The insurance industry is facing a talent crisis, and this is especially true for the captives market. Captive International reported live from the Captive Insurance Companies Association annual conference, which has increased its efforts towards spreading awareness and closing the talent gap.
“Hiring managers want candidates who know the industry and are familiar with more advanced concepts such as indemnification.” Matt Blessing, RT Specialty
Against the backdrop of an aging workforce and a wave of retirements, the insurance industry—and by extension the captive insurance industry—is facing a talent crisis.
According to the US Bureau of Labor Statistics (BLS), around 400,000 employees are expected to retire from the insurance industry by 2020, creating thousands of unfilled positions. A McKinsey & Company report also suggested that 25 percent of insurance industry professionals would be at retirement age in 2018.
While risk management and insurance (RMI) education programmes are becoming more prevalent in the US, many of their graduates typically go on to work for a carrier or a broker, or to be risk managers, rather than working with a captive entity.
At this year’s Captive Insurance Companies Association (CICA) conference in Tucson, Arizona, there was a large focus on raising awareness about career opportunities within the captive insurance industry.
“This conference is becoming a hub for knowledge transfer,” says Dan Towle, president of CICA, addressing the conference.
“By connecting students and young professionals with today’s industry leaders we’re not only creating excitement about captive insurance career opportunities, we are transferring knowledge to prepare the next generations of captives professionals.
“At the same time, seasoned veterans can learn from the young professionals.”
The association has involved itself with numerous advocacy activities and initiatives to address the industry’s talent crisis. It formed a professional development partnership with Butler University in 2017; launched a mentorship programme aimed at young and mid-career professionals in 2018; and this year held an essay contest to help promote the next generation of captive insurance industry talent.
Awareness goes both ways
It is very common to hear professionals working within the insurance industry say they “fell into” insurance, as opposed to actively seeking a career in it, and the same rings true for the captives sector.
This was discussed during one of the CICA panels, ‘Students: the bridge between academia and industry’, which suggested it can be difficult to find opportunities for students to work with a captive and that there is general lack of industry awareness.
“They don’t go to a captive because they don’t know who you are,” says Kathleen Larkin, instructor of risk and insurance at Missouri State University.
At the same time, however, the panel said the level of awareness goes both ways, and many hiring managers for insurance companies—and captives—may not fully appreciate just how “industry-ready” students are.
Matt Blessing, underwriting manager, RT Specialty, says that hiring managers want candidates who know the industry and are familiar with more advanced concepts such as indemnification, which many students will learn.
The panel speakers were strong advocates of RMI programmes and internships, but said that they are perhaps underappreciated by captives.
“If I were a captive and I had to pick the 4.0 GPA political science student versus the 3-point-whatever RMI student—I’d take the latter every time,” adds Larkin.
Daniel Freeman, an RMI student, adds: “You don’t need someone with five years’ experience; you need someone with an RMI degree.”
Kristen Peed, director of corporate risk management, CBIZ, developed an internship at the company, and claims there was a 100 percent success rate of interns getting a job in the insurance industry after taking the programme.
John Talley, captive programme manager at Missouri Department of Insurance, Financial Institutions and Professional Registration (DIFP), says it can be difficult for students to find opportunities to work with a captive, as they would have to go directly to a parent organisation which may not openly advertise the fact it has a captive.
Talley comments: “Most captives don’t have any employees, to be very honest. They are a creature of the accounting sheet.”
A hands-on approach
One of the ways students are becoming more involved with the captives world is through direct, hands-on experience.
Indiana-based Butler University provides one such example of this, being credited with creating the world’s first student-run captive, the MJ Student-Run Insurance Company.
Around 95 percent of the work processes have been done with students, according Butler University professor Kevin Thompson.
“Our programme has grown tremendously over the last few years,” says Thompson. “We have around 80 students involved in the programme. They have great hands-on experience.”
Thompson claims there is a 100 percent job placement rate among students who have worked with the captive.
Butler’s captive was founded in 2016, and received a licence from the Bermuda Monetary Authority (BMA) in the spring of 2017. The captive currently provides coverage for a police dog, along with its Real Business Experience (RBE) class, and the fine art owned by the university, for example, rare books, telescopes, and antique clocks.
It also aims to become a class 2 insurer in Bermuda, which would allow it to write up to 20 percent of its business to a third party, over the next few years.
“We’re trying to position our students in learning to satisfy that talent crisis,” says Thompson.
Before the conference CICA held an essay contest aimed at students, where two-person teams were asked to describe how and why a captive could be used as a cost-effective means of alternative risk financing for emerging risks and their corresponding loss exposures.
The winners of the contest, Angel Song and Alana Vicale of Temple University, submitted an essay titled ‘Opioid Epidemic in the US’.
Runners-up in the competition were Kayla Cecchine and Brendan Tarte, of St. Joseph’s University, who submitted ‘Captive Insurance: An Intimate and Efficient Risk Financing Solution to Climate Change and Tax Rulings Risks’; and Christian Ferrara and Charles Fisher, of Appalachian State University, with an essay titled ‘Alternative Risk Solutions: Captive Insurance for Cyber and Supply Chain Risk’.
“Our essay contest finalists tell us they’re excited about being at the forefront of creating captive solutions for emerging risks,” says Towle.
“That’s a powerful marketing message, and we’re taking it to a wider audience, so we can raise awareness and create excitement about career opportunities in the captive insurance industry.”
CICA 2019, Talent Crisis, Captives market, BLS, RMI, Dan Towle, Butler University, North America