The UK insurance industry is going to be divided into two clear categories going into 2013 – the hirers and the firers. While some firms remain open to bringing in other teams, redundancy announcements are likely to become more commonplace, even among managerial and technical staff.
In theory the UK insurance sector is expanding. When the CBI/PwC released its financial services survey for the third quarter a balance of 7% of general insurance firms said they were hiring and 80% of life insurance companies. Sentiment has changed since then, says Mark Stephen, head of PwC’s UK insurance business.
“After the post-Olympics boom, more insurers are looking at a sustainable cost base. The delay of Solvency II has led many to look at the resources attached to these programmes, and downsize accordingly, while there’s a general need to reduce headcount. I’d expect redundancy plans to become more common in 2013,” he says.
So far, however, job cuts have been restricted to a few significant players. Aviva announced plans to cut 800 jobs as it attempts to reduce costs by £250m by the end of this year, Direct Line has followed up 900 redundancies by cutting 70 management roles, ING has said it plans to reduce 1,350 jobs in insurance and Brit Insurance has been disposing of its non-core businesses.
The firms cutting back appear at risk of losing staff to firms that are expanding. In late October, a team of six engineering underwriters from Aviva joined Towergate-owned MGA Fusion Insurance, which stated its intention to hire more people, while last week managing general agency, Dual, poached three Brit staff for a new special liability business.
“Now is a prime opportunity for insurance firms making very public statements of intent to expand to poach teams from those firms that are contracting. Teams are recruited relatively often, but usually for new divisions and those hired need to make an instant impact,” says Mark Dainty, director of insurance focused recruiters High Finance Group. “Even if redundancies only affect administration functions, those in technical positions are often unsettled and start to look for a safer option.”
While there is the danger that insurance firms trimming administrative functions could lose employees they wish to keep, it’s questionable whether job cuts will remain restricted to the back office. Delays to Solvency II have already led to some actuaries being shown the door, and job cuts in technical roles are likely to increase.
“Technical roles are less at risk than administrative functions, a number of these jobs are likely to disappear as firms increasingly question the necessity of certain layers of management or employees,” says Stephen. “At the same time, however, other companies are identifying significant growth opportunities, so I’d expect a lot of movement next year.”
As well as MGA Fusion, Hiscox has said that it sees “huge opportunity” in the UK and is opening a new office in York which will house 300 staff and Chartis has been expanding, most recently with the appointment of three new underwriters – Tony Smith, David Major and Steve Kent – to its trade credit team.