The insurance industry's junior hiring problem isn't about AI. It's about your remote work policy

The statistics from the US insurance labor market tell a story that the industry has been trying to explain for three years. A Q1 2026 Insurance Labor Market Study conducted by The Jacobson Group and Aon's Strategy and Technology Group found that job openings in finance and insurance fell to their lowest monthly level in a decade by December 2025 - dropping from an annual average of 281,000 openings to roughly 138,000 in a single month. P&C industry headcount grew by only 0.81% from January 2025 to January 2026, significantly below the anticipated rate of 1.42%.

The Bureau of Labor Statistics has projected approximately 400,000 insurance professional retirements between 2021 and 2026. The junior pipeline that would normally be filling those vacancies is not growing to compensate. Graduate vacancies across the sector fell in 2025. The most common explanation points to generative AI: tools that automate the routine analytical and administrative work that entry-level staff once performed, making the economics of junior hiring less compelling.

A major new working paper published in May 2026 by researchers at the University of Warwick, the London School of Economics, and Oxford's Ellison Institute of Technology challenges that explanation head-on. The paper - The Broken Ladder: AI, Remote Work, and Early-Career Hiring, by Peter John Lambert and Yannick Schindler - draws on 243 million new hire records and 407 million job postings across the US, UK, Canada, and Australia between 2017 and 2025. Its finding: when WFH exposure and AI exposure are properly disentangled, the WFH effect is robust and the AI effect collapses. The US is one of the four countries in the study, and the patterns in its data are consistent with those in the other three economies.

The informal apprenticeship model that insurance is quietly losing

The administrative and junior analytical roles being thinned out by automation have long served as training grounds — the way employees learned the craft of underwriting or claims judgement. Without those early rungs on the ladder, the industry risks losing the informal apprenticeship model that has sustained it for generations. Future underwriters may arrive highly educated in data science but untested in the grey areas of risk, regulation, and human behaviour.

That observation captures something important that the AI attribution misses. The junior roles being lost are not being lost because AI can do the work they involve. They are being lost because the organisational conditions that made developing junior staff worthwhile - physical proximity, informal feedback, visible performance, the gradual accumulation of tacit knowledge through observation — have been disrupted by hybrid working arrangements, and most firms have not rebuilt the infrastructure to compensate.

Gallup's data shows that among remote-capable workers, 52% are now in hybrid arrangements and 26% are exclusively remote. The share of paid workdays spent at home was approximately 27% in July 2025. These are the structural conditions under which American insurance is now operating — and they are the conditions the Lambert-Schindler paper identifies as suppressing junior hiring by raising the cost and reducing the return of early-career investment.

What the Jacobson Group data actually shows

According to the Gallagher Bassett Carrier Perspective: 2026 Claims Insights, the roles that are growing, by contrast to those being lost, are experienced underwriters, compliance specialists, analytics professionals, and technologists - positions that require judgement, not just processing. The industry is, in a phrase, automating from the bottom up.

This is precisely the pattern the Lambert-Schindler paper's model predicts - but for a different reason than AI substitution. When the development conditions for junior talent are degraded by hybrid working, firms respond rationally by raising the experience threshold for new hires. They seek workers who have already built the capabilities that proximity-based development would otherwise provide. Entry-level vacancies fall. Mid-level and senior vacancies rise. The pattern looks like AI displacement because it affects the same occupational categories as AI exposure - but its proximate cause is the disruption of the knowledge-transfer infrastructure that hybrid work has produced.

EY partner Jullie Hands described the underwriting talent gap as both urgent and potentially destabilising — a demographic cliff that could leave insurers without the institutional knowledge that has long underpinned disciplined risk selection and pricing. That institutional knowledge was built through decades of the apprenticeship model. It cannot be rebuilt through remote training modules or AI-assisted onboarding. It requires proximity, time, and the kind of informal mentoring that happens between a junior and a senior professional who share physical space consistently enough for the relationship to develop organically.

The remote work tension that insurance has not yet resolved

US insurance employers face the same strategic dilemma that the Lambert-Schindler paper identifies across all four countries. Flexible and hybrid arrangements are now non-negotiable for attracting experienced candidates in a competitive labor market. Those same arrangements undermine the development conditions that make investing in junior candidates worthwhile. Most hybrid policies apply the same framework to a senior actuary and a first-year claims trainee — despite the fact that these are fundamentally different employment relationships from a development perspective.

A growing number of companies are experimenting with remote-first or hybrid arrangements to better appeal to Gen Z, who increasingly prioritize flexibility and meaningful work. Yet for mid-sized and smaller firms still tethered to legacy systems and slower onboarding cycles, the workforce shortage is already affecting performance. For those firms, the solution is not to abandon flexibility - it is to apply it with more precision, differentiating between the development needs of early-career staff and the retention preferences of experienced professionals.

Research on hybrid work in the US consistently finds that mentoring is identified by workers as one of the activities most suited to in-person time — over half of hybrid workers say mentoring is better done face to face. Yet mentoring programmes in most insurance firms remain informal, inconsistent, and poorly resourced relative to the development gap they are being asked to fill.

The optimistic case - and what it requires

The Lambert-Schindler paper is explicit that its findings are more optimistic than the AI-displacement story. AI substitution, if it were the primary driver of junior hiring decline, would require systemic policy responses that individual firms cannot influence. WFH, as the primary driver, requires organisational responses that HR leaders can implement today.

The practical steps are threefold. First, audit whether your firm's junior hiring decline tracks most closely with the business units that went hybrid earliest, or with those deploying AI most aggressively. For most US insurers, that analysis will be clarifying. Second, design hybrid policies that explicitly differentiate by career stage - maintaining predominantly in-person expectations for early-career staff while extending full flexibility to experienced professionals. The investment rationale is defensible and, when clearly communicated, accepted by the younger workers it affects.

Third, treat mentoring as a formal operational commitment rather than an informal goodwill gesture. The knowledge that is walking out the door with retiring claims handlers, underwriters, and brokers needs to be transmitted deliberately - and deliberate transmission requires structured, resourced, time-committed programmes, not occasional conversations over a video call.

The US insurance industry's talent emergency is real and urgent. Four hundred thousand retirements, a falling junior pipeline, and a growing gap between the expertise the industry needs and the workforce it can attract — these are the defining challenges of the next decade. Correctly diagnosing their primary cause is the first step to addressing them. The ladder is broken. And unlike AI substitution, a broken ladder can be rebuilt.

Peter John Lambert is at the University of Warwick and the London School of Economics. Yannick Schindler is at the Ellison Institute of Technology, Oxford. The Broken Ladder: AI, Remote Work, and Early-Career Hiring was circulated in May 2026. Insurance-specific data sourced from The Jacobson Group/Aon Q1 2026 Insurance Labor Market Study, Bureau of Labor Statistics, Gallagher Bassett Carrier Perspective, Gallup, EY, and cited Insurance Business America reporting.