Talent crunch is top challenge for local insurers: Gallagher Bassett

Attracting and retaining talented professionals is the number one challenge cited by Australian insurers this year, according to a survey by Gallagher Bassett, which has more than 7000 global clients.

Brisbane-based Head of Sales and Client Services John White tells insuranceNEWS.com.au that while the survey found many common themes worldwide, Australian insurers expressed a greater focus on compliance and the impact of regulatory changes on their business.

Insurers operating locally are also more focused on addressing climate risk and sustainability than in other regions, reflecting vulnerability to climate-related events such as bushfires and floods, he says.

“Both trends were consistent with our experiences working directly with insurers in Australia as a claims management partner,” Mr White said. “Our ability to partner with insurers to respond quickly and appropriately to regulatory changes or manage a surge of claims following a catastrophic event are highly valued.”

Access to top talent and staff retention was a concern raised by two thirds of insurers surveyed, topping the list of what mattered most to businesses after demand for claims personnel jumped by nearly a fifth, for brokers by more than 10% and for underwriters by about 7%, according to Seek.

“Attraction and retention of talent is the number one challenge facing Australian insurers in 2023,” the report said. “The battle for talent was a major concern.”

Mr White’s team is seeing some signs of improvement as insurers offer flexible work arrangements and invest in training and development programs, though many insurers still struggle to find the right personnel.

“The overall trend is still one of a tight labour market and strong competition for skilled professionals,” Mr White said.

“It is likely the talent crunch will continue to be a significant challenge for the insurance industry in the years to come and insurers will need to be creative and proactive in their efforts to attract and retain top talent.”

Only 16% of insurers indicated new business growth was their number one priority or opportunity in 2023, while over half said business stability and retaining existing clients took precedence.

The survey found insurers were more focused on retaining existing clients than new business growth in the face of economic uncertainty, changing customer expectations and regulatory pressures – particularly in Australia.

Greater caution among Australian insurers than in the US and UK was attributed to local economic fears – with a third selecting inflation as one of their main challenges in 2023.

“One also cannot ignore the impact the ongoing talent shortage is having on growth plans,” the survey said.

“The issue is clearly causing headaches today but there is the prospect of even more pain,” it said.

“Organisations that struggle to find quality recruits and retain their best and brightest may need to withdraw or even shelve expansion plans or at least wait until the economic outlook improves.”

Keeping up with technology advancements and cyber security are also frequently named as the main challenge, and Gallagher Bassett says a fear of failing to keep pace with competitors in technological innovation “can be overwhelming in a sector where the smallest of process improvements can deliver big results”.

Technology spending in Australia is expected to grow by almost 6% to over $117 billion this year, and Gallagher Bassett says many of its clients “will be contributing to those figures” and to “expect an influx of investment in technology infrastructure and education”.

Three-quarters of those surveyed agreed their clients wanted more insight and risk management-related tools from insurers, and insurers identified automation, cyber security, predictive analytics, and artificial intelligence as top trends.

“Insurers need to be able to efficiently automate reporting to provide deep insight and be able to analyse trends and performance at a click of a button,” the report said.

Mr White says insurers that embrace change and deliver what matters most to clients will “come out stronger than ever”.

“There are opportunities for insurers to thrive in this rapidly changing industry,” he said.