How current events are affecting recruitment in insurance

The following is an opinion article from Amechi Peirce-Howe, the director at London-based IT and Business specialist recruitment company, red10.
 
We are living in politically turbulent times. From the shock election of Donald Trump to the US presidency, to the Brexit vote that few people saw coming, 2016 has been a year full of upheaval. As a country still emerging from recession, and with plenty of existing economic woes before either of these events occurred, the UK feels like a particularly unstable place to be right now. Although none of us really knows what a real Brexit is going to look like, or whether Trump will prove to be the saviour or destroyer of the US economy, there is already fallout from these – and other - world events that is affecting recruitment into the insurance industry.

The fall in the value of the pound
 
Perhaps the biggest impact of the Brexit vote so far has been the fall in the value of the pound. For those businesses with staff or offices abroad this has meant taking a hit on the exchange rates as salaries and expenses paid in dollars or Euros suddenly demand more pounds from cashflow than previously. For organisations exporting products out of the UK, this exchange rate shift has proven profitable. But for everyone else, including the insurance sector, this has just made some resources more expensive.
 

Businesses moving out of London
 
As long as we remain in the tentative position of not really knowing what Brexit looks like, few businesses are making any definitive moves. However, there is no doubt that there are some big insurers considering the possibility that a London base may no longer represent the opportunity that it used to. AIG and Tokio Marine, for example, currently have their European operations base in London. If Brexit means that London is no longer a passport to the EU for these businesses – only to the much smaller UK market – then the consequence could well be downsizing or the shutting down of London operations, which will have a big impact on jobs.
 
Fewer overseas jobs

Insurers with multiple offices that might previously have been able to offer positions all over Europe to UK applicants could well be forced to change this approach. Although none of us yet knows what the consequences of Brexit are likely to be in terms of trade and free movement, the anticipation is that it will become harder to work in Europe if you are a UK citizen. This means that jobs in the EU being offered to insurance applicants by UK recruiters are likely to be significantly reduced, as fewer businesses want to take the hit on the expense or hassle of bringing in employees from outside EU borders.
 
A boost to UK insurers
 
Some commentators have highlighted the boost that UK insurers might receive from being relieved of EU regulation, such as Solvency II, thanks to Brexit. Switzerland is often used as a point of comparison for those looking to find the positives. Home to two of the world’s most successful insurers - Zurich and Swiss Re – Switzerland sits outside the EU and so, many believe, could provide a blueprint for the evolution of the UK insurance industry. If this was done successfully, it could lead to job creation and more opportunities for those working in the sector.
 
A drop in demand
 
While economically, it’s not all doom and gloom there’s no doubt that the UK was not enjoying a time of prosperity, even before Brexit. A challenging economic climate since 2008 has had quite a specific knock on effect on the insurance sector as demand drops through the floor. In particular, smaller and medium sized enterprises tend not to spend on insurance when margins are very tight – it’s one of the first expenses to go. As demand drops, insurers have to do more to compete with each other and leaner structures with less cashflow in them can mean fewer jobs and opportunities. Until the economy picks up, large parts of the insurance industry could remain similarly stagnant.
 
Opportunities for those who evolve
 
Of course, every crisis also potentially represents an opportunity and there are a few of those around right now, despite many of the dark predictions. For example, some firms have begun to offer ‘Brexit Insurance’. AIG was one of the first to promote this product just after the referendum, designed to give executives back-up against the issues that could arise from the border changes. Other opportunities exist in the advantages of technology. Tougher economic times require smarter solutions and with technology providing businesses with plenty of ways to be more efficient this could cut excessive wastage from budgets and leave more resource for key staff.
 
The events of the past 12 months have caused global levels of uncertainty that make it almost impossible to predict how the changes will pan out – or what the effect there is likely to be on recruitment into UK industries, including insurance. Given the instability this will cause, in the short term at least, this is likely to slow or stagnate insurance sector recruitment for many firms.
 
The preceding article was written by Amechi Peirce-Howe, the director at London-based IT and Business specialist recruitment company, red10. The views expressed within the article are not necessarily those of Insurance Business.