For the last 18 months, if you’re an actuary working on a contract basis developing an insurance firm’s Solvency II provisions, life has been good. An increasing number of people have been swayed to take contract positions, which paid between £1,000-2000 a day, but insurers are now quietly letting a large proportion of them go.
The main reason for this is that the deadline for implementing Solvency II keeps on getting pushed back. Originally, the plan was for insurance firms to be ready for the capital adequacy regulation by November of this year, then it was extended to January 2014, but this month the Financial Services Authority (FSA) said that firms will have until the end of 2015 to develop their solvency models.
What was once an urgent deadline for insurance firms has now become more of a long-term project. This means that actuaries and risk specialists drafted in on a contract basis to push through solvency models on time have now been laid off. If they’re core to the project, insurance firms are willing to keep them on, but those on the periphery are now surplus to requirements.
“In one week, we’ve been contacted by 150 contractors who were working on Solvency II projects,” says Paul Walsh, chief executive of actuarial recruiters Acumen Resources. “More insurance firms are firing actuaries on Solvency II projects than hiring.”
Keeping contractors on is expensive, particularly if they’re a luxury rather than a necessity. Actuaries working on Solvency II projects earn a minimum of £1,000 a day, but it has been known for insurance firms to pay up to £2,000.
“Insurers are taking a closer look at the people they have employed on Solvency II projects and realising that they’re paying a lot of under-skilled people lucrative contract rates,” says Steve Stubbings, managing director of insurance recruiters The Emerald Group. “If someone is core to the project they’re being kept on, otherwise insurers are reluctant to renew contracts.”
Stubbings says this has also affected business as usual recruitment within insurance, since many firms are looking to redeploy people working on Solvency II initiatives into other roles within the organisation. Those choosing to leave, however, appear in no rush to find a new contract position.
“Because they’ve been earning such good money in their previous positions, many actuaries are happy to wait for the right opportunity to come along,” says Walsh. “Most are thinking that the new year will bring more opportunities.”
Contractors may have to accept that the gravy train may have passed, however. Walsh says that while £1,000 a day was common earlier this year, new roles are offering an average of £750.