Sizing Up Industry Talent

A looming shortage of commercial underwriters and actuaries means the property and casualty industry must put effective talent management systems in place sooner rather than later, according to Robin Spencer, the president and CEO of Aviva Canada.

Spencer was a member of the CEO panel at the Canadian Insurance Accountants Association (CIAA)’s 2007 annual general meeting in Scottsdale, Arizona. He warned “the industry could be in big trouble if we don’t start thinking today about the talent we need tomorrow.” He suggested the profits and stability of Canada’s property and casualty industry might be compromised in the future if the talent issue isn’t addressed now.

Spencer indicated the most obvious threats to the talent pool include the demographic trend of retiring baby boomers and a flat population growth. “Canada has a great stock of commercial underwriters, but many of them are in their mid-50s and there’s nothing in the pipeline [regarding succession],” he said. “It takes five to seven years to develop a commercial underwriter and we need to plan accordingly.”

THE ROLE OF CEOS

Spencer said CEOs have a major role to play in talent management. “We need to start taking a long-term view on people issues and realize there’s a war for talent,” he said. “This means identifying critical skill sets where the shortages are expected, building a framework for talent management and investing in training and development. Talent management [involves] an understanding from a strategic objective [of] where your organization is going and whether you have the talent to get there.”

Another mistake CEOs need to correct is the tendency to promote technical people who don’t have the talent management skills required to develop people, he added.

Attracting young people to the property and casualty industry is also a key to its future success, Spencer said. “We need to start working with universities and schools to attract people to the actuarial field on the property and casualty side. If we don’t do this, we’ll be buying our actuarial talent from India.”

Bill Star, president and CEO of Kingsway Financial Services Inc., pointed out that many people fall into the insurance industry by accident. “Until 30 years ago, there were only two property and casualty actuarials in Canada.” Because actuaries are instrumental in working out the pricing of products, a shortage of them would cause a serious problem in developing rates, he observed.

MARSHALLING FORCES

Spencer acknowledged that finding new people would not be easy. The property and casualty industry is facing many competitors and challenges — not the least of which is the talent exodus created by the western oil boom, which is stealing potential workers. He predicted the talent war made manifest by the situation in Alberta would only get worse over the next few years. “We’re also competing with the U.S., where the compensation for actuaries is higher.”

Outsourcing to India is not the answer either, Spencer admitted. “Aviva has 9,000 employees in India. Because of the cultural differences, it isn’t working from a customer perspective. So we’ve replaced some customer service functions with analytical and specialist skills such as IT and accounting.”

Star pointed out that Indian salaries are climbing as well. “We know we’re in trouble when India starts outsourcing to Vietnam,” he said.

Fellow panel member Robert Landry, president and CEO of Zurich, asked how the industry could reconcile keeping costs down while at the same time offering potential employees an attractive compensation package.

Francois Boulanger, president and CEO of RBC General Insurance, pointed out that many graduates go into the more lucrative capital markets instead of the actuarial field.

Compensation is only one factor, said Spencer. The more critical supply issues are related to skill set. “Money and benefits are simply the price of admission, but not what differentiate us at Aviva,” he said. “It’s important for us to be a value-driven organization with leadership that supports the people agenda. This means giving our people opportunities to learn, be effective and grow.”

CASE STUDY IN RECRUITMENT

Aviva Canada has plans in place to tackle the talent management issue, according to Spencer. Over the past three years, the company has built a talent management review process, which Spencer said is recognized as “leading-edge” within the Aviva global organization. Senior management looked at where the organization should be going in the next five years and what capabilities are needed to get there, he said. The result is Aviva’s Leadership Capabilities Profile, which outlines core competencies, skill level and behavioural competencies. This process is used to assess leaders within the organization, as well as to identify opportunities and develop leaders. According to Helen Bozinodski, senior vice-president of human resources at Aviva Canada: “Leaders are the starting point because they grow an organization and need to develop talent to support their own lines of business.”

Bozinodski says understanding individuals’ strengths would give an organization a better sense of the strength of its overall leadership talent pool. “At that point, we can identify people who can be accelerated within the organization,” she said. “Our goal is to have the maximum quality candidates for the future.”

Twice a year, Bozinodski said, Aviva Canada looks at its talent pool to determine what kind of training and development might be required in such areas as IT, finance and actuarial. Quebec is the main province training property and casualty actuaries, she observed, and because the Montreal market is very competitive, companies like Aviva need to try harder to attract these professionals.

Property and casualty companies are also competing with life insurance companies for actuaries, said Bozinodski. Aviva Canada is therefore starting to get creative about how it designs its actuarial jobs. Aviva is looking at mathematician and statistician roles (math and analytical), which are core competencies, and seeing how they might design jobs to separate out aspects like research, analysis and modelling.

Aviva is also introducing a Fast Forward trainee program for entry-level underwriters, scheduled to begin in early 2008. The nine-month training program will include mentoring, in-class training and workshops and is intended to hone core and transferable skills.

Getting out in front of students is another important part of Aviva’s long-term recruiting strategy, Bozinodski said. To this end, Aviva regional staff members are visiting classrooms and career fairs to try and entice young people into a property and casualty career. Known as the Ambassador Program, it’s part of an overall youth education effort by the Insurance Institute of Canada.

Aviva is also supporting the Take Our Kids to Work Day for Grade 9 students. On the community college front, Aviva has an emerging relationship with Seneca College in Toronto for recruiting its call centre staff. The company also works closely with Hamilton’s Mohawk College, which has an insurance program that feeds Aviva’s claims care centre with co-op students. “This is an important pipeline for employees,” says Bozinodski. There are also future plans to work with universities.