Suddenly, insurance companies are very interested in hiring people who know about market risk
by Dina Medland, efinancialcareers.co.uk
Solvency II, the new regulatory framework by the EU for the insurance industry, may not be expected to be introduced until the start of 2014, but it’s already stimulating a little hiring. It’s not difficult to see why. As Matt Gusden of management consultancy firm Oliver Wyman pointed out recently, “A large proportion of the risk calculations in Solvency II is market risk – 60% of the capital held by insurers will be market-related. Hence, everything you can do to reduce that risk will have a benefit for your own return on equity.”
Insurers traditionally used to equating ‘risk’ with ‘actuary’ are beginning to take heed. Adrian Marples, a consultant with global executive search firm Leathwaite, says: “Insurance companies are under pressure to hire from a broader church into their risk management functions. Looking back, actuaries have managed risk with their technical expertise. Under Solvency II insurance companies will need a much broader skills-set.”
Unsurprisingly, Marples says insurance companies are now interested in hiring candidates with experience of working in market or credit risk roles in banks. However, insurers are also wary about whether banking candidates will successfully make the move. “It’s a big challenge for many insurance companies. They just don’t think ‘banking types’ will fit in. Certain firms have embraced the idea of bringing in people from different backgrounds as chief risk officers, while in others it will always be an actuary” says another risk recruiter.
Mark Dainty, director of insurance-focused recruitment consultancy High Finance Group agrees that risk professionals are suddenly popular in insurance firms. “We are seeing the creation of a second line of defence (in insurers) with group level risk functions,” he explains “Whereas the first line tends to be the traditional actuary who is liability-focused, Solvency II is clearly turning attention to the asset side of the equation and there is a whole new skills-set in demand.” However, Dainty agrees that finding the people with the right background and ‘fit’ remains a major challenge.