Risk and actuarial recruitment in the UK insurance sector boomed in 2022 and people with expertise in ESG, asset management and coding remain in high demand. Ronan McCaughey reports
UK insurance risk and actuarial recruiters say they were kept busy during 2022 and are confident demand will remain strong.
Risk and actuarial professionals with expertise in sustainability issues have become particularly sought after, causing salaries to rise in this area.
Antony Williams, a director at recruitment consultancy Arthur, says 2022 was one of the busiest for several years in the insurance risk recruitment market.
"Covid impacted businesses attracting and hiring junior talent. Onboarding and upskilling this level were put on hold due to the remote working we all experienced. This meant the junior end of the market in 2021/22 was high in demand and salaries really advanced to crazy levels as the war for talent took hold.
"Although the UK has seen a drop in vacancies overall, the insurance sector remains strong with its demand"
"The actuarial market in the UK is as buoyant as ever. Demand has always outstripped supply in the profession, particularly in insurance. Changes in regulations, world events and digitalisation of the market will only maintain or increase this demand."
Williams says his conversations with senior managers at insurers give him confidence recruitment activity will remain high.
"Results for most insurance businesses were good during 2022 and although the UK has seen a drop in vacancies overall, the insurance sector remains strong with its demand. March often leads to plenty of movement once bonus season comes and goes."
Actuaries
Patrick Flanagan, founder and managing director of insurance and investment recruiter Clarence George, says increasing demand for junior to mid-level staff in life insurance, actuarial and risk roles has pushed up salaries.
Flanagan says: "A newly qualified actuary used to earn £65,000-70,000 ($81,000-87,000) in London, but that has crept up to £70k-75k at a minimum."
Williams at Arthur notes actuaries are moving into non-traditional roles, such as underwriting strategy and portfolio management, to add further financial rigour to assessing these operations.
The largest increase in remuneration has been within "the engine room": people with a few years' experience, up to head of team level.
"Candidates were more than often able to obtain over 20% increases to move or very large counter-offers to stay. Inflation and shortage of talent were key drivers of these inflated salaries," says Williams.
Peter Knowles, managing director of IGA Talent Solutions, which provides actuarial recruitment services, says there was a significant increase in demand for actuarial specialists during 2022, which resulted in a strong jump in compensation across all levels, even up to 25-30% at certain levels.
"Demand has been driven by a shortage of supply of permanent candidates as result of Brexit and off-payroll changes"
"During 2023 we expect demand to remain strong, but cautious," he adds.
Knowles says actuarial contractor pay has risen over the last 18 months, but this has mostly been a readjustment in response to many firms adapting to "inside IR35" circumstances. This relates to reforms enacted in 2021 to prevent full-time contractors paying less tax by routing their pay through their own company.
Knowles comments: "IFRS 17 has certainly impacted demand for contractors, but most demand has been driven by a shortage of supply of permanent candidates as result of Brexit and off-payroll changes."
CRO level
For senior roles, such as chief risk officers (CROs), Clarence George's Flanagan says consolidation among insurers means recruitment and salary trends have been quite static.
"Salaries at the CRO level and deputy CRO level have not changed so much in the past few years," he says.
"A head of enterprise risk management would be looking at a salary package of between £120k and £150k with around £150k-180k at the director level. A base salary for a chief risk officer at a good life insurer would be between £200k and £300k, dependent on their AUM [assets under management]."
At the most senior levels in the risk function, such as chief actuary and CRO, Williams at Arthur agrees salaries have remained fairly consistent.
"These roles change over at a slower rate than other levels and they are also highly sought after by those in the industry. C-suite's compensation often has considerable variable elements, so basic salary isn't the only driver."
Hot skillsets
Flanagan says professionals in the life and annuity market with asset experience are currently in high demand.
"Actuaries and risk managers are good on the liabilities side of the balance sheet, but asset experience is becoming much sought after. The growth in the life insurance space is mainly within the annuity providers and asset experience is needed in both public and private credit, as well as equity release mortgages, which is a finite skillset," he says.
"Asset experience is needed in both public and private credit, as well as equity release mortgages"
Employers are also seeking expertise in programming. "We are seeing a lot more demand for actuaries with coding skills in languages such as Python and R," Flanagan says.
"Some people have only used Excel and it can be quite cumbersome and time consuming. We are seeing the leading firms set up modelling centres of excellence using these newer languages."
Knowles from IGA Talent Solutions adds there is a huge demand for technical actuarial experience – for example in IFRS 17, capital management, internal model validation and Solvency II – as well as people with strong programming and systems experience.
"We're also seeing a continued demand for people who have a wider commercial view of the market: people with the understanding of how actuarial and data insights can be better used within the insurance sector, and who bring more of a joined-up approach to the use of data across the different teams within an insurance company."
ESG expertise
Williams at Arthur reports a significant up-tick in hiring connected with insurers' desire to integrate environmental, social and governance (ESG) factors into their business.
"Some businesses are appointing senior leaders and then building resource below them as demand increases. Others are hiring managers at between £60,000 and £80,000 with a reporting line into the CRO," says Williams.
"This will be a highly competitive candidate-led growth market in 2023/24 resulting in good levels of compensation increases for those with experience across ESG inside and outside of insurance."
Kate O'Rourke, head of banking and insurance at recruitment firm Acre – which specialises in hiring ESG and sustainability experts – says insurance professionals tend to lack the technical knowledge required for dealing with ESG strategy, climate, biodiversity, reporting and disclosures.
This lack of detailed knowledge can also diminish their credibility when seeking commercial influence on sustainability issues, she says.
O'Rourke explains while sustainability has accelerated up the agenda for insurers, finding the right candidates for new roles like heads of ESG and heads of responsible underwriting is challenging for the insurance market.
"We have seen a minimum of a 25% increase across the board in the last 18 months"
Insurers have responded by upskilling some professionals for ESG and sustainability roles, while other technical ESG professionals are being pulled into the sector from across finance, consultancies and insurance brokers, as well as sectors like energy and manufacturing because "they know how to drive the transition for a carbon-intensive sector and will complement internal insurance talent who are now focusing on ESG".
O'Rourke says there has been a significant uptick in remuneration for sustainability roles in all financial sectors. "We have seen a minimum of a 25% increase across the board in the last 18 months," she says.
She adds most sustainability roles no longer report into corporate affairs or marketing. Instead, they typically sit with the risk, underwriting and commercial strategy functions at insurers, or have their own business function led by a chief sustainability officer.
Typical salaries for driving sustainability at insurers range from £140,000 to £250,000, says O'Rourke.
Focus on gender diversity
Antony Williams at recruitment firm Arthur says insurers are demanding a more gender diverse talent pool when recruiting.
"We are continuously being asked to provide data on many of the searches we are doing. The market is showing signs of improvement, with some excellent initiatives. This change will not happen overnight, but progress is being made. Recruitment companies are critical in helping these changes," he says.