The current market for actuaries and analysts is extremely strong. Insurance companies and consulting firms are expanding and seeking top talent to fill new roles. The Department of Labor predicts a 24% increase in growth for actuaries this decade, while candidates are moving to new positions for higher pay and better opportunities to grow their careers.
For the insurance and analytics space, the first half of 2021 seemed like business as usual, a carryover from the challenges of the pandemic. In a matter of a few months, we bore witness to a drastic pivot that resulted in the most active employment market since the financial crisis. In early 2021, there was some reluctance to change jobs, based on concerns about the financial markets, but by third quarter and through the end of the year, candidates were seeking better positions with higher compensation, remote options, and a better work/life balance.
This very active market had one trend that cannot be ignored. Much of it was driven by the desire for remote work. Candidates who have been working from home were no longer interested in long commutes, crowded trains and working from an office. They had the opportunity to spend more time with their families and became more focused on work/life balance. They felt they had proven that they can work effectively from home and thrived in that environment. The barrier of relocation was removed, and many candidates were anxious to advance their careers without relocating their families.
In addition, we have seen more candidates shed their risk-averse nature and move into less traditional industries, start-ups, insurtechs, tech-driven companies, etc., leveraging their actuarial talents in more non-traditional roles.
2022 Actuarial Market Outlook
We expect to see the current growth sustained through 2022, with increased compensation and a focus on benefits aimed to engage the best talent. Employers will be focusing on retention of staff and will be re-evaluating salary structures. Enhancing the work/life balance for employees, allowing for remote and hybrid work schedules, and emphasizing the company’s commitment to their employees through “Stay Interviews” will increase. Counteroffers will become more prevalent and enhanced packages for current employees will be implemented to retain staff. Restructuring of compensation will not only be more prevalent, but critical for retention and recruiting initiatives.
Candidates will be more likely to make a move in less than 2 years, as the stigma of “job hopping” becomes insignificant. We will see candidates open to making a move after 2 years or less for a better opportunity if they don’t need to relocate. The prevalence of remote opportunities will drive the “Great Resignation” of 2022 as candidates see new opportunities with higher salaries, career advancement and work/life balance that do not require a relocation.
In addition, we are seeing more candidates moving into less traditional industries. We are seeing more candidates shed their risk-averse nature and move into less traditional industries such as start-ups, insurtechs, and tech-driven companies, and leveraging their actuarial talents in more non-traditional roles.
The hit was hard with reported claims due to COVID-19 that far surpassed that of 2020. Total life insurance new annualized premium represented the largest growth recorded in 25 years. With exception of term products, all products experienced growth in policy sales. Variable universal life (VUL) in particular, benefiting from low interest rates, stable equity markets and recent tax law changes, experienced stellar sales growth. Indexed universal life (IUL) also saw huge spikes in sales.
Life insurers are now faced with challenge of investing wisely recent gains in premium growth. The pandemic has already accelerated online competition from digital startups and the competition will continue to stiffen. The need to modernize, especially digitizing core process, migrating to the cloud, etc. will continue. Insurers will need to more nimble, digital and consumer-centric in order to attract a younger demographic.
COVID-19 put a spotlight on the vulnerably of entire healthcare industry and the need for further structural and technological transformation. We can expect to see more disruptors enter the Medicare Advantage space as the number of startups is exploding. 2021 lacked the mega-mergers of the past and instead large traditional providers are partnering with non-traditional healthcare players to provide more customer focus and data driven analytics to improve outcomes, treatments, and productivity.
The industry is shifting its focus toward value-based care. We are seeing both start-ups and established insurance companies seeking actuaries with coding and even AI / machine learning experience. Medical Economics is a big area of growth, and we continue to see provider/hospital systems grow their in-house actuarial staff. We are seeing candidates spending more time studying the effect of COVID on the healthcare systems and future health. Behavioral health has increasingly become a focus area with insurers. There is increased focus on how to create equity in care. Additionally, Digital Transformation, Risk Adjustment, Behavioral Health, and Value-Based Care are other key trends that continue to dominate conversation. The industry still has a long way to go to truly transform from a treatment-based care system to one that is focused on prevention and well-being.
Private passenger auto benefited the most due to less driving during the pandemic lockdowns. Carriers will look to partner with or acquire insurtechs. The challenge will be for P&C insurers to take advantage of a hardening market, while addressing the issues of significant shifts in demographics, increasing demand for digital services, cyber threats and ESG considerations.
Such trends as MGAs becoming full-stack carriers, growth in the self-insured market and the growing need and demand for data-driven decision-making offers great opportunity for the P&C space. Along with property catastrophe, there is also optimism about rising rates for professional lines. Lines including cyber risk and Directors & Officers (D&O) liability have also been flagged as likely areas for further double-digit price increases.
We now know that even a year without multiple major hurricanes can result in significant losses for reinsurance and the ILS space. 2021 proved to be one of the most costly years for global reinsurers and the threat of continued higher frequency and severity mean natural catastrophe losses still loom large. While primary rates having risen strongly in 2021, reinsurance rates continue to lag behind, with retrocession significantly outpacing treaty price increases. Renewal season will be most telling as most feel that reinsurance pricing still isn’t keeping pace. There seems to be a flight to quality as primary insurers seek a more stable performance and capital efficiency in a volatile environment. The demand for reinsurance capacity has and will continue to grow, which in turn may benefit some of the smaller reinsurers.
Catastrophe exposed property insurance rates witnessed significant increase in premium, in particular homeowners and commercial property. There is a great need for insurers to focus their attention to what are typically considered secondary catastrophe perils, such as wildfire, convective storm, and flood. Much attention will continue to be given cyber and climate change.
In an age of AI and machine learning, “the Great Resignation” has forced a laser focus on human talent. The struggle will be to retain and attract highly sought-after talent, particularly those with advanced quantitative and data analytics skills. One way is to take strong positions on the social issues that matter to the younger generations of workers, such as ESG (Environmental, Social and Governance).
2022 will be a challenge for companies seeking to hire actuaries and analysts. The hiring trends we expect to see include:
- A dramatic increase in remote positions and roles with flexible/hybrid in-office schedules, and considerably less travel for consultants.
- Increased compensation throughout the industry.
- Internal equity re-evaluation for employee retention.
- An emphasis on Diversity and Inclusion initiatives.
Higher compensation packages will challenge internal equity, candidates will be looking for remote or hybrid roles that allow them to remain in their current location and work/life balance will be more of a consideration. Per the Department of Labor, the 24% growth over the next 10 years far outpaces the predicted 8% growth across all industries. The nearly 0% unemployment rate in the industry coupled with an expected growth of 2400 or more positions will make top candidates highly in demand. Companies who are successful in hiring top talent will allow for 100% remote work or flexible/hybrid schedules. Positions that require candidates to be in the office will take significantly longer to fill. In addition, companies will need to focus on diversity and inclusion and provide safer, happier and more productive workplaces.