Emphasis: Got Actuaries?

By Patricia Guinn          

In the 90s, when we surveyed insurance industry CEOs and CFOs on their top issues, "people" consistently ranked toward the bottom of the list, while issues like growth, capital and profitability came out on top.

Having been part of Towers Perrin for many years, with a large part of our business focused on people issues, I have seen firsthand the sharp contrast between insurance and some other industries — like health care and retail — where people issues have been more prominent. But over the last few years, I noticed many other industries focusing more and more on their workforce needs and engagement of their people. People issues — ranging from talent management and workforce engagement to labor cost optimization — are catching on in the insurance sector as well.

With the rise of computing power, work that used to take armies of actuarial resources has become increasingly commoditized. Although one might expect this to ease the pressure for actuarial talent acquisition and management, every increase in computing power has been more than matched by the thirst for more robust models and projections — the sorts of models and projections that actuaries are very skilled at building. This increase in demand for technical skills and information has been driven by needs to:

• understand and quantify risk using economic capital and other risk models required in enterprise risk management programs
• help management better understand the risk and uncertainty inherent in different lines of business by applying sophisticated analytical techniques like stochastic reserving to estimate insurance liabilities
• build and evaluate the required internal models to support the global move from rules-based to principles-based approaches to regulatory reserve and capital requirements
• build new pricing models and strategies based on predictive modeling techniques and competitive market analysis
• apply sophisticated asset/liability management and hedging analysis skills to develop and manage flexible retirement income products.

Demand for actuaries in non-insurance roles is growing even faster. Investment banks, asset managers and hedge funds are increasingly hiring actuaries for asset/liability matching, liability-directed investments and other activities to support highly sophisticated products traded in capital markets. Companies in a wide variety of industries are turning to actuaries to staff their strategic planning, risk management and workforce planning functions.

Experts estimate that the existing worldwide supply of actuaries is already insufficient to meet global requirements, with the shortage being most acute in developing countries. So it will become increasingly important for companies to attract, retain and engage actuaries, along with various other professionals, to meet critical skill requirements. In the Towers Perrin Global Workforce Study, we identify the most important factors driving employee attraction, retention and engagement in insurance and many other industries.

The study found that different aspects of the employment proposition are important when people are considering joining a company, when they are deciding whether to stay and how much extra effort they are willing to put into their work (i.e., how engaged they are). The key factors that attract employees tend to be transactional in nature — competitive base pay, flexible schedule and convenient work location — although career advancement opportunities and challenging work are also involved.

The most important factors in retaining and engaging employees tend to be more about the culture of the organization — what is valued and rewarded — and the effectiveness of its senior leadership. The top drivers of retention and engagement in the insurance industry include factors such as working in an environment where new ideas are encouraged and where employees have the opportunity to learn and grow, having a good relationship with one's supervisor, and senior leadership that communicates a clear vision for long-term success and acts in customers’ best interests.

Why worry about retention and engagement? Our study found that engaged employees understand and support the organization’s goals and values. They deliver higher financial performance.

The factors that compel actuaries to join, stay with and engage with organizations can’t be ignored. How will you ensure you have the right supply and caliber of the skills you'll need in the years ahead?

Comments or questions, call or e-mail Patricia L. Guinn at 1-212-309-3949 or tricia.guinn@towersperrin.com.