Stemming the ‘Silver Tsunami’ in insurance

Stemming the ‘Silver Tsunami’ in insurance | Insurance Business

Stemming the ‘Silver Tsunami’ in insurance

The insurance industry is male, pale, and stale. That’s the unfortunate stigma attached to what is actually one of the most “fascinating and noble” industries in the financial services sector, according to Jon Loftin, president and CEO of MJ Insurance, one of the largest privately-held insurance agencies in the US.

Alarm bells are ringing. By 2020, it’s predicted there will be 400,000 open positions in the US insurance workforce and nearly 50% of the workforce will be retired by 2034. A demographic shift in the overall economy is causing this trend in pretty much every industry, but it has been quite dramatic in insurance because of a lack of interest in the business from the younger generation.

Lots of people who find themselves in the insurance industry have either inherited their positions by following in family footsteps or have fallen into the industry unintentionally. Loftin commented: “Once you get into the industry, you realize that it’s actually very interesting and somewhere you can build a long career. Every single one of us in the industry loves it because it’s fascinating and we serve such a noble cause.

“Unfortunately, insurance has such a negative stigma attached to it as boring, sales-oriented, and lacking the dynamics that the younger generation looks for. Whereas some industries, like investment banking, law, and tech, are seen as ‘sexy,’ the insurance industry is often referred to as ‘male, pale and stale’. Why would any young person want to get into that?”

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The insurance workforce crisis has been widely recognized by the industry. Some people refer to the demographic shift as the ‘Silver Tsunami’. The industry has seen the problem building and approaching for a number of years but has only really taken deliberate and meaningful action in the past four or five years. These actions are starting to reap some positive results, according to Loftin.

In 2016, a collaborative of more than 850 insurance carriers, agents and brokers, trade associations and industry partners launched the Insurance Career Movement (ICM) to raise awareness of the dynamic career opportunities in the risk management and insurance profession and to recruit the next generation of industry leaders.

MJ Insurance is attempting to address the pending talent shortage in the field by partnering with Butler University in Indianapolis. Together with Butler’s Lacy School of Business, the agency co-founded a student-run captive insurance company called MJ Student-Run Insurance Company Ltd. The intention of the program was to give students a “real life and real business experience” so that they can leave the program with an accelerated learning curve and further along the career path than most other graduates.

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“Our program has created so much buzz around the university and, quite frankly, in the industry, that we’re now seeing non-insurance majors showing interest and seeking to get into the insurance and risk management space,” said Loftin. “MJ and Butler aren’t going to solve the potential 400,000 workforce deficit that we’re looking at, but it’s the general compounding of that kind of mindset or attitude that I think will solve the problem.”

Another way MJ Insurance - and many others in the industry - are shifting common perceptions of insurance as a dead-end industry is by embracing innovation and technology. It’s attracting people to the industry by diversifying what has traditionally been thought of by many as a boring sales career. With technology enabling easier access to relevant and actionable data, the industry is now attracting talent from more diverse backgrounds, especially those with STEM education.  

“Innovation and technology are also helping to attract fresh sales talent to the business,” Loftin added. “Historically, insurance brokers were hired based upon the size and quality of their networks. While that’s important today, it doesn’t necessarily win the day or make you a successful producer. As the industry transforms, it’s changing the dynamics of what an insurance agent or broker does. The role is bona fide consulting nowadays, not sales. I think being a bona fide business consultant is much more attractive than just trying to sell as much product as possible to a buyer that’s not necessarily excited to buy the product.”