State of the Nation: Lloyd's and the London Market: Deepening the talent pool

For the insurance industry, London is infamously built upon a cluster of talent and expertise that lies within the City’s square mile, an area packed with underwriters, brokers, loss adjusters, shipping brokers, law firms and accountants. But in 10 years’ time, will this story be told just the same? By 2026, a significant number of the senior management will have retired, leaving vacuums behind where historic knowledge and expertise once sat.

Finding new talent has never been more challenging, and the London Market has mandated itself to address this issue before companies are left with no one to run them or understand the new business coming in. Attracting new business to London requires manpower in the city, and with the emergence of new technologies and an increasingly connected environment, it is therefore crucial to find the right talent that can relate to these risks.

“Having grown up with technology at their fingertips, it’s really important to get young people involved and get their ideas. It’s very difficult to change something if you yourself have been doing it one way forever,” confessed one participant.

Another respondent worried about a different issue: “When you look at the demographics, certainly in the developed markets, the population is declining and there is going to be a fight for talent. We have to make sure we are attracting the best candidates out there who want to work in insurance and not Google or Amazon.”

From the line of least resistance
Clearly change is needed and not just to attract Millennials; the general recruitment process for most companies is fairly insular, according to those surveyed: “People will recruit by poaching from one another, they won’t think of attracting talent from outside the industry because it’s deemed that you need insurance experience, which in a lot of jobs is completely untrue,” bemoaned one participant. Another admitted: “Most of the people who work here do so because they know somebody who works here. Go much beyond, and the level of knowledge and understanding of how [the London Market] works rapidly declines.”

This poses a problem for recruitment. If people are ignorant of the industry, they are beyond the market’s reach. One respondent confessed that outside of the graduate intake, “we’re probably going to pinch them from our competitors or the brokers or the client, which is not a great place to be, but that’s the line of least resistance”.

Companies are slowly moving away from this attitude. However, some still hold fast to the principle: “Your talent basically comes from people who’ve got to know the market by practical work within it. You won’t suddenly get an accountant or solicitor deciding to change streams and become a senior underwriter.”

Since publication of the 2015 London Matters report, industry leaders have been made aware of a growing talent shortage and are seeking to redress that. Although one respondent still stated: “I wasn’t aware there was a great shortage of talent.”

“The London Market Group has a workstream looking at the talent gap in the market, which includes the diversity element,” said one participant. “The market has tended to be somewhat of a washing machine: we are recycling people from our own catchment pool, so there isn’t a huge outward reach from the London Market.”

Looking outside
This outreach has now begun and involves both recruiting from outside the industry and targeting those in higher education. One respondent commented: “I don’t think it is rocket science. This is just being thoughtful, being aware of what is changing out there from a demographic point of view, from a cultural point of view, and attracting a diverse group of people who may traditionally not have thought of insurance as a career. Because they come in with a different perspective, they could really be creative and innovative.”

Having identified talent gaps in wording and claims, the LMG is now assessing its options: “We are doing a little bit of research as to maybe attracting lawyers who either haven’t got a contract yet or are fed up with their work-life balance and doing really unsociable hours. The important point is we would like to bring people from different job roles and industry backgrounds, at different levels of experience, into the industry,” said one participant.

Widening the pool
If lawyers might be attracted to insurance, so too might law students. Financial students, law graduates and technology whizz-kids all have vital roles to play. Pulling in these young minds is an essential step for success, and not just to counteract the lure of start-ups, which have already headhunted promising individuals from insurance companies. To prevent that talent drain, the London Market is now widening its recruitment base and reaching out to higher education students from myriad disciplines.

Lloyd’s itself has an initiative that brings in graduates and enlightens them as to the career possibilities within insurance. One candidate explained how these graduates, upon looking around the building and learning about the market, experience a “lightbulb moment” when told about the roles for them within the industry. Evidenced by research conducted through organisations such as the Chartered Insurance Institute and the LMG, it is clear those who know about the industry are much keener to join. Respondents told Post, on the ground, graduate schemes are “oversubscribed by about seven or eight places to one”.

Yet retention rates are worrying. Where once a job meant for life, the average time spent in one company is now less than five years in the US and likely to follow suit in the UK. Employees today tend to shift around, which can have a serious impact on a company’s resources in terms of both training new recruits and promotions to management.

One participant remarked: “The longer we can keep people at individual companies the better. Try and stop people moving around every two or three years, put people on leadership programmes, through technical training, international experience as well. They need to get that broader view of how other markets work.”

Hitting the ground with a bump
To assist the London Market in its global and domestic strategies, new talent must be nurtured or it will simply leave. Yet, as some participants stated, when the new intake settles in to “essentially admin work”, the talent pool that fought so hard to enter the industry might feel neglected, and and take their hopes of career progression to another company.

One participant explained companies are struggling to know how to deal with Millennials: “You get a graduate who comes in and the company wants to do a lot with them but it’s very difficult to understand how to unlock their potential.”

Faced with this task, it appears to have been easier in the past for companies to simply pick up old habits, as another participant explained: “They haven’t really changed the way that the work is taken on. They still have the same ways of doing scanning or inputting, which is a very old way of doing things. And that’s a little bit restrictive and a bit of a barrier.”

The prospects of having to “do your time” to move up the ranks, especially in underwriting, can also be a barrier to new talent. One participant commented: “It’s possibly a turnoff. I’d suggest they try to actually differentiate between [those] who are happy to stay assistants their whole lives and people who want to end up heading up their own teams.”

Praise the youth
With 34,000 London-based people working in the London insurance market, not everyone will progress their career as quickly as anticipated, so spotting and developing the future’s leaders is another key strategy for the London Market, one with which the participants felt very aligned: two-thirds agreed that to retain talent within the London Market, one had to reward it.

“What we need is more youths in positions of authority being given more opportunity to bring their view of the world to the market,” suggested one participant.

That understanding is key because the clients placing business with the London Market live in this changing world too: “Clients are very, very relationship-based and these relationships are held with the senior staff, and so it’s important for people to bring on board the younger generation a bit earlier.”

Several companies are trying. One participant spoke of their company’s shadowing scheme: “We take junior members of staff in both our casualty and general property business units and we stick them into the complex and major loss areas for a period of three months to shadow the more experienced [members]. Rather than just have a day with them, they go and spend months with them.”

A healthy perspective
Something else that will help young talent stay on at their firms is the belief that their company values them. The next generation of employees is already known to highly value a company’s work-life balance ethics, perhaps because it is increasingly difficult to ‘switch off’ from work with so much connected technology around them. With more competition for the best talent, this changing world demands an entirely new and modern approach to employment itself.

“We have to change our practices,” stated one participant. “We have to have things like flexible working, we have to be digitised so that we can attract the talent of the future, we have to be closer to our customers, go out to big markets, speak the language, be culturally aware and make sure we’re getting lots of young people who are talented, bright and wanting to do things in a different way.”

‘Staying relevant’ was a phrase heard repeatedly throughout this research, and it concerns both employees and clients. “The work-life balance of our client is changing,” explained one respondent. “They are flexible in the way they approach working and they expect us to be as well.”

The road to diversity
But flexibility encompasses much more than unusual working hours or working from home. It is about being able to meet every client’s needs wherever they are from and however technologically smart they may be. To do this, the London Market must diversify its workforce across all client-facing companies so for every new piece of business walking in through the door, there is someone within that company to whom they can relate. After all, the industry revolves on relationships.

This is a huge task and one the London Market has not taken lightly: “Our main aims really are around focusing on making sure Lloyd’s is a diverse and inclusive place, making sure that we can continue to attract and retain the best talent, and incorporating diversity in its broadest sense. ”

The Corporation of Lloyd’s and the London Market Association have already begun raising awareness with ‘Inclusion at Lloyd’s’, a market-wide initiative set up last year with the objectives of transforming London into “a diverse market by gender, age and ethnicity” and to “increasingly mirror the geographic origin of the market’s business and capital”.

Inclusion at Lloyd’s launched the Dive In festival in London last year to “raise the awareness and increase education” around diversity and inclusion. Taking place this year in London and around the world, Dive In has already won several prizes, including a British Insurance Award, which is “quite an achievement if you look at the boardrooms and committee meetings around here and the preponderance of middle-aged white men”.

Embracing difference
Although the male-female balance is still important, a diverse workforce involves much more than striving towards ‘50% female’. For some, it is about gender, race or sexuality. For others, it is about age, language or social status: “Diversity in London is less about gender and race, and more about class. I know for a fact when I’ve gone for a position and not got it, I’ve been told it was because I didn’t go to the right school and I was absolutely the right person for that job.”

For the LMG, diversity addresses all these issues and anything else which might enable an inclusive workplace “where everyone feels valued and gets the best out of people”.

The London Market as a whole is currently “not very” diverse, according to the 33 participants who took part in this research. And 65% felt their firm was even less diverse than the market. This is clearly an opportunity to “get closer to our customers and make sure we are relevant to them by speaking their language, by understanding their culture”.

As insurance buying becomes more localised, more people are needed on the ground who know these cultures, and this requires an employee base as diverse as its clients: “The London Market attracts talent from all over the world and it’s important we have the insights that come with colleagues who are from outside the UK,” said one participant. “They enable us to fit our solutions to the actual lifestyles of the clients.”

Diversity gives access to a greater and larger talent pool, which is vital if the London Market wishes to attract an even larger pool – the world – to its doors. “We’re going to need a broader mix of experiences, skills and cultures to succeed and when you talk about the cultures, we operate within a very old-fashioned environment in terms of personal make-up of the UK London Market. In terms of colleagues, we are going to need a much more cosmopolitan and international flavour to actually meet the needs of the international market and a global set of [insurance] buyers.” This recognition is at the heart of what the push for diversity is all about.

Negative consequences
“It’s important for all businesses to reflect their client base,” stated one participant. “This is about making sure we are able to understand the needs of businesses going forward. We need to continue to develop, continue to innovate, continue to inform product development, and the best way is to have the most innovative employees working towards that long-term vision. That has to come from a diverse workforce.”

A lack of diversity could lead to being out of touch with the Millennials, the future generation of insurance buyers: “Because of the new client base that they are having to target, it’s becoming increasingly difficult for a company. It’s great if you can draw parallels and comparisons with your client, they feel more comfortable.”

Serious consequences can occur when clients do not feel comfortable, as one participant related: “I have had an incident where a broker lost a Brazilian client because they didn’t have a single Portuguese or Spanish speaker or anyone that had been to South America on the broker team, so [the client] moved the account to a competing broker who had a South American on board and who made the effort to go out to Brazil and build a relationship with them.”

“The insurance market is very much white and male and it doesn’t really represent a lot of ethnic minorities,” added another respondent. “With people from different nationalities and different backgrounds – in terms of race and gender – they can definitely encourage innovation because they bring different skills and mindsets towards their work.”

Attention is turned once more to the importance of attracting the best talent because the success of the London Market may depend on it: “One of the things we are trying to do is make sure we attract a diverse pool of candidates into our organisation and by doing that we have a greater chance of being successful in the future because we have people who can think differently.”

A difference in thinking is crucial to the London Market’s drive for best talent and greater inclusion. Diversity of thought brings new ideas and new solutions and greater diversity “drives a more innovative and profitable business”. If London wishes to keep its reputation as the global centre of innovation, it would do well to continue its good work of targeting graduates and school leavers by embedding the culture of diversity across its firms and businesses and allowing ambitious new starters a little more taste of the action that can presently be seen within the insurance industry.

To find out more about this research on Lloyd's and the London Market, read part one on globalisation, part three on innovation and modernisation, or part four on leading the way.