As the regulatory burden for insurers and brokers continues to increase Shyam Raikundalia, Chief Compliance Officer, Davies Group, explains the fight for talent in compliance operations threatens to create a generation of disillusioned staff seeking to exit the industry.

Compliance is playing an ever greater role in the operations of companies across the (re)insurance industry.

The current regulatory environment remains dynamic. From the ongoing need to evidence solvency ratios to new rules around the operation of appointed representatives, regulators continue to create a new range of responsibilities which fall squarely in the remit of compliance departments.

The fight for talent across the insurance sector has always been difficult, and the move towards greater use of technology and digitalisation has required new skills.

As the regulatory environment increases in complexity, new staff require extensive training, but the industry is witnessing a disturbing new trend which has the potential to deliver serious long term issues for the compliance discipline.

There is a growing trend which sees firms looking to attract young peoples from rival companies to boost their compliance operations. Competition for staff is to be welcomed and firms which can offer an attractive opportunity for staff to take the next step in their career should be encouraged.

However, currently staff who may have only been in the role for six months and may have undergone a basic amount of training are being headhunted by companies offering them substantial pay increases to move.

At Davies we devote a lot of time to the training of our new staff, and I would say this training is on a par with a few and the envy of many. However, six months does not deliver a comprehensive set of skills and understanding to the young and talented individuals who have decided to pursue a career in compliance and regulation. The changing nature of regulation requires continued CPD, for those who have been in their roles for many years, so those who are new to the industry require two, three, even five years to achieve a fully rounded understanding of the roles across compliance.

While the young people are clearly attracted to an offer which increases their salary by a substantial rise, they find that when they arrive in their new role their limited experience means they will be relegated to specific tasks and in some cases suddenly discover that there is no career path open to them to progress.

The result is a building disillusionment and discontent which will see them either lose the job, or simply leave the industry to find a role outside of insurance which offers better long term job satisfaction and a career path.

At a time when the ability to attract staff is at a  premium, the compliance sector cannot afford to see staff leaving the industry as their hopes and aspirations are dashed.

The market has to halt this trend and in doing so stem the flow of staff which are no longer willing to commit to a career in compliance.

I am a case in point in terms of what can be achieved, having joined Davies Group at a young age and been given the opportunity to build a fulfilling career in compliance. The increasing importance of the compliance function provides the industry with the opportunity to offer young people with specific skillsets a highly rewarding career both financially and in terms of the challenges that regulation poses for businesses of all sizes.

Given the current economic environment the temptation of a greatly increased salary is significant. However, when approached to move, staff need to consider the long term implications of the decision they are being asked to make. Does the new offer include a clearly defined career path, and importantly what is the firm’s approach to further training and CPD?

Sustainability is a term on the lips of all in the industry, but are compliance departments taking a sustainable approach to the recruitment of staff? The immediate need for new staff has to be tempered with a recognition around how you see that member of staff developing within your organisations and the long term investment you are willing to make to provide a genuine and rewarding career.

Staff need to be recruited for the right reasons, both for the compliance department and the individual.

I have had staff who have left our business call me to say they wish they had thought longer about the decision they made, and now regretted their actions. While it is always nice to be viewed as a good place to work, the bigger picture is that we are in danger of simply churning staff, many of whom are still learning the business, to the point that they choose to leave the industry.

If we do not address the current trends, we run a real risk of losing the future talent the industry will require to meet its compliance requirements.

If you would like to continue the conversation, get in touch with Chief Compliance Officer, Shyam Raikundalia at shyam.raikundalia@davies-group.com