Back to Blogs
Ec   Blogs (9)
Share this Article

Broking & Underwriting Market Insights - H1 2022

  • Publish Date: Posted 9 days ago
  • Author:by James Sibthorp

I have been working closely with the broking and underwriting industry to hire talent into the Lloyd's and London Market since 2013. I have explored a number of topics and shared my insights into the current availability of talent in the market. This includes the approach to flexible working, sustaining culture through hybrid working, in-demand roles and skills and impacts on the market for H1.

Availability of Talent

In the current market, there is a tightening of underwriting & broking talent across multiple lines of business. Employers are being left with a pool of talent that is not experienced enough and potentially overpaid, especially if they have moved roles in the last two years. Companies have counter-offered or increased salaries to retain talent or stop their staff from taking a new role, so it’s now challenging to find new candidates that match the requirement of clients. Clients are having to look at fewer years of experience, but this, in turn, drives up the salaries of less experienced candidates.

There are very few candidates in the 5-to-10-year bracket that haven’t already moved or been bumped up the pay scales in their current roles.

There seems to be a smaller talent pool within the insurance and reinsurance markets due to having a soft market for 15+ years. This means that now the market has hardened, companies are seeing improved rating conditions and making more profit and thus need talented people in place that can service the brokers/clients. This drives demand for talent, especially as classes of business that have been out of vogue, come back into fashion.

As markets come back into classes of business that they haven’t been in, the result is inflated wages and counteroffers. This has all happened in a relatively short space of time, and it seems that candidates are being paid more than they would have been even just five years ago. In many cases, salaries have doubled in just a 2-year period.

Where are clients hiring from?

Clients hire from competitors because the insurance market has historically not been very good at attracting people from other “industries”. It does occasionally happen, and in my experience, the candidates that come from other industries are often in high demand during their careers. The insurance market could populate itself with people who are bringing different skills, experiences and ideas, especially as the market becomes more digitized and risk profiles change.

A lot of companies have scaled back their graduate schemes, meaning that growing your own staff hasn’t been an option for some companies. It is usually only the large global brokers and carriers who can afford to have their graduate schemes running.

How has this changed?

The market has seen huge activity in the past 2 years. Broadly speaking, the cream of the talent seemed to move in year one, with a subsequent middle tier of talent following in the second year as rivals poached talent to try to upskill existing teams. COVID restrictions easing have helped people find new roles. The COVID restrictions had made people slightly more hesitant to commit to finding a job. Having face-to-face contact meant it was easier for people to make a career change. The movement of talent was relatively quiet during the early COVID restrictions, with candidates lining up positions and waiting for restrictions to ease before resigning.

Flexible working approach

Flexible working is a requirement that candidates want to have, but the more client-facing or market-facing you are, the less important this demand is. I think companies that have a hard and fast “in the office 24/7, five days a week” culture are not as attractive and may not attract the top talent in the future. Clients that offer a hybrid pattern or have flexible working will appeal to many, especially those with long commutes.

As far as underwriters and brokers are concerned, Mondays and Fridays are generally good days to get your admin done, but Tuesdays, Wednesdays and Thursdays are trading days. The more senior market practitioners generally tend to be in at least 3 days, or more commonly 4 days.

Video tools have become essential to everyone involved in insurance. Meeting clients internationally or in London can be an expensive affair. Clients can now be accessed in minutes, with larger numbers of people on the calls (sometimes much to the brokers' frustrations). However, there is still nothing like the lure of meetings in EC3, and London should have no problems maintaining its pre-eminence in the eyes of the insurance and reinsurance market.

Culture

The London insurance market is a very close-knit group of professionals, and candidates will often know a colleague or associate at a potential employer. Google will also bring up various well-known sites used to rate employers, but there is nothing like speaking to an existing employee at a company to gauge the culture.

Sustaining a culture through a hybrid working environment is challenging, and employers have been trying to maintain cultures, or build them if they are start-up businesses, during COVID. When so many employees may be away from the office at any one time, having those weekly underwriting meetings with the Chief Underwriting Officer or Active Underwriter are so important, ideally face-to-face if possible. I have spoken to underwriters and brokers who say that Underwriting meetings with someone in their home office with the camera off just don’t flow very well. Even just switching on the camera and showing your face, can contribute to a better culture. Company cultures can’t just be built digitally, and managers need to invest in team bonding sessions and getting people around a table to establish strategies and encourage diversity of thought.

Due to COVID, the culture of a Friday in the market has been eroded for better and for worse. Bars and restaurants are emptier, but as a result, work productivity has gone up (in my experience). If I am working until 6.30 pm on a Friday, then I can guarantee that my underwriting contacts are, as I am often speaking to them at that time. This never happened before COVID on a Friday.

Companies that have a strict 24/7 and 5 days a week culture may see a talent drain. If your rivals are offering flexible working, then why wouldn’t you try to compete? I know of companies that have checked in on employees’ mental well-being during COVID and companies that have asked their staff how they are adapting back to a “normal” working pattern? Can every company say they have shown a duty of care to their employees? Some can, but certainly, not everyone, based on the conversations I have had with people.

In demand skills

Underwriting skills across treaty lines and emerging technologies/industries such as renewable energy are hard to find. How can employers adjust their expectations? There is a massive pool of offshore energy underwriters with 20-25 years left in their careers. How can they be utilised if oil & gas projects are shelved by the major economies over the next 10-15 years? Employers need to think outside the box, and we can help them do that by accessing those candidates that haven’t traditionally been in their network.

Property treaty is currently quiet due to less appetite for CAT exposed property, but specialty and casualty treaty lines seem to be buoyant, and hence there is a demand for talent. In the direct lines of business, renewable energy underwriters and brokers are in demand in line with the environmental, social and governance (ESG) philosophies. The shift from carbon-intensive activities is meaning that companies and syndicates are reviewing the way that they deploy capital and meet ESG targets. As a result, they realise they need to start backing and being involved in infrastructure projects which are heavily renewable-focused projects. Therefore, renewable energy is going to grow across underwriting and broking. How will the market insure the growing risk profiles of battery and hydrogen storage facilities or lithium batteries in transit on cargo ships?

I’m seeing a demand for those types of people, and there is a very good chance for people to potentially move from industry into insurance.

How has this changed?

Brokers are seeing increased demand for products and services, and they bring the business to London. If the insurance and reinsurance markets are making a profit then they need to invest in the amount of staff they employ, to service the clients and brokers. If, and when there's another downturn in terms of the pricing of the products, inevitably, you start to see a few people leave the market. Currently, it doesn't look like there is going to be a significant event anytime soon, and it seems to be a continuous growth pattern.

Roles in demand

Talent is short in renewable energy, specialty/casualty treaty and marine/energy across underwriting and broking. Casualty classes have seen significant shortages of talent, and I have also seen demand for underwriters that have got between five to ten years of experience, as well as deputy-class underwriters and senior underwriters. Candidates that are currently “number two’s” in a team that could be “future number one’s” are difficult to find at the moment.

How has this changed?

The demand has increased through the better pricing environment and the withdrawal of capacity 3-4 years ago in certain classes of business (marine, for example). As rates increase, carriers and syndicates need the talent to attract business from the brokers, and the brokers have needed experienced heads to better communicate the harder pricing environment to the client. Talented brokers don’t come cheap.

Over the last 12 to 24 months, the environment has been better for people to make money in insurance than it had been for many years, in certain classes of business. Marine had suffered for a long time from a very soft pricing environment, but as weaker capacity withdrew and the market showed discipline, the markets that had large books of business and had priced their books well have come through it.

The pricing environment is much better now than it has been for many years, and it is a good time to be in certain classes of business.

Impact of the war against Ukraine

The Ukraine war has affected everyone when it comes to insurance. There are lots of different ripple effects for social and economic things that affect us all daily, as we're all finding out. For example, the war clearly affects how underwriters in aviation markets look at their portfolios, and the reinsurance markets are going to be vigorous in terms of protecting these exposures.

We are going to be coming up to a big renewal season in the reinsurance markets where pricing, in theory, should go up to try and start compensating for any losses that will be incurred as an effect of the Ukraine war. Everyone in the world is going to be impacted in terms of how we are all experiencing price increases in daily goods. Whether it's groceries or cars, things are becoming hard to find, products are stuck in warehouses, and the global supply chain has been disrupted by a series of events from COVID, the Suez Canal blockage and now the Ukraine/Russia war. These are hard to calculate, price and model for insurers and reinsurers. Social inflation is a phrase that hadn’t cropped up in client meetings until the last 2-3 years, and now it is the buzz topic.

Insurance and reinsurance have historically been seen as a ‘boring’ job but when you scratch under the surface, the roles can be fascinating as they intertwine with global events. Insurance and reinsurance can offer stability and career development and present opportunities to apply your skill set, particularly, if you are analytically minded.


If you are looking for your next opportunity or support in your business recruitment objectives, please don’t hesitate to reach out for a confidential discussion: james.sibthorp@eamesconsulting.com or by phone on +44 (0)20 7092 3260.