In the News: P & C Carriers Face Leadership Crisis Unless They Start Succession Planning Now

P&C Carriers Face Leadership Crisis Unless They Start Succession Planning Now

By Susan Ladika

May 22, 2019 

An exodus of Baby Boomers from the P&C industry may leave companies scrambling to fill executive and managerial positions, unless they start preparing for the transition now.

“It’s an industry that hasn’t really been known for setting up succession planning,” says Jeanne Branthover, managing partner of the New York office of the executive search firm DHR International. With Baby Boomer retirement in full swing, human resources departments of P&C companies must change that dynamic.

“It’s never too soon to set up succession,” Branthover says, because companies also can be rocked by the unexpected illness or death of a corporate leader.

With no good succession plan in place, an insurer might be forced to promote an employee to fill a particular leadership role, even though it might not be the job the individual wants or a position the professional is ready to handle, Branthover says.

“It should be clear who succeeds whom,” she says, and time should be built in so the designated successor can receive training from the person they are intended to succeed.

In many cases, “what’s missing is the planning aspect,” says Robert Morlot, a managing partner of Clearwater Business Advisers, a business consultancy in Tampa, Fla. “We need the 30,000-feet view of what we’re really trying to do here.”

That means insurers need to have forward-looking HR employees who can gauge how the P&C business is changing and how the company needs to adapt, Morlot says.

Grooming Potential Leaders

P&C companies face two challenges – one is hiring those with high-tech skills to work in today’s high-tech environment. The other is to broaden the skills of those in less-specialized fields.

With advancements in areas such as artificial intelligence and robotics, employee skill sets are different than those of previous generations. That could mean hiring younger talent to fill those roles, or recruiting experienced talent from businesses outside the P&C industry.

Meanwhile, there is also a need for strong generalists to become P&C leaders, says Limore Zilberman, leader of the global insurance practice at the executive search firm Russell Reynolds, who is based in Chicago. Historically, those in the P&C industry have been “groomed to be specialists, with a narrow lane of expertise.”

Instead, the P&C industry needs to “groom internal talent to be broader generalists” so they can “embrace transformative change and also protect the core of the business,” Zilberman argues.

P&C companies need to identify potential leaders who are agile learners, flexible in their thinking, multidimensional and adaptable, she says.

Zilberman suggests establishing a rotation program so potential leaders are exposed to more areas of the company. For example, an up-and-coming finance executive could do a stint in the underwriting department so they learn to think of the enterprise as a whole. “You’re not just a cog in a wheel,” she adds.

Exposing employees to different departments also helps to break down silos and cross-pollinate talent, Zilberman says.

These training and development programs can help P&C insurers attract and retain employees, she says. While companies work hard to glean new customers and keep them, not enough emphasis is put on attracting and training top talent.

Time is of the essence, Morlot says, because building a leadership training program “doesn’t happen overnight.”

P&C companies could operate such training and development initiatives in-house, or they could opt to bring in good outside trainers, he says.

Companies should consider implementing training programs for various levels of the corporation – from potential corporate leaders to mid-career employees to new employees, Morlot says.

Part of the challenge remains “how to make insurance the industry of choice for the next generation of talent,” Zilberman says.

People in the Millennial generation tend to want to work at companies such as Amazon and Google and “don’t think much has changed with insurance,” she says. They generally seek mission-driven companies that demonstrate a sense of purpose.

Millennials also are less hierarchical than previous generations and typically like to work in group settings, Zilberman says. They tend look for employers that offer such benefits as the opportunity to work remotely and work flexible hours.

“Everybody is vying for the same type of candidate,” Zilberman says.

Focus In-House

Preparing current employees for managerial and leadership roles fosters company loyalty. Employees “feel good about their job and feel good about a company that promotes people,” Branthover says.

Overall, promoting from within the company can often be a better choice rather than bringing in “someone from outside who pops in and rocks the boat,” she says.

It’s also “imperative that companies look at diversity as they do succession,” Branthover says. The next level coming up should reflect the diversity of the U.S. population, she explains.

Good succession planning programs can save P&C companies the time, trouble and expense of needing to conduct an external search because no one internally has the right skill set, Branthover says.

If an external search can’t be avoided, the company should bring the replacement on board before the departing leader moves on, so the new hire is prepared and ready to step into the role.

With this approach, “everything moves very swiftly but smoothly when a transition happens,” Branthover says. “A seamless process affects a company in a very positive way.”