Talent Solutions For Mutual Insurers Proprietary & Confidential 2
Agenda
Introduction – Aon’s Integrated Approach
About Aon Hewitt & Ward Group Talent, Rewards and Performance
Industry Challenges and Initiatives
Human Capital Strategy Survey Review
Closing Summary and Q&A
Additional Resources and Contacts
Talent Solutions For Mutual Insurers Proprietary & Confidential 3
Introduction – Aon’s Integrated Approach
Jeff Rieder, CPA Partner and head of Ward Group +1.513.746.2400 [email protected]
Brian Ruggeberg, Ph.D. Partner, Aon Hewitt +1.516.342.2708 [email protected]
Chris Delhey Senior Managing Director, Aon Benfield Mutual Insurance Practice Group Leader +1.312.381.5566 [email protected]
Moderator:
Speaker:
Speaker:
Talent Solutions For Mutual Insurers Proprietary & Confidential 4
An Overview of Talent, Rewards & Performance
For most firms, talent is their largest expense and their greatest asset.
Recruit Assess Engage
Effectively determining reward strategies are critical to motivating and retaining a firm’s key talent.
What to pay How to pay it
Objectively measuring performance against internal goals and the external market is key to assessing the effectiveness of the reward strategy.
Benchmark Optimize Assess
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Industry Challenges and Initiatives
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Focus
An Active Industry
Speed of Change
Driving efficiency with new enterprise systems
Sales/Distribution strategy continues to evolve
Marketing and servicing efforts are changing to focus on the millennial generation
Product/Geographic expansion
Advanced analytics
Talent Solutions For Mutual Insurers Proprietary & Confidential 7
Management Perspective
Senior leadership becoming less optimistic about the state of the industry.
Source: Ward Group 2016 Business Environment Survey
2%
32%
54%
12%
4%
29%
50%
17%
0%
33%
59%
8%
0% 20% 40% 60% 80% 100%
Significantly worse
Moderately worse
About the same
Moderately better
State of the Industry in 2016 Compared to 2015
Commercial Lines Personal Lines Overall Benchmark
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-10%
-5%
0%
5%
10%
15%
20%
25%Total Personal Commercial
U.S. Quarterly Year-over-Year Direct Premium Change
2016 – Q3 marked the first time in 6 years total quarterly premium declined over prior year for commercial lines
Source: SNL Financial
Post 9/11 Post Katrina
Talent Solutions For Mutual Insurers Proprietary & Confidential 9
YTD Change in Direct Premium Through Q3 2016 (Versus YTD 2015)
3.6%
1.4%
5.6%
7.0%
4.6%
3.4%
2.5%
1.6%
0.6%
0.1%
-2.7%
-4% -2% 0% 2% 4% 6% 8%
All Lines
Commercial
Personal
Private Auto (Est.)
Comm'l Auto Liab
Fidelity & Surety
Home / Farm
Workers' Comp
Comm'l Multi Prl
Med Prof Liab
Fire & Allied
Source: SNL Financial
Talent Solutions For Mutual Insurers Proprietary & Confidential 10
60.0%
57.1% 56.3% 56.2%
63.3%
65.3%
59.2%
65.9%
62.5% 61.0%
59.7%
64.1%
70.2%
63.4%
53.1%
51.0% 51.0% 52.2%
62.3%
60.1%
54.4%
2016-YTD201520142013201220112010
Total Personal Commercial
Direct Loss Ratio
Source: SNL Financial
Talent Solutions For Mutual Insurers Proprietary & Confidential 11
100.5%
75.0%
40.1%
20%
40%
60%
80%
100%
120%
140%
160%
Combined Ratio Net Premium Written to Surplus Total Expenses
39.9%
93.2%
2000 – 2015 Average
Worse
Better
101.9%
Source: Ward’s Results
Key Performance Measures - US
• Combined ratio is prior to effect of policyholder dividends • Expenses include Underwriting, Loss Adjusting and Investment • Projections are based upon first 3 quarters trends and do not try to
anticipate reserve changes by companies
Talent Solutions For Mutual Insurers Proprietary & Confidential 12
Employee Costs on the Rise
10.8%
13.0%
7%
8%
9%
10%
11%
12%
13%
14%
91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
Salaries & Benefits as % of Net Premiums Written
Ward's 50 Total Industry
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Hiring for Succession
The workforce is changing, 42% of workers are over 50 while millennials (those born after 1980) make up approximately 21% of the employee population.
<30 11.6%
31-40 19.5%
41-50 26.1%
51-60 31.3%
>60 11.4%
Employee Age Distribution
32.6% 34.3% 36.2% 38.4%
42.7%
2008 2010 2012 2014 2016
Percent of Workforce over 50
*Source Ward Group “HR and Employee Benefit Practices Study”, 2016
HR led employee training costs have increased 44% since 2013, from $421 per FTE to $606. Employee engagement has become more challenging. Remote workers expected to double in the next 3 years.
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Hiring for Innovation
Focus on recruiting a unique mix of talent and demographics; think about “out of the industry” talent.
81% of insurance executives are looking to hire a broader range of talent with different perspectives and diverse skills.
Talent Solutions For Mutual Insurers Proprietary & Confidential 15
Hiring for Diversity
85% of organizations with a diversity-focused staffing strategy report
increased performance
Diversity is key to promoting innovation
and creativity
Bringing together diverse teams has proven to create
a culture of adaptability
and productivity
Talent Solutions For Mutual Insurers Proprietary & Confidential 16
Insurance Carrier Employment
1360
1380
1400
1420
1440
1460
1480
1500
1520
1540
In T
hous
ands
6.67%
Source: U.S. Bureau of Labor Statistics
94,700 new jobs since April 2011
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Job Openings in Finance and Insurance
121
176 162
182
220 224
253 274
0
50
100
150
200
250
300
2009 2010 2011 2012 2013 2014 2015 2016
In T
hous
ands
Source: U.S. Bureau of Labor Statistics
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12-Month Staffing Plans Increase vs. Expected Revenue Growth
56%
66% 65% 66%
75% 69%
77%
86% 81%
87% 85% 84% 79% 80% 79%
35%
44% 39%
44% 44% 51% 54% 56% 54%
62% 58%
66% 65% 66% 66%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16
Expected Revenue Growth Increase Employees
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Recruiting Difficulty Continues
On a scale of 1 – 10 (10 being most difficult), companies responded that positions are still moderately difficult to fill and recruiting is slightly more difficult in most disciplines than it was a year ago
Positions rated 5 or above are considered moderate or difficult to fill
Product line has a significant impact on the ease of filling positions
7 of 12 categories have seen recruiting difficulty increase slightly over the past year
0 2 4 6 8 10
Operations
Accounting
Underwriting-Reinsurers
Claims
Sales/Marketing
Compliance
Analytics
Product Management
Underwriting
Actuarial
Technology
Executives
July 2016 July 2015
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Human Capital Strategy Assessment Survey
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Human Capital Strategy Assessment Survey
The Human Capital Strategy Assessment Survey assesses the human capital programs of insurance carriers to help determine how the talent spend is linked to business strategy
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Profile of Participating Organizations
Number of Participants 69
2015 Direct Premium Written (in Millions)
Property and Casualty $523,792
Life and Health $166,573
Financial Metrics
2015 Average Revenue (in Millions) $500,368
2015 Average Premium Growth 2.5%
2015 Average Return on Equity 7.1%
2015 Average Return on Revenue 8.0%
2015 Average Expense Ratio (P&C) 43.1%
2015 Average Expense Ratio (L&H) 33.3%
2015 Average Combined Ratio (P&C) 97.5
Employee Statistics
Annual employee turnover 8.8%
Average tenure of employee population 10.5
Survey was conducted from May through July, 2016
Talent Solutions For Mutual Insurers Proprietary & Confidential 23
Top Business Priorities
1%
7%
7%
10%
14%
17%
19%
28%
35%
36%
39%
57%
57%
57%
70%
Organizational Restructuring
Improve/Manage Captial Adequacy
Mergers & Acquisitions
Product Expansion
Geographic Expansion
Risk and Regulatory Compliance
Improve Loss Performance
Competitive Positioning/Gaining Market Share
Innovation Product or Technology
Executing on Major Investments/Initiatives
Revenue Growth
Customer/Client Service
Operational Efficiency/Cost Management
Technology Implementation
Human Capital/Talent Management
70% of companies indicated that Human Capital/Talent Management is one of their top five business priorities over the next three years
Talent Solutions For Mutual Insurers Proprietary & Confidential 24
Effectiveness of Human Capital Programs and Processes
Strengths
75% or more respondents consider the following programs and processes to be effective, highly effective, or exceptionally effective within their organizations.
Opportunities
52% or more respondents consider the following programs and processes to be ineffective or only moderately effective within their organizations.
Benefits 90%
Compensation 81%
Retention of Top Talent 80%
Organization Culture 77%
Sourcing and Recruiting 75%
Human Capital Analytics 83%
Career Pathing and Mobility 65%
Succession Planning 62%
Leadership and Development 54%
Diversity and Inclusion 52%
Note: Full rating scale for effectiveness is Exceptionally Effective, Highly Effective, Effective, Moderately Effective, Ineffective
+ ̶
Talent Solutions For Mutual Insurers Proprietary & Confidential 25
Effectiveness of Human Capital Programs and Processes
0% 25% 50% 75% 100%
Human Capital Analytics
Career Pathing and Mobility
Succession Planning
Leadership and Development
Diversity and Inclusion
High Potential Development
Reward and Recognition
Performance Management
Employee Training
Employee Assessment and Selection
Employee Engagement
Onboarding
Communication and Feedback
Sourcing and Recruiting
Organization Culture
Retention of Top Talent
Compensation
Benefits
Ineffective Moderately Effective Effective Highly Effective Exceptionally Effective
Talent Solutions For Mutual Insurers Proprietary & Confidential 26
Program Support and Alignment with Strategic Business Priorities
Many organizations agree that human capital programs and processes – regardless of effectiveness – are not highly supportive of or aligned with strategic business priorities:
Note: For the purposes of this reporting, the midpoint of the rating scale was excluded. The full supportive/aligned scale is: Not at all supportive or aligned; Somewhat supportive and aligned; Reasonably supportive and aligned; Highly supportive and aligned; Completely supportive and aligned
40%
41%
48%
49%
52%
Sourcing and Recruiting
Compensation
Organization Culture
Benefits
Retention of Top Talent
7%
13%
28%
29%
29%
Human Capital Analytics
Career Pathing and Mobility
Diversity and Inclusion
Retention of Top Talent
Leadership and Development
Top Five Most Effective
Top Five Least Effective
Human Capital Programs and Process Percent of respondents rating as highly / completely supportive and aligned
7%-29% of respondents rated the top five least effective HC programs and process as highly or completely supportive and aligned.
Only 40%-52% of respondents rated the top five most effective HC programs and processes as highly or completely supportive and aligned.
Talent Solutions For Mutual Insurers Proprietary & Confidential 27
HR Function Components
While many organizations agree that key components of their HR Functions are effective, less than half rated their HR Functions as supportive of or aligned with strategic business priorities: Over 70% of respondents rated key components of their HR Functions as effective, highly effective, or exceptionally
effective However, less than 42% of respondents believe that their HR Function components are supportive of and aligned with
their business priorities – HR Technology and HR Processes represent specific risk areas
Note: For the purposes of this reporting, the midpoint of the rating scale was excluded. The full supportive/aligned scale is: Not at all supportive or aligned; Somewhat supportive and aligned; Reasonably supportive and aligned; Highly supportive and aligned; Completely supportive and aligned
71%
41%
74% 82% 82%
24% 16%
32%
41% 39%
0%
20%
40%
60%
80%
100%
HR Processes HRTechnology
HROrganization
Design
HRCapabilities
HRGovernance
% of respondents rating HRcomponent as effective, highlyeffective, or exceptionallyeffective
% of respondents rating HRcomponent as highly /completely supportive andaligned
Talent Solutions For Mutual Insurers Proprietary & Confidential 28
Assessment of Organizational Capabilities
Extent to which participants agreed or disagreed that the following organizational capabilities and skills met their organization's future business priorities.
0% 25% 50% 75% 100%
Analytics and big datacompetency
Innovation
Developing integrated solutionsacross business units
Sales accumen
Technology aptitude
Operational efficiency
Policyholder understanding andintimacy
Strongly Disagree Disagree Neutral Agree Strongly Agree
Talent Solutions For Mutual Insurers Proprietary & Confidential 29
Capabilities Required to Meet Current and Future Business Priorities
Strengths
Meeting Current Business Priorities:
62-76% of respondents strongly agree or agree that they have the following organizational capabilities and skills required to meet current business priorities
Opportunities
Meeting Current Business Priorities:
12-18% of respondents strongly disagree or disagree that they have the following organizational capabilities and skills required to meet current business priorities
Policyholder understanding and intimacy 76%
Technology aptitude 72%
Developing integrated solutions across business units 62%
Analytics and big data competency 18%
Sales acumen 13%
Developing integrated solutions across business units 12%
Meeting Future Business Priorities:
63-71% of respondents strongly agree or agree that they have the following organizational capabilities and skills required to meet future business priorities
Meeting Future Business Priorities:
13-25% of respondents strongly disagree or disagree that they have the following organizational capabilities and skills required to meet future business priorities
Policyholder understanding and intimacy 71%
Operational efficiency 65%
Technology aptitude 63%
Analytics and big data competency 25%
Developing integrated solutions across business units 18%
Technology aptitude 13%
Note: For the purposes of this reporting, the midpoint of the rating scale was excluded. The full scale is: Strongly Disagree; Disagree; Neutral; Agree; Strongly Agree
+ ̶
Talent Solutions For Mutual Insurers Proprietary & Confidential 30
30%
32%
38%
49%
49%
54%
60%
61%
64%
The chart demonstrates number of participant’s that agreed or strongly agreed that their organization had the practices to meet their organization's future business priorities.
My Company Has Practices Required to Meet Future Business Priorities
Employee value proposition helps to attract and retain the employees
Company has an attractable organizational culture
Workforce composition is appropriate and adequate
Appropriate organizational structure and spans of control are in place
Current workforce has sufficient skills and capabilities
Current workforce has ample geographic mobility
Organization has requisite change management processes and capabilities
Organization has a defined Human Capital Strategy
Have talent pools and leadership pipeline needed to fill key roles
Talent Solutions For Mutual Insurers Proprietary & Confidential 31
Meeting Future Business Priorities:
60-64% of respondents strongly agree or agree that they have the following company-wide priorities required to meet future business priorities
Practices Required to Meet Current and Future Business Priorities
Strengths
Meeting Current Business Priorities:
74-80% of respondents strongly agree or agree that they have the following company-wide priorities required to meet current business priorities
Opportunities
Meeting Current Business Priorities:
19-32% of respondents strongly disagree or disagree that they have the following company-wide priorities required to meet current business priorities
Current workforce has sufficient skills and capabilities 80%
Workforce composition is appropriate and adequate 75%
Company has an attractable organizational culture 74%
Have talent pools and leadership pipeline needed to fill key roles 32%
Organization has requisite change management processes and capabilities 20%
Organization has a defined Human Capital Strategy 19%
Meeting Future Business Priorities:
28-45% of respondents strongly disagree or disagree that they have the following company-wide required to meet future business priorities Employee value proposition helps to attract
and retain the employees 64%
Company has an attractable organizational culture 61%
Workforce composition is appropriate and adequate 60%
Have talent pools and leadership pipeline needed to fill key roles 45%
Organization has a defined Human Capital Strategy 30%
Organization has requisite change management processes and capabilities 28%
Note: For the purposes of this reporting, the midpoint of the rating scale was excluded. The full scale is: Strongly Disagree; Disagree; Neutral; Agree; Strongly Agree
+ ̶
Talent Solutions For Mutual Insurers Proprietary & Confidential 32
Critical Needs for the Future
Participants were asked what will be the most critical business needs for the future. Top 5 Most Common Themes
Analytics / Data
Customer Centricity Talent Technology Leadership
Talent Solutions For Mutual Insurers Proprietary & Confidential 33
Practices to Start, Continue and Stop
Participants were asked what activities the human resources organizational should Start, Continue and Stop in order to meet future needs
Activities to Start 1. Planning 2. Talent Development 3. Succession Planning 4. Leadership Development 5. Organizational Analytics
Activities to Continue 1. Talent Development 2. Employee Training 3. Focus on Culture 4. Employee Engagement 5. Succession Planning
Activities to Stop 1. Manual/Outdated Processes 2. Rigid Performance Evaluations 3. Operate on Old Technology 4. Eliminate Paper
Talent Solutions For Mutual Insurers Proprietary & Confidential 34
Implications and Q&A
Financial results are losing steam more quickly.
Expense management is becoming a greater priority with market headwinds.
Finding and retaining top talent is more difficult than ever.
Data analytics driving more company-wide decisions but companies indicate weakness in their capabilities.
The labor market is very competitive and expected to remain that way.
Many companies feel a need for new technology and updated processes in order to be successful in the future.
Human Capital/Talent Management is a top priority of most organizations to ensure proper alignment to business strategy to help meet current and future business objectives.
Talent Solutions For Mutual Insurers Proprietary & Confidential 36
For more information or to schedule a one-on-one meeting:
Visit Aon Benfield’s Mutual Insurance webpage for an overview of our offerings including:
– Growth strategies – Industry leading analytics – Capital solutions – Operational consulting and benchmarking – Innovative reinsurance
Aon Benfield inquiries, contact:
– Chris Delhey at +1.312.381.5566 or [email protected]
Ward Group inquiries, contact:
– Jeff Rieder, CPA at +1.513.746.2400 or [email protected]
Aon Hewitt inquiries, contact: – Brian Ruggeberg, Ph.D. at +1.516.342.2708
Download Aon’s Talent Solutions Info Sheet
Talent Solutions For Mutual Insurers Proprietary & Confidential 37
Biographies
Chris Delhey - Leader of Aon Benfield's Mutual Insurance Practice Group Jeff Rieder - Partner and Head of Ward Group
Brian J. Ruggeberg, Ph.D. – Partner, Aon Hewitt
Chris has 30 years of industry experience including servicing a highly diverse book of business: general casualty/CMP, personal lines, national and regional property, workers’ compensation, professional liability, directors and officers, financial institutions, fidelity/surety, and miscellaneous errors and omissions. One point of concentration within Chris’s current client partnerships is reinsurance specific to carriers insuring non-profits, mutual insurance companies, and other cooperative financial institutions.
Jeff has 22 years of experience in the insurance industry with expertise in the property-casualty and life segments. He has been involved with over 400 projects for domestic and international insurance companies, covering a range of performance and strategic evaluations. Jeff leads Aon’s global performance benchmarking practice for insurance and the U.S. insurance compensation practice.
Dr. Ruggeberg has 25 years of consulting experience and has been involved in the development and implementation of various assessment and selection, leadership assessment and development, performance management, and training programs. He also serves as the Talent Enablement leader for Aon Hewitt’s Talent practice.
Talent Solutions For Mutual Insurers Proprietary & Confidential 38
About Aon
Aon plc (NYSE:AON) is a leading global provider of risk management, insurance brokerage and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 72,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative risk and people solutions. For further information on our capabilities and to learn how we empower results for clients, please visit: http://aon.mediaroom.com.
© Aon plc 2017. All rights reserved.
The information contained herein and the statements expressed are of a general nature and are not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information and use sources we consider reliable, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.