The general economy is continuing to improve, and insurers are optimistic about their growth prospects, Rieder says. Certainly there is the positive impact of an improving economy. The current unemployment rate of 5.8 percent is the lowest it has been in many years, Rieder says. As the economy continues to improve, businesses across industries are hiring, which creates an underlying exposure base that companies have to insure, he says, which stimulates organic growth. "New home and car purchases continue to increase, so theres more to insure. Up until now rates, year-over-year, have continued to increase. Going into 2015, that may slow down, but with the wave of improvement in the economy, people are forecasting better results. Source: The Ward Group
Performance Review
The rosy outlook is not limited to the largest players. Many smaller, regional carriers are expanding their geographic footprint and increasing the number of product they are writing as well, Rieder says. As they are trying to expand their own business, a lot of times they are hiring, whether that is new underwriters or claims people. Thats all driving growth. It will be interesting to see how that evolves into 15 and 16, as things are likely to flatten out at some point. Many insurers are experiencing financial strength and have surplus capital, Rieder explains, which is encouraging them to take on more risk in an effort to achieve these growth objectives. They are trying to find ways to deploy that capital, he adds. Source: The Ward Group
New Job Creation
The insurance industry has created 51,300 new jobs since April 2011, according to the Bureau of Labor Statistics, but filling those jobs will be increasingly difficult, especially for the positions they need most to fill, including actuarial, analytics and technology. Technology is a function that is not unique to insurance, meaning that companies are competing with others outside the industry, Rieder says. For actuarial and analytics, there are simply not enough people to fill the open positions currently, he adds. Those are newer skills and finding or developing people who have those skills is difficult. Finding people with 10 or 15 years of experience with those skills? Not many of those people exist. Those are skill sets that will need to be developed internally at many companies. Source: The Ward Group
Falling Unemployment Rates
Historically, the insurance industry has had much lower unemployment rates than the broader economy. As unemployment continues to decrease across the country, the labor pool that insurers will draw from is becoming more competitive, Rieder explains. We are seeing that already. As companies are searching for employees, it has become more difficult, and that is forcing them to go back to offering internships, hiring young people and developing that talent. The demand for talent is increasing and its not expected to get any easier. Source: The Ward Group
Likelihood of Increasing Staff by Function
More insurers are willing to take on more risk to grow their businesses, Rieder says, which is driving systems replacement, geographic expansion and new product rollouts, all of which is motivating insurers to hire. If you look back to 2009, when people thought things were very difficult after the economic downturn, we saw companies that were cutting staff, cancelling strategic initiatives and delaying new systems implementations," Rieder says. "They were very inward looking. Now we see companies taking a much more outward looking approach to the business and they are more proactive about change. That change in perspective is supported by a number of contributing factors, Rieder says. Equity markets now are trading near record highs, most insurers have recouped investment losses, most have been able to generate positive premium growth for a couple years, the cost of reinsurance has fallen, and other than an unusually harsh winter, catastrophe losses have been comparatively lower. "It isnt any one thing. Everything is just a little bit better than they have been, Rieder says. "There are a lot of reasons companies are feeling better. Source: The Ward Group
Top Take Aways and Closing Thoughts
To succeed, insurers need to become more well rounded, Rieder says. There are influences, both internal and external, that are going to affect all of the decisions that companies make, he says. So, companies need to be very proactive to understand what those influences are, to monitor them regularly and make sure they are accomplishing their goals relative to all the other issues. You cant move a parked car. Youve got to keep moving forward. Source: The Ward Group