The cause of the current spate of musical chairs taking place at the top end of the local insurance broking sector can be traced back as far as the early 1990s.

The insurance cycle was at a low-profit point and insurers and brokers were tightening their belts. That included a halt on non-essential recruitment – a decision that’s now resulting in a shortage of experienced and skilled managers.

The movement from company to company of senior broker managers over the past few months reflects the difficulties recruiters have in finding skilled people to build new business initiatives, as well as replacements for managers who have left for other companies or been promoted.

Recruiters say the most effective way to convince managers to switch companies is by offering them substantially more than they’re earning at present.

And they say the situation will persist unless the industry does more to attract people to a career in insurance.

Aon has seen some key departures in recent weeks, and Pacific Region Chairman Steve Nevett says the company is a logical target because of the calibre of its people.

“In the 1990s the market was tight and there wasn’t much hiring,” he told insuranceNEWS.com.au. “That has led to a shortage now of managers in the 35-40-year-old group.”

Mr Nevett says the global financial crisis of the past few years has exacerbated the problem for the big broking companies.

Squeezes on executive salaries mean he and his counterparts at the top end of the broking sector face the risk that salary levels across the board could come under pressure.

“We don’t want to match the inflated salaries being offered because we don’t want to find ourselves in a situation where there is inequity with other people’s salaries,” he said.

Aon is now “working hard to get things in order”, and Mr Nevett points to the “enormous depth of talent in our broking and client teams” which has allowed him to replace recent senior management losses from within the Aon workforce.

Michael Page International Manager Financial Services Tom Brown agrees that it’s money rather than career development that is driving much of the movement not only within broking, but right across insurance.

He describes underwriting as “very talent-tight” but says there has been a shortage of experienced managers for some time.

Mr Brown says people are moving for higher base salaries because they cannot rely on bonuses.

“Bonuses act as very strong retainers and when they are dropping because the market is tougher, it is more attractive to lock in higher bases.”

Although major insurers have programs to encourage new talent and develop underwriting skills, Mr Brown says these haven’t been operating long enough to address the shortage of talent, so “you have to buy it”.

Hays Manager Ian Markus, who specialises in insurance, says the industry is hiring from outside Australia to find senior staff with the strategic experience and management skills companies need.

He has seen several Australian expatriates return from Asia where they have been managing claims or operations teams, often choosing to take a pay cut to come home.

Mr Markus says that in insurance there is often strong loyalty to an employer – more so than in other parts of the finance sector – which limits movement at the middle to senior level.

Hays’ employment surveys continue to find that experienced insurance professionals are highly sought after and Mr Markus says employers are prepared to pay to retain the ones they already have.

“Insurers don’t want to lose their best staff so they make a conscious effort to build a good culture and do everything they can to keep these people,” he told insuranceNEWS.com.au.

Mr Brown says when he sees some of the salaries available in underwriting, he is surprised that more people aren’t attracted to insurance and suggests the industry has to do more to promote itself.

He says the industry may need to “jazz up the message” by visiting careers fairs and offering graduate programs to build the profile of insurance.

He also notes that entry-level jobs in insurance pay around $40,000 a year compared with $50,000 for people starting out at a bank.

Mr Markus agrees that many young people do not consider a career in insurance.

“Everyone I meet falls into insurance. When people go to university open days there is no stand advertising insurance while other industries are out there promoting careers and opportunities in their line of work.

“Insurance is not actively promoted.”