Are apprenticeships a just cheaper way for insurance firms to bring in junior talent?

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Apprenticeship-of-yesteryear

Until recently, apprenticeships for school and college leavers in the insurance industry were restricted to the broking sector, which often took the friends and relatives of current or former employees under their wing for informal training programmes.

Now, though, it’s become mainstream and apprenticeship programmes are structured training programmes, approved by the UK government. Is this a genuine move to offer a wider range of career opportunities to young people, or way to recruit and train talent while avoiding more expensive graduate packages?

“There’s definitely something of a ‘me-too’ approach to apprenticeships in insurance,” says Caspar Bartington, who manages the talent outreach programme at the Chartered Institute of Insurance. “Insurance firms are trying to capture the growing percentage of students eschewing university. While graduate schemes are becoming more about developing future leaders, apprenticeships are a way of recruiting and training people for functional roles.”

Prudential, for example, has just launched its new apprentice scheme, and plans to hire 50 people across its offices in London, Reading and Stirling.

Cathy Lewis, the firm’s HR director, says: “We know from working with local schools that there is a pool of highly motivated, talented young people who are finding it increasingly hard to get a foothold on the career ladder.”

Other large insurance firms with apprentice schemes include Aon and Aviva, while the Lloyd’s Market Association highlighted earlier this year how more brokers were hiring younger trainees who had not been to university.

Insurance firms are competing with banks for the best graduate recruits, but while investment banks offer first-year base salaries of up to £45k, starting pay in insurance typically comes in at £20-25k.

Apprentices are decidedly cheaper; outside of London, salaries start at £13-14k, while in the City this rises to £16-17k. Students who secure a place on the actuarial programmes can start on £18k+. What’s more, if an insurance firm fulfils all of the government’s criteria, it will generally meet the training costs including examination fees and study material, which comes in at roughly £2.5k.

While cost is clearly a consideration for insurance firms, another advantage of recruiting apprentices is an increased sense of loyalty, and therefore better retention.

"Apprentices are given an opportunity to learn from the bottom up, and are usually exposed to a wide range of business areas and willing to learn the ropes over a longer period of time,” says Bartlington. “This increases retention and many apprentices move into management positions. Meanwhile, graduates have a tendency to leave if they feel they’re not moving up the career ladder quickly enough.”

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