Risk Solved's Richard Thomas conducts research into the growing risk engineering skills gap.
There’s an app for that, so we were told by folk at Apple. However, I don’t believe there is a Property Risk Engineer App. Their skills and experience cannot be reduced or replaced by an algorithm. But here is the problem, not only are risk engineering resources stretched, my research suggests the challenge for insurers is going to get worse not better. The question is how do we align the experience and skills of Risk Engineers with technology?
Mind the Gap
I conducted research with seven major insurers in the UK and European market on the understanding that their responses would be subject to the Chatham House Rule – anonymised, in a spirit of trust, and as a way of seeking solutions. It has become clear to me over a period of time that a perfect storm is brewing. A combination of experienced Property Risk Engineers retiring and switching to consultancy plus a lack of trainees to replace them is leading to a gap which needs to be filled if the industry is to identify, manage and mitigate risk efficiently.
What were the questions?
I wanted to explore three simple areas:
1. What is the number or percentage of property engineers who are expected to retire in the next 3 to 5 years?
2. How many trainees have been brought into the business in the past 3 years?
3. Is recruitment targeting industry or insurance companies?
What was the response?
The Insurers contacted were of varying sizes in terms of current risk engineering resources; but they all have the same concerns – property risk engineering resources are at a premium and the recruitment situation is getting worse.
Depending on the size of the insurer, internal teams range from 5 to over 120 engineers in the UK with many hundreds more for global carriers. Large or small, each respondent fears haemorrhaging property risk engineers over the next 3 to 5 years. Estimates vary, with expected losses ranging between 10% and 40% of headcount.
Bridging the gap is not straightforward. Retirement may be planned or sudden with many flipping over to more expensive consultancy work, possibly through third party suppliers. In fact, nearly all insurers are engaging with third party vendors to provide property risk engineering services on a contract basis to cover peaks of demand.
At the other end of the career path larger insurers have graduate schemes in train to bring on the next generation. In one case an insurer has shifted their millennial headcount from 5% to 33% of the team in the last 5 years. However, this is not the case across the industry. Also, long-term planning is necessary as training requires investment in programmes of up to 2 years and CPD with experienced staff thereafter.
• >40% Property Risk Engineers will be lost to retirement within 5 years
• Trainees limited to larger insurers with 1-2 year training programme.
• Insurers aligning limited resources with technology to bridge the gap.
There is an acceptance by the insurers that the shortfall in experience will not be filled by hiring and training new engineers alone.
Their approach to a solution is similar, even if insurers are at different points on the journey. They realise that integrating technology and digital solutions is the only long-term answer.
A clear focus is being placed on embedding property knowledge in technology systems by building risk data templates, self-assessments, and online e-learning solutions for customers. There is a desire to make a shift to investing heavily in utilising risk data from external sources and reducing the time spent by high value resources on time consuming tasks like processing data. This in turn will free up risk engineers to add value with customer support, insight and solutions.
Crucially, there ‘isn’t an app for that’ – quality engineers are essential to manage relationships with major customers and brokers into the future.
If you would like to know more about how Risk Solved technology could help you bridge the resource gap and free up your Risk Engineers to add value, please contact firstname.lastname@example.org