."
The problem seems to lie in how some people view the insurance industry. Nicki Kavanagh, managing director of people development firm the Juniper Company, remarks that the industry has a long way to go in developing its professionalism because it remains driven by sales. "The public are savvy and perceive it as sales-driven, rather than advice-led, so insurers need to show they are providing a service to protect against risk. But the industry does not benchmark its qualification outside insurance." She believes insurance has to decide where to pitch its profile, which, at present, she would put "in the middle bracket, with estate agents", because there is not the rigour of the established professions, nor the length of training.
However, Christine Millar, Crawford & Company's HR director, claims that Crawford's college can benchmark its training outside insurance. "We are serious about developing people because professional qualifications are the key to sustaining and growing the business."
Similarly, Trevor Latimer, UK managing director of MYI chartered loss adjusters, says his company insists all staff undertake professional qualifications and feels that, in terms of client service, retention rates and investment in people, this is crucial to a firm's success.
"It is just a necessary cost of doing business," he says, "but it is vital, bearing in mind that it means attracting talented people." And, in terms of tangible financial benefit, he points out that, as the age profile increases, people move around and salaries can spiral, so it is better to bring in new people, then reward and provide incentives for them. "There is always a danger they will go elsewhere, but every profession needs an injection of new blood constantly," he says.
So, can any benefits be quantified in business terms? Alasdair Stewart, head of business development at the CII, says its in-house study found 63% of brokers feel they now have an improved perception in the eyes of professional connections and a further 71% believe customers view them more positively because of their chartered status. Mike O'Dell, head of training at GAB Robins, has also measured this since his company invested heavily in a management training structure. "It has delivered tangible business successes," he asserts. One ROI measure was staff retention — while the industry average was 4.5, GAB's was 6.5. Another improvement was seen in reduced absenteeism, although Mr O'Dell agrees it is difficult to separate external factors. "The spend is about the quality and calibre of staff," he says. "The investment isn't wasted and taking the attitude that the cost is squandered because individuals will leave is negative. We are doing it for hard business reasons."
Ms Millar adds that there are established evaluations models, but the question is really about the cost of not doing it. Crawford's MBA programme resulted in 100% retention and produced emerging leaders, she says, who have since been promoted. So, it can be about growing from within and saving on recruitment costs. When tendering for work, she says insurers also regard it as critical that adjusters have qualified staff, both from a regulatory and professional point of view.
More generally, Mike Petrook, head of public affairs at the Chartered Management Institute, says its own research and analysis indicates that individuals with professional qualifications achieve — on average — substantially higher average wages across their lifetime, compared to other individuals. "Members of professional bodies, over their lifetime, earn £152 000 more than those who are not," he says, "while those with qualifications and professional membership have a 37% wage premium over those without." The CMI believes employers should push the professionalism route, because organisations attract better talent if they offer it — and 85% of individuals see qualifications as a career passport. To those who resist investment on cost grounds, he remarks: "If you think the cost of competence is expensive, just think about the cost of incompetence."
Among insurers, Carl Carter, managing director of health specialist IMG Europe, says: "We encourage staff to obtain individual CII chartered status and will actively sponsor and assist staff seeking to gain professional insurance qualifications. We can see advantages to both the company and staff member as well as, ultimately, our business as a whole."
He adds: "As we operate in the international field, and are already corporate members of the Association of International Medical Insurance Providers, we do not see a need for our company to hold corporate status."
Pam Quinn, marketing manager at Groupama, says it too actively encourages people to undertake a variety of professional qualifications, including those of the CII. But she adds: "We do not necessarily follow this through with encouragement to apply for chartered status, although we support those staff that want to. With regards to the Aldermanbury Declaration, this is something we are reviewing and will be meeting with the CII in the near future to discuss."
To maintain chartered status, the CII charges brokers an annual fee — from £500 for firms with fewer than 10 employees, to £2000 for those with more than 250. But the qualifying criteria that the entire board, or highest management team, together with a minimum of 90% of customer-facing staff, must be members of the CII, adds additional cost. Naturally, this is less of an issue for brokers the size of Aon — which is considering signing up for chartered status, according to a spokesman — but could be an issue for smaller intermediaries.
Ann Peel, head of technical services at the Institute of Insurance Brokers, says small brokers have tended to recruit qualified people rather than grow their own, but worry that, once trained, enthusiastic staff will move on. "So, brokers may see little direct return on the substantial cost of bringing them through. However, bearing in mind the quote 'if you think education is expensive, try ignorance' there has never been a more important time to invest in professionalism."
Attract and retain talent
The market is increasingly competitive, innovative and highly regulated so, if a firm wants to thrive — whatever its size — it must work out how to attract and retain talent, she says. "Brokers can no longer rely on tapping into a pool of ex-insurance company personnel. They should be able to offer recruits a qualification-based career path tailored to the firm's needs and areas of expertise."
Doctors and lawyers obviously can't practise without qualifications, but Mr Carter says IMG "would not mandate this qualification, as we see it as a matter of personal choice, while appreciating there could be benefits for a firm holding corporate status". While Christopher Dickman, a director of recruitment group IPS, applauds the principle of encouraging individuals and firms to achieve chartered status. However, he too is cautious about it ever becoming mandatory, primarily because the demographics of the UK insurance market have changed dramatically, with fewer offices in different parts of the country. "Too many restrictions on a candidate's suitability could make it difficult to find the right person," he says. "Specifying that qualifications are desirable, coupled with a willingness to consider experienced people without them, would be preferable. This recognises the practical issues in the context of available recruits."
For his part, James Heald, managing director of recruitment specialist Aston Charles, says chartered status is a big selling point when promoting a client to the industry: "It differentiates brokers from each other, and shows they are committed to professionalism."
This point is echoed by Matt Green, managing director of Idex General Insurance, who adds: "Aldermanbury has already had an impact on the brokers we deal with in terms of marketing. It has emphasised that people at a senior level must get the qualifications to progress."
He is also keen for firms to obtain corporate status, to compete with other professions and enhance the regard of the industry. "When candidates register for work it is vitally important for them to be placed with such a firm. It is a common question around candidates. High flyers will want to be aligned with those businesses."
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