In series - Lloyd's & London market: Power to the people

n organisation is only as good as the people it employs. And, for Lloyd’s and the London market, where success hinges on the quality, skills and experience of the employees, this is particularly true.

Its importance is neatly summarised, by Toby Esser, group chief executive of Cooper Gay Swett & Crawford: “Broking is about people. Without good people, you have nothing.”

With staff recognised as being crucial, it’s essential that firms pay close attention to talent, ensuring the right calibre of employee is recruited and retained within the industry and not lost to competition.

Skills assessment
Assessing the state of the market’s talent is essential. Julian James, chief executive of Lockton International and current president of the Chartered Insurance Institute, believes it’s at a high point. “I’ve worked within the London market for 30 years and the talent and skill base is the best it’s ever been,” he says.

James believes this is due to the quality of employees and the breadth of experience in the market, with more analytical roles creating an even greater mix of talent.

But while this presents a positive image of the talent in the market, Lloyd’s is also aware of its competition and the need to invest in skills to retain its position.

Lloyd’s is learning from the past, after putting its claims talent under the microscope and discovering a large hole. David Lang, head of claims at Lloyd’s, explains: “In the early 1990s there was a lot of uncertainty in the Lloyd’s market so, for a six to eight-year period, companies stopped recruiting.

“This has left us with a hole, with a real lack of people in their late 30s and early 40s who have the necessary experience. We’re now looking at ways to address this, with the franchise board having set a challenge of introducing 50 new claims people over a five-year period.”

New blood
One way to ensure this talent gap doesn’t hinder the market is to attract new employees through apprenticeships and graduate training programmes. Finding people of the right calibre, who can be fast tracked through to more senior positions, is essential.

Gavin Phillips, Lloyd’s and London market leader at PwC, has noticed a drive to do this. He explains that, three to five years ago, there were few graduate programmes but these are much more common now. “Lloyd’s has reinstated its graduate programme and many of the managing agents are advertising for graduates. The market needs to tap into this talent,” he adds.

Certainly graduate programmes are in evidence across the market, attracting more and more trainees each year. For instance, Aon has 80 people on its scheme and Hiscox has 20 trainees completing its UK programme, having introduced it in 2009.

Julie Hyett, graduate programme manager at Aon, says its own programme is becoming larger and more significant each year. “Insurance has been something of a hidden profession,” she says. “So we’re really pushing to get out to career fairs and speak to undergraduates about a career with us.”

The word seems to spreading, with Terry Hayday, head of professional standards at the Lloyd’s Market Association, witnessing more graduates applying for places than ever before. Additionally the LMA’s graduate website is 
growing in popularity and has received more than 100 000 hits so far this year. “Lloyd’s 
employers are having to be much more selective,” he adds. “They get so many graduates they’re stipulating a minimum of a 2:1 degree.”

As well as graduate programmes, some companies are offering more short-term internships. These are aimed at graduates and undergraduates who can gain work experience during the summer holiday ahead of a training programme. This also makes for an ideal way to assess talent. For instance, Aon had 60 interns this year and has made graduate programme offers to more than half 
of them.

Fellow broker Lockton runs a similar programme and currently has a mixture of interns working in its business. These include trainees from one of its EU business partners; two interns from a US partner; as well as a couple from its partner charity Whizz-Kidz.

“We’ll also increase the number during busy periods such as solicitors’ season,” James adds. “It’s great as it gives the individuals some experience of working here but also enables us to assess their suitability for a permanent position within the company.”

Training apprentices
Apprenticeships are another option for attracting talent, and one that Hyett says Aon is considering for the 
future. These are aimed at over 16-year-olds and are likely to become more commonplace as high tuition fees deter candidates from going to university. They also benefit from government funding, allowing employers to receive a contribution towards the cost of each apprentice’s training.

Gordon Vater, managing director of Resources in Insurance Group, believes apprenticeships will become more prevalent in Lloyd’s and the London market. “There’s a lot of weight behind apprenticeships,” he says. “As well as encouraging more school leavers to consider a career in the market, employers can also use these schemes with existing employees and receive a contribution towards the cost of training from the government.”

In addition to bringing new talent into the market, companies need to invest in their current employees to ensure they continually enhance skills and improve retention rates. Joris Wonders, practice leader for talent management at 
Towers Watson, says employers within Lloyd’s and the 
London market need to 
understand what the market’s specific drivers are behind retention. “Employers need to get out there and understand what motivates people and tailor what they offer,” he adds. “I would suspect that a structured career path and professional 
development would be important in this market.”

Hayday agrees and believes that today’s graduates want to see their careers advance quickly rather than find themselves in the same job for many years. “They demand much more progression and variety of jobs now,” he adds.

There are plenty of examples of these activities across the London market, with many companies taking advantage of the training provided by organisations such as the Chartered Insurance Institute, the International Underwriting Association and the LMA.

James says professional development is essential. “We believe in developing talent,” he says. “We became chartered brokers in 2010, making us only one of two out of the top 20 brokers that have achieved this. I would like to see more brokers going this way.”

To support this, his company has introduced a more structured CPD programme, encouraging employees to develop their skills and has seen a threefold increase in entrants for the CII examinations. “We have a retention rate of 95% for our professional associates,” adds James. “When they join us, we want them to stay for a long period.”

Positive message
Hiscox is also supporting its employees in their development, giving its staff, including those on its graduate training programme, four years to gain professional qualifications. In particular it is encouraging all new employees to take the CII’s Award in London Market Insurance and top this up to Certificate in Insurance level.

Des Bishop, group head of learning and development at Hiscox, says this sends out a very positive message. “It demonstrates commitment to employees, including those on the graduate programme. We’re investing in our talent and want to support 
individuals and professionalism in the industry in general,” he says.

Lloyd’s is also nurturing existing employees through its Claims Talent Programme. As well as offering the scheme to graduates, with nine of the 200-plus applicants recently starting their 12-month programme, it also offers an 18-month programme for market practitioners. This is in its first year and has six students, all of whom are paired with a senior mentor from another company.

Lang says it’s proving very interesting: “By matching rising stars with senior mentors, it’s challenging the way the industry operates. Both sides are finding it a learning experience.”

There is also evidence of companies within the market sharing their experience to ensure standards remain high. The IUA recently launched a training and education forum to enable members to meet on a regular basis to discuss issues and share their experiences. “All of our members want to bring talent into the London market and this will encourage that,” says John Hobbs, director of market services at the IUA.

While Lloyd’s and the London market appears to be awash with schemes to recruit new employees and retain existing ones, an additional approach may be required. “It needs to do more on the PR side and sell itself to potential employees,” claims Ian Faulkner, managing director of Metaskil. “Lloyd’s is still perceived as a bit of an old school organisation. It is an exciting place to be but the brand doesn’t attract innovation.”

As an example, he points to Lloyd’s recent results announcement. Faulkner says that rather than putting a positive spin on this and talking about the future, it was apologetic about the size of the losses. “It missed a great opportunity,” he believes. “It needs to excite people and make them want to be part of it.”

Regulation is another potentially thorny issue when it comes to recruitment and retention. With a need to dictate the processes and paperwork required, this could be seen as stifling market innovation and entrepreneurship.

But Hayday says that red tape should be seen as an opportunity rather than a constraint. “Solvency II is creating a big regulatory drive. It’s an opportunity for risk management and it’s already attracting people to the market. We’re also seeing employers actively seeking out graduates in maths and similar subjects to deal with the future demands. It’s a great opportunity for young actuaries,” he says.

Banking backlash
While the insurance industry may still suffer its own image problem, many feel it is benefiting from the reputational damage other sectors have endured. For instance, Hobbs says that the banking crisis in particular is pushing graduates to think about other options, including insurance.

But even if the sector is benefiting from the banking backlash, employers within Lloyd’s and the London market still need to spell out the plus points of a career in insurance. Phillips says Lloyd’s should use its unique position to its advantage.

“Lloyd’s and the London market deal with such an array of risks that underwriters have to truly understand what they’re underwriting and brokers have to truly understand what they’re broking. As long as it continues to sell itself as being at the forefront of the market it will succeed in attracting talent,” he says.

A good example of this in practice comes from Hyett. When she speaks to undergraduates about the market she’s keen to emphasise it is not boring at all. “Insurance doesn’t sound interesting but I explain to them that we’re involved in everything they see on the news – war zones, political risk, entertainment, sport and so on,” she says.

Even though improvements are being made, speaking to new market entrants suggests that more PR is needed up front. Twenty-three year old William Steer-Matthews is on Allianz’s graduate programme as an underwriter for commercial property, and says: “I feel very fortunate to be in the London market, but before I came here I didn’t appreciate what went on. Now I want to stay within this market. It’s really interesting and I believe it offers opportunities you won’t find in other financial services sectors.”