Updated: Jun 13
In the year 2009 in the UK, it was common for insurer pricing teams to be under 10 people. By 2022 it was common for insurer pricing teams to be over 100 people. By the year 2030, pricing teams will average at least 300 people. Some providers will have over 500. With a similar magnitude of growth for pricing teams in other countries and in other insurance providers like intermediaries.
It’s no wonder that pricing teams have grown tremendously over the years and still will. With more hands-on deck, pricing teams can do a better job of profitably growing the business by avoiding anti-selection, selecting against their competitors, eliminating errors in pricing, and thereby, improving the pricing system. In the words of Helen Keller, which says, “Alone we can do so little, together we can do so much." There is a never-ending advantage to improving your prices, and there is also far more that can be done than is currently being done and this shows no sign of ending. So, as complexity builds so does the need for more people to support the key activities too.
Structure of a Pricing Team
An effective pricing department needs much more than just pricing analysts, the roles can vary depending on the size and complexity of the insurance company, but generally, there is a need to expand all roles including:
● Data Engineers: Responsible for collecting and organizing data related to insurance risks and claims.
● Data Scientists: Responsible for modeling data and understanding the best methods and factors for forecasting the burning cost of a policy
● IT Professionals: Responsible for developing and maintaining the technology infrastructure that supports the pricing department's rates.
● Compliance and Legal Professionals: Responsible for ensuring that the company's pricing practices comply with regulatory requirements and that pricing decisions are made in accordance with applicable laws and regulations.
● Testers: Make sure that the prices deployed match what is expected without errors and problems.
● Other roles include trainers, communicators, and business partners.
Overall, the team structure of an insurance pricing department is designed to ensure that the company's pricing strategies are data-driven, financially sound, and comply with regulatory requirements while meeting the needs of the market and the company's overall business objectives.
Major Struggles and Challenges in Growing a Pricing Team
LinkedIn data shows a strong exponential year-on-year growth of people in insurance pricing and insurance data jobs. Below are a few reasons why it’s challenging to recruit people for the pricing team:
● Shortage of qualified candidates: The insurance industry requires specialized skills and knowledge, particularly in actuarial science. Remember actuaries do not have a monopoly on actuarial science. Almost anyone with training and experience can use these techniques. But there is still a shortage of candidates with the necessary technical expertise and experience to fill open positions.
● Competitive job market: The insurance industry is highly competitive, and candidates with strong analytical and technical skills are in high demand. They may have several job opportunities to choose from, making it difficult to attract and retain top talent.
● Perceptions of the insurance industry: The insurance industry may not be viewed as an attractive career option by some candidates due to unfair perceptions of it being bureaucratic, slow-moving, and lacking in innovation.
● Limited diversity: The insurance industry has historically struggled with limited diversity, particularly in senior roles. This can make it more challenging to attract a diverse pool of candidates and can limit the talent pool available for recruitment.
To overcome these challenges, insurance companies need to offer genuinely competitive salaries and benefits packages, provide real opportunities for professional development and growth, emphasize the importance of diversity and inclusion, and cultivate a positive reputation as an innovative and forward-thinking industry. We must not be elitist. Additionally, companies may need to broaden their recruitment efforts by leveraging social media, attending job fairs, and partnering with universities and industry associations to attract and retain top talent.
Top Tips on How to Grow Your Pricing Team
● Always be recruiting by having continual activity with HR and recruiters. Meaning you get the best candidates for your roles.
● Make contacts with universities and support internships.
● Keep contact with good people at all levels.
● Don't neglect senior levels just because salaries are high, and candidates are hard to find.
Building and growing a successful pricing team in the insurance industry requires a strategic approach that balances technical expertise with business acumen, regulatory compliance, and innovation. Companies must be prepared to invest in competitive salaries and benefits packages, provide opportunities for professional development and growth, and create a positive work culture that fosters creativity, collaboration, and diversity. In addition, companies must be willing to broaden their recruitment efforts by leveraging various recruitment channels, partnering with universities and industry associations, and developing effective retention strategies. By focusing on these factors, insurance companies can attract and retain top talent, build a strong pricing team, and achieve long-term success in a highly competitive market.
Exercise: Write down how many people worked in your insurance pricing department when you started your career.
Activity: Discuss what more you could achieve with more pricing people with other people in your team.
Questions: What will happen to you when your competitors triple their pricing teams if you don't keep pace?