By David Greenfield, Managing Partner
The Asian insurance sector has endured a radical transformation during the past decade, imposed by a combination of global and regional influences as well as demands made by a more sophisticated and informed clientele.
Global insurance companies that once doubted the effectiveness of bancassurance and affinity as viable means of distribution alongside the traditional agency now compete openly to secure relationships with banks and other highly visible brands.
The insurance industry historically has been placed within the shadows of the banking sector and subsequently regarded as less high-profile. Thus, working in the insurance industry has not been the first career choice for university graduates.
With each global recession came a new round of the banking sector's review of cost base and management structures. During each review period, the insurance sector has systematically targeted certain elements within banking, offering opportunities with accelerated career paths to entice career changes. However, as soon as there are signs of a banking sector revival, there is a professional migration back to previous careers.
Traditional distribution across Asia continues to be a significant point of contact for established and prospective clients. In the past, this area has been seen as the obvious choice for the identification and selection of future senior management, fitting established, recognized and valued leadership profile models.
Until recently, Asia had viewed the Western insurance industry as being about eight years ahead of its own with regard to distribution techniques and selling models. Subsequently, in an effort to reduce the knowledge and experience deficit and accelerate the Asian insurance industry, companies imported this essential knowledge and experience in the form of senior management, resulting in a costly, short-term fix.
It became practice to position nonlocals in key leadership positions. This is evident upon reviewing the list of current chief executive officers in most of the Asian countries and regions—e.g., the last four regional CEOs appointed in the Life sector were all non-Asian.
This approach of circumventing the shortfall of knowledge and experience required to develop and deliver within the shortest timelines has been applied to bancassurance, affinity and other distribution models. The result has been a reduction of the eight-year deficit in some Asia Pacific markets to less than a three- to five-year differential between Western and Asian business models.
In addition to importing talent to the Asian insurance industry, there has been a sustained focus to reduce exposure to risk and the stringent revision of compliance, which has been ongoing since 2008. This focus on compliance has influenced a dynamic review of business models and senior management profiling to meet revised business demands.
The combination of all these elements continues to influence the career potential for junior and senior insurance executives in Asia through the installation of unofficial glass ceilings created as a result of short-term quick fixes being chosen over developing the long-term requirement. Although these unofficial glass ceilings are not unique to the insurance sector, they are one of the crucial factors for the common statement made industrywide across Asia: "There is no local talent available."
Most companies try to address the lack of local expertise and experience by identifying and then managing internal succession programs as a strategy to develop talent. However, this can result in a "robbing Peter to pay Paul" scenario where unexpected stresses are applied to the management structure.
One or two of the more established Asian insurers have tried to implement an executive development program, which is typically championed by human resources. Unfortunately, history has seen these programs become suspended over time due to a lack of sustained support from the senior regional and country leadership, brought about by cost reviews. In addition, regional teams that once were used as a source of "bench strength" and as an incubator for the development of succession have been eroded or in some companies dissolved due to management restructuring or from the specter of cost reviews.
It would be naive to assume that a quick-fix response to the Asian insurance sector's lack of local talent could be implemented without having a short- or medium-term negative impact on the companies involved.
Something must change to break the existing cycle if the Asian insurance industry is to have local talent, and companies may not have a choice in the matter. Recently, some South Asian governments and regulatory bodies have been applying pressure to impose restrictions on the issue of employment visas. Clearly, this has the potential to cause negative consequences directly to companies with limited capability for local internal succession, through costs incurred by reduced effectiveness, during the time to identify and recruit an external replacement.
Consideration might be given to applying a "prevention is better than the cure" approach by implementing a strategy and bespoke development program, tailored by country, to support current and anticipated regulatory and business requirements. Initial investment made in any development program will have a financial impact on budgets that will be recovered by the reduced expenditure on short-term fixes. If done well, Asia's insurance industry would finally be generating professional talent rather than importing it from elsewhere.
See the full-feature article at Carrier Management, January 21, 2015.
* * * * * * *
David Greenfield is a Managing Partner at Allegis Partners. He was previously Managing Director of Global Sage and Global Managing Director of Edison Morgan. Prior to these roles, David was with Korn/Ferry International as the Senior Client Partner and Practice Leader for Insurance Asia Pacific and Middle East (a total of 18 countries). He can be reached at +852 3628 4663 and email@example.com.