Job cuts are hitting insurers: you should be worried, but not panicked

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Job cuts are beginning to emerge in the UK insurance industry, but this is not necessarily the time to panic. As companies are forced to pare back costs, administrative employees are in danger of losing their jobs, but the competition for revenue generating roles remains stiff.

Last week Aviva revealed it was cutting up to 800 UK jobs as part of an ongoing cost-cutting drive, and up to 20% of general insurance employees here could be set for the axe, while Direct Line said this morning that it’s looking to save £100m annually by 2014 and job cuts will be included in this.

“Confidence in the general insurance industry has fallen rapidly in the last six months, and in such a competitive industry, we would expect a further need for more cost efficiencies,” says James McPherson, partner, insurance at PwC. “I wouldn’t expect the redundancies to be dramatic, certainly compared to other areas of financial services, but there is likely to be a steady flow of job cut announcements in the coming months.”

While there are concerns that the pace of job cuts could pick up at Aviva, the proportion of people being made redundant this time around is relatively small – it employs 18,500 people in the UK, and says the actual number will be smaller than 800 due to “natural turnover, voluntary redundancies and redeployment opportunities within Aviva.”

It is, nonetheless, a challenging job market for those working in claims and other administrative functions in the insurance industry. However, for those in revenue-generating roles, demand remains high, says Stephen Mallaband, managing partner, general insurance at recruiters Cavendish Maine.

“People in senior roles and in particular revenue generating positions, whether working for a broker or an insurance company, are in less danger of losing their jobs, as demand for these types of people remains high," he says. "The job market remains a very competitive one, and for key roles there are still not as many quality candidates as there are vacancies, and firms are keen to recruit from their peers”

The bigger concern for many will be the knock on effects. When a few insurance firms start cutting back, there’s the danger than others will follow suit. What’s more, with insurers under pressure to cut costs they won’t just be paring back headcount – there’s a danger that commission for brokers could be squeezed further, which could in turn force brokerages to cut costs.

For the time being, it’s regulation that’s the primary driver for recruitment, says McPherson: “Those with specialist skills around risk and regulation – underwriters, actuaries and risk management professionals – will remain in demand.”

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