Faced with elevated attrition levels amid a high growth environment, the life insurance sector is battling a human resource shortfall. Hiring across companies — both for new onboarding and to make up for the attrition — has surged drastically, according to industry players.
The life insurance sector had grown tepidly during the Covid-19 pandemic, but is now seeing a speedy revival aided by pent-up demand, IRDAI’s push for insurance penetration and product innovation, and the entry of new players across insurance companies, intermediaries, brokers and distributors.
“Post Covid-19, we are working to improve the attraction and retention of key talents. One of the reasons is that as the market and industry get back to growth, the competition for talent is increasing exponentially,” said Bruce De Broize, MD and CEO, Future Generali India Life Insurance.
“Talent is also becoming more selective, and we are competing with the industry for talent in specific areas. IT, actuarial, product, and marketing are all high demand talent areas,” he added.
Sector-agnostic roles such as IT, marketing, data analytics, HR and finance are seeing hiring pressure across industries, but the life insurance industry is also struggling with sector-specific hiring for positions such as actuarial, sales and distribution due to their technical requirements.
“The insurance sector is growing at a very rapid pace and hence, the demand for actuaries too has drastically gone up. Currently, the supply of these niche professionals is on the lower side. Given the specialized nature of the vocation, there is a lot of movement happening within the industry,” said Praveen Menon, Chief People Officer at IndiaFirst Life Insurance.
Due to talent unavailability and applicants having more negotiating power in an employee job market, life insurers are now looking at more industry, geography and job-agnostic hiring, at least for non-technical roles, and also offering more benefits and perks such as work flexibility and staff personalisations.
Even as these established barriers are being broken down, hostile poaching by other companies and how to retain and ring fence the talent once they have been hired, remain key concerns, industry players said.
Increase in employee costs
This environment of aggressive hiring is expected to translate to higher employee costs for insurance sector entities, as they look to attract and retain talent via higher remuneration and incentives.
“Insurance industry is growing faster than the country’s GDP. Fuelled by this growth, everyone in the ecosystem, be it insurers, brokers or other intermediaries, all are hiring,” said Apaar Kasliwal, Executive Director at PolicyBoss.com.
Given that the increase in fixed cost for insurers is primarily in the non-sales and sales supervisory roles, Menon said he expects this cost to increase by up to 15 per cent for the industry, whereas the overall wage cost could rise by around 5 per cent compared with FY22. Being one of the fastest growing life insurers, he expects the increase in wage cost for IndiaFirst Life Insurance to also be in-line with the industry.
“Because of this so-called war cry on talent, our attrition numbers have gone up. We believe we are still better as compared to the market, which has seen at least 10 per cent rise in attrition,” Menon said.
Industry players have pegged the attrition rate for the life insurance sector at about 60 per cent, and at over 65 per cent for insurers that are driven by the agency model.
The limited supply of skilled professionals has been a long-standing challenge for the industry. However, the supply-demand gap seems to have been now exacerbated by the entry of new players.
“With entry of new insurers, there will temporarily be an impact on the available manpower for the entire industry. Hence, it’s important we as an industry start investing in capacity building across all levels,” Kasliwal said.
Others too said that investing in learning and training programmes and skill development is the only way to ensure the required mix of talent — both entry and senior level — to sustain high growth levels. That, however, remains a long-term strategy that will require collaboration from all industry players.
Meanwhile, the situation is expected to start easing in the second half of FY23 as most insurers tend to do the bulk of their hiring in the first half. Most participants believe that the next few years will remain challenging and competitive in terms of talent management and hiring, as all industry players look to participate in the high growth insurance story.