Memo to insurance agency owners seeking to onboard new employees: Expect to pay more, offer more and train more.
Those trying to hire know that already.
“What we’re seeing in particular in Texas, and I imagine in other places, too, is the market is extremely candidate-driven. We are facing a situation where, really, the industry is paying younger insurance professionals larger salaries than what their value is, than what they’re bringing to the table,” said Taylor Jones, college recruiting manager for Questpro Consultants, a Dallas-based staffing company solely focused on the insurance industry.
That reality is creating big problems for smaller agencies especially, because larger agencies can usually afford to pay for that talent, Jones said. “The smaller, Mom and Pop shops are struggling to keep up with that.”
Phil Lackman, CEO of the Independent Insurance Agents of Illinois, said he’s seeing a similar situation in his state. “Hiring talent for independent insurance agencies has been and continues to be one of the biggest challenges we hear from our members.”
As a result, agencies are having to readjust, particularly when it comes to hiring new producers, Lackman said. Whereas previously, it might have been standard practice for an agency to start a new producer at “a straight salary and a 20 percent commission and then nine months later put them on full commission, that’s changing. … I think agency owners understand to make a successful and long term hire, that particular model … just doesn’t work well today. It’s got to be a longer-term phase-in,” he said.
Mary Newgard, partner and senior search consultant for Capstone Search Group, a national recruiting firm for the insurance industry, told Insurance Journal that today’s job market favors employees and applicants.
“Don’t kid yourself thinking that you don’t have competition,” Newgard said as part of Insurance Journal’s annual Agency Salary Survey. “It’s a candidate’s market.”
Newgard said agencies can struggle to find solid candidates to interview for a position. “I think they are lucky to find two (good ones),” she said. “And if you find two, you better be willing to make a decision quick because those two candidates will each have three offers going at once.
Behind the Trend
There are a couple of primary reasons for the hiring difficulties agencies are facing today. One is the fact that older workers are disappearing into retirement like Alice sliding down the rabbit hole. And, they will continue to do so at an alarming pace, Jones said. “The insurance industry is facing retirements on all fronts. By 2020, 40 percent of the industry is of age to retire,” she said.
The second reason? With the economy in full recovery mode from the recession that began in 2008, unemployment rates are at historical lows.
Questpro’s Taylor said in her experience, Texas agencies first and foremost are seeking candidates for account management roles. “CSR, assistant account manager, account manager roles are the bulk of what we are always trying to fill. Every client that we speak to always says, ‘if you ever have an account manager, send them over, we want to see them, we want to meet them.’ Account managers and CSRs are the most popular openings for these agencies,” Taylor said. And agencies are willing to pay a “hefty price” for strong account manager candidates.
Agencies are looking for producers as well but are finding it difficult to attract top level sales professionals, she said. The high compensation packages top tier producers expect, along with non-compete agreements, are limiting the available talent pool for producers.
So many agencies are looking for account manager candidates that have a producer mindset, Taylor said. “We’re seeing a shift from maybe more talented, more seasoned account managers to the younger, next generation of insurance talent who can start with that CSR role [and move to] the account management role after three-to-five years. But they want them to be production oriented, to have that mindset of always being producing and being comfortable being client-facing.”
Agencies, especially the larger ones, also are investing in-house training programs in order to be more competitive in attracting talent, Taylor said. They are “taking the time to develop really strong training classes, developing different universities, they like to call them. They’ll have property and casualty universities, they’ll have different continuing education opportunities. And they’ll market it as their own training class.”
Some of the in-house educators are industry veterans who have extensive insurance knowledge but are not quite ready to retire. Because these educators are onsite, they are available to answer any questions trainees and new hires might have. Some agencies also develop a tiered training approach, offering one instructional channel for those who are brand new to the industry, one to those with some experience and another for experienced professionals who may just want to keep their license up to date or want to learn about a new insurance sector, like cyber, for instance.
Lackman, with the IIA of Illinois, said hiring producers is challenging for both small and large agencies in Illinois, though the smaller agencies located away from large urban centers face obstacles that larger firms might not. For one, there are just more candidates to choose from in a metropolitan area. And, he said, younger people are gravitating from the more rural areas of the state to the bigger cities. Still, “whether a large agency or a small agency in a small town in Illinois, some of the challenges are the same. Because it’s a unique position,” he said.
Agencies are realizing the importance of investing in a training regimen. Some are turning to the agent association for assistance and some are developing their own programs, Lackman said. He cited an agency in Decatur that has developed a training program and has had success with young producers, giving them more time to learn the business and phasing them into the commissioned producer role over a longer period of time. While a smaller agency may need that new hire to be bringing in income as soon as possible, the reality is that “the investment and training needs to be for a longer term than it once was. There’s a lot of competition out there,” he said.
Both Lackman and Taylor said the agent/broker community needs to do a better job letting young people know about the positives of the agency universe compared with the carrier side.
In Texas, Taylor said, there’s about a 50-50 split where about half of the young graduates coming out of the college and university risk management and insurance programs she works with are going to work in brokerages, especially the larger ones, and about half go to the carrier side.
Lackman said because Illinois has a number of large, well-known insurance companies such as State Farm, Allstate and CNA, students graduating from insurance programs in his state tend to gravitate toward the company universe.
Lackman and Taylor also said that young graduates in both states tend to want to be in the large population centers. Chicago in Illinois is a big draw, Lackman said. In Texas, Dallas and Houston, and San Antonio to a certain extent, are attractive to new grads, according to Taylor. But “Austin is the big-ticket item,” she said. “Austin is very popular.” As far as relocating to a city in Texas, that’s where candidates from all over the country want to go, she said.
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