October 28, 2025 • 18 mins
In this episode of Insurance Tomorrow, Vanessa welcomes Nicky Johnson, Head of Workforce Change and Productivity at Allianz UK, and Shazia Ejaz, Director of Research at the Recruitment and Employment Confederation to navigate the skills shortage in the UK, what this means for businesses, and the insurance implications.
We dive into:
- How the skills shortage impacts SMEs
- The implications for insurance costs, including claims costs
- How workforce planning can help businesses stay resilient
- The benefits of risk assessments to prevent claims
- How apprenticeships can help SMEs bring skills into their business
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
MUSIC (00:04):
(Music).
Vanessa Baffoe (00:07):
Hello, and welcome back to another episode of Insurance Tomorrow, brought to you
by Allianz Insurance. I'm Vanessa Baffoe. Now, today we're diving
into a topic that's increasingly difficult for UK businesses. So
what am I talking about? The shortage of skilled workers. Now,
this is a challenge that's so significant that it ranks
in the top 10 of the Allianz UK Risk Barometer.
(00:29):
For small and medium- sized enterprises, this is not just
a headline, this is a daily reality that impacts their
ability to stay competitive. Well, I'm pleased to say that
we are joined by Nicky Johnson, who's head of Workforce
Change and Productivity at Allianz UK, and also Shazia Ejaz,
who's Director of Research at the Recruitment and Employment Confederation.
(00:50):
They'll be sharing their thoughts on how these workforce challenges
are reshaping risks, driving up insurance costs, and also crucially,
what brokers can do to help their clients navigate through
these complexities. It's great to have both of you here
with us. Welcome to Insurance Tomorrow, Shazia, to set the
scene, can you just outline the skill and the nature
(01:11):
of the skilled workforce shortage in the UK, particularly in
relation to small and medium- sized businesses?
Shazia Ejaz (01:18):
Skills shortages are still a really important issue for the
UK economy. Not just the UK economy, it's a global
issue, actually, but we've been on a journey with the
levels of skill shortages. So if we think about pre- COVID,
there were lots of skill shortages in the economy. And
a few years ago, people might even remember queuing up
(01:39):
at sort of petrol forecourts, because there wasn't enough petrol
reaching the pumps, because there weren't enough drivers to take the
petrol around the country. And I think that was a
real jolt for the economy. And then, after COVID, a
lot of people that were here returned home, because they
weren't able to work, so lots of people returned to
(02:00):
Europe. And after Brexit, as well, there were a number
of people that felt that they weren't necessarily welcome in the
UK, so we lost a lot of skills over that
period, as well. And it's a slow journey to recover,
and certainly there are bits of the economy that continuously
still struggle with skill shortages. Health is one of those,
(02:23):
IT, computing, what we register as sort of executive professional roles, but
all sorts of jobs within those sectors. Employers are still
struggling to fill those roles.
Vanessa Baffoe (02:34):
Such an interesting point there that you make, Shaz, about
that slow journey to recover. And actually, Nicky, what's your
take on that?
Nicky Johnson (02:41):
Yeah, I mean, I think that's right. And there are
particular sectors that are impacting insurance topics. So, for example,
construction shortage, skilled trades and labor, et cetera. So there
are high peaks in demand, so storm demands, and stuff
like that. We are seeing skill shortages impacting, more generally,
in terms of the ability to and repair. So there
(03:01):
is a general shortage, as you've outlined, in a number
of sectors, and I think that does have direct impact
on people's insurance arrangements.
Vanessa Baffoe (03:07):
So Shazia, how's a shortage of skilled workers influencing the
risk landscape for businesses?
Shazia Ejaz (03:12):
It's a really important issue for employers and businesses to
have to contend with, because obviously if you want to
grow or scale your business, and you can't get the
people that allow you to do that, then that curtails
all sorts of opportunities, it curtails profits. The government say
that their priority is to grow the economy, but you
(03:34):
can't grow the economy unless you have the people to
do it. So it's a huge issue. Also, skill shortages
means that it drives up the cost of employing people,
because those shortages mean that their skills are in demand,
so it pushes up wages so that impacts ... the cost
of employment is impacted, which is obviously a huge issue,
especially for smaller businesses, as well.
Vanessa Baffoe (03:57):
And Nicky, I'll throw the same question to you.
Nicky Johnson (03:59):
Yeah, of course. And I think that's absolutely right. The
other thing you'll see is it impacts a wide range
of risks for businesses, generally, but particular of SMEs. So
you're looking at operational risks. If you haven't got the
staff to do the work, are you running more risks
of error, product defects, service demand failures? If you are
not able to source skills in new and high demand
areas, can you expand and really take on the competition
(04:22):
in emerging areas? So there might be other risks as
well around compliance with industry standards and compliance requirements. And
increasingly specialist skills like data skills and data protection, health and safety,
cyber skills, that even SMEs need access to, those skills
are in demand and actually can hold you back, as
a company, if you don't have easy access to those skills.
Vanessa Baffoe (04:43):
Nicky, in what ways are labor shortages and skills gaps driving
up business insurance costs directly? And with that I mean things
like increased claims, but also indirectly looking at longer reinstatement
times, higher repair costs.
Nicky Johnson (04:57):
There are kind of direct and indirect costs to those.
So direct costs would be around things like where people
are trying to replace skilled labor with some automation, you're
going to have more sophisticated machinery and plant, and that's
going to incur perhaps potentially higher insurance premiums. There are
also costs around making sure that you don't find yourself
making more claims. So if you've got a shortage of
labor or it's badly trained, that you may end up
(05:19):
with errors and accidents that result in more claims. The
ability to recover, as well, from instances is critical, because if
you can't recover quickly, if you haven't got the right skills, then
your business interruption insurance is going to be influenced, as
well. So there are a number of direct impacts. There
are also a number of indirect impacts. So, for example,
the shortage in sectors we've talked about where we, for
(05:40):
example, put care packages in place for people who are
seriously injured. The lack of health and care resources, in
that sector, means that those packages are harder to find
and that they're more expensive. Equally, things like shortages in
construction and plumbing will lead to both immediate indirect costs
of increased repair costs, but also longer term issues. So,
(06:00):
for example, the lack of plumbers is resulting in push-
fit piping rather than copper piping, which results in more
escape of water claims over time. So there are lots of implications
across the insurance spectrum.
Vanessa Baffoe (06:11):
And we've seen materials cost inflation and also the supply
chain issues that we've seen pushing up reinstatement costs. And
so with that in mind, I'm just really keen to
know, how does the workforce shortage, then, interact with these
factors to add to the risks and costs for businesses
and insurers?
Nicky Johnson (06:30):
I mean, I think in terms of the impacts with
the increase of material costs, actually labor costs are, quite
often, the higher proportion of a claim cost. And what
you see there is extended repair time. So even if
you've got the materials, sometimes you don't have the skilled
labor to do that reinstatement and repair. So EV technicians,
drying technicians for property damage, et cetera, all in high
demand. And actually, that can extend the time at which
(06:52):
repairs can be taking place. If that extends significantly, then
what you are going to find is that there may
be secondary issues. So in properties, if they're in bad
repair, then you might get further structural issues, mold, et
cetera. So you end up with an overall inflation of
claims costs in terms of expertise and secondary damage. And
that means that insurance indemnities go up, reserving goes up,
(07:13):
and the overall costs for claims will increase. And alongside
that, as you've mentioned, we've got labor inflation costs, so
high demand, storm surges, et cetera, then you're going to
have increased costs around call- out charges, overtime, et cetera,
so all of those things add up to very expensive
claims. And so, for brokers advising people, it's really about
(07:35):
making sure they avoid making claims in the first place, but
also then making sure they've got good recovery strategies.
Vanessa Baffoe (07:40):
Well, sounds very sound to me. What about you, Shazia?
Shazia Ejaz (07:43):
Workforce planning, in general, is a huge issue for the
UK economy. So there are obviously different levels. There's the
government's announced its industrial strategy recently, and they've got priority
sectors within that. And for those priority sectors, one of
the things that they've asked those industries to do is
to come up with workforce plans. That's crucial, so that
(08:04):
actually we know that if we want to invest in
a certain bit of the economy, potentially something like AI,
digital skills, well we need to make sure that there are
people coming into the workforce that are skilled up that
can grow and that can fuel those industries. But it's
really important then that, to mirror that, that individual organizations
(08:25):
think about what it is that they need. If you
are an organization, you need to be thinking, " Five years
down the line, where is my business going? What are
the sorts of skills that I need?" And you've got
to start planning early. And that investment in skills needs
to be considered as exactly that. It's an investment rather
than a business cost, because it's a false economy to
(08:48):
try and grow your business, but not be thinking about
the skills that you need. And that means upskilling existing
workforce, but it does mean also thinking about how you
are going to acquire those skills into your business.
Vanessa Baffoe (09:00):
That's a really good point there. Nicky, I can just
see you going ... nodding along in agreement there.
Nicky Johnson (09:05):
Yeah, absolutely. (inaudible) Yeah, exactly. I think that's right. Increasingly,
SME businesses, where they're under pressure competing with larger firms
for talent, will need to look at diverse pipelines and looking
at apprenticeships, people coming into the workforce in their early
years with T- level qualifications, but also looking at other
sources around the workforce in terms of returners, people coming
(09:25):
out the armed forces into shortage skill sectors with high
levels of training. So there are lots of places to look
for people, and it's just about making sure that you
have the right strategies to attract and, more importantly, retain
those people when you get them.
Vanessa Baffoe (09:38):
Nicky, let me just come to you on this one,
because are there particular sectors or types of businesses that
are feeling the impacts of the gap and the skill shortages
a lot more acutely? And, if so, how should brokers
tailor their advice to clients that are at risk of these areas?
Nicky Johnson (09:54):
Yeah, sure. So I think we've covered earlier some of the
sectors that are really under pressure, and that's things like
healthcare, and social care, IT and cyber, AI skills would
be in there as well. Construction is a big one
and obviously that impacts from an insurance perspective quite significantly.
And emerging technologies, generally, whether that's sustainable energy or EVs,
et cetera. So there are a number of sectors that
(10:16):
are going to feel that pressure, and that will be
exacerbated for SMEs where they're in perhaps geographic locations where
it's hard to attract specialists or where they rely on
key person dependencies or mixed skill roles where they're asking
for more than perhaps large employers might do. So they really
need to kind of keep an eye on that. From
a broker perspective, I think there's a couple of things.
Firstly, is trying to work with their clients so that
(10:37):
actually they avoid making claims in the first place. So
things like looking at industry standards around good practice for
escape of water management and all those kinds of things.
So they're putting themselves in a position of managing risk
generally well and therefore not making claims, which obviously puts
the pricing and accessibility to insurance products on a much
better footing for them. But then actually when they're working
(10:58):
with their clients, look at risk management assessment and risk
management strategies. So the kind of things we've talked about
from a workforce perspective in terms of enabling them to
look at the broadest range of solutions that they might
have to any critical issues.
Vanessa Baffoe (11:10):
And Nicky, from an underwriters point of view, how are
insurers then adapting their approach to risk assessment and also
areas like pricing, as well. And I say all of
this in light of the workforce shortages that we are
seeing and that you've also mentioned, as well. And there
are also new questions on requirements that brokers should be
(11:30):
aware of.
Nicky Johnson (11:31):
Yeah, absolutely. So you touched earlier on the shortage of
skills in insurance. Certainly, from insurer perspective, you are seeing
insurance firms relying more heavily on automation and AI in
terms of their ability to look at risks, and then
utilizing underwriters on the more complex aspects of risk management.
But from a client perspective, I guess it's more around
making sure that there are robust workforce plans in place,
(11:55):
that people are aware of their key person dependencies, and
that they've got mitigation plans in place for those, that
there are business continuity plans, so that if something does
go wrong, businesses are able to recover quickly and well
from that. And also that they're able to demonstrate that
they have a robust workforce in terms of the training
that they've had and therefore the level of quality that
they're able to provide in the services or products that
(12:16):
they deliver to their customers to avoid potential for claims
around failures there or even accidents and errors that will occur
if you've got a shortage of workforce or people that
are not well skilled to do the job.
Vanessa Baffoe (12:28):
Let me come to you first actually Shazi on this.
What are actually some of the steps, the practical steps,
that brokers can take to help their clients to mitigate
those risks that are associated with the shortage of skills, whether
that's through risk management areas, such as business continuity planning,
and also insurance solutions, for example.
Shazia Ejaz (12:46):
What I can say for brokers that are thinking about
how do we help our clients? One of the things
I would say is to try and get the right
advice. So we've talked about planning. My organization is a trade
association for recruitment and employment businesses. We know that our
members, recruiters up and down the country that help people,
deploy people in various sectors around the UK, they are
(13:09):
skilled experts in how to access these skills, and to help
businesses manage their workforce needs, to help them do that
planning that we've talked about. So I think it's really
important to reach into your local recruitment sector and find
out how they can support you. Also, to make sure
that you are speaking to that local skills and business
(13:31):
environment. So there are lots of organizations that are at a local level, so
the British Chambers, for example, will be connecting with colleges
and other businesses to make sure that they understand what
the issues are, so that they can try and redress
them and come up with local plans to redress them.
And I think it's really important for your brokers and the insurance
community to be part of that conversation and to be
(13:53):
part of that infrastructure that looks at what the local
economy needs, so that they can help access and plan
for meeting those skill shortages, as well.
Vanessa Baffoe (14:02):
And Nicky, what about you?
Nicky Johnson (14:03):
Yeah, I mean I think all of the above, but
I think the first point is really education. So quite
often, if you don't think about the workforce planning and
your skills' profile, you only really realize you've got a
problem when it happens. So actually, just that education around
what the risks are. And then, the ability to give
their clients some advice around how to do a risk
assessment in this sort of skills space, and then how
to mitigate some of those risks. So encouraging clients to
(14:25):
make sure that they've got good workforce plans, that they're
training their people properly, and that they're looking at some
good workforce metrics in terms of being able to then
predict what the future might hold for them, and get
ahead of the game, and make sure that they can
recruit the right people at the right time, so that they've
got a seamless transition into the future plans that they
want for their business.
Vanessa Baffoe (14:42):
Now this is a part that I just want to just
say, let's just look ahead. We don't have any crystal
balls here, do we? But just looking ahead, how do
you see the skilled workforce shortage evolving, Nicky, over the
next 2, 3, 4, 5 years time? And what could
this mean for business insurance costs and also cover availability
for SMEs?
Nicky Johnson (15:02):
So we talked about critical sectors, and there are sort of 10
critical sectors that the government feels will be in need
of perhaps up to 15% more jobs by 2030. Now
that's nearly 800,000 people. And so, there is going to
be, I think, more pressure around these sectors in the
future and we should expect, over the next three to
five years, to see that pressure increase. And so, it
really is about making sure that clients are on top
(15:24):
of this, and that they understand the skills that they
need now and for the future, and can really start
to plan for that in a meaningful way, and tapping
in, as you say, to resources available to them locally
to help them do that.
Vanessa Baffoe (15:34):
What about you, Shazia?
Shazia Ejaz (15:35):
So this is an issue that needs quick action, in
a joined up way, by both businesses and employers, local
skills' infrastructure, so colleges. What we do know is is
that this problem's not going away anytime soon. We've had
it for a long time, and actually as we were
saying earlier, we've got ageing populations, we've got people that
aren't well enough to work. There's too many people that
(15:58):
are either not in education or not in employment, so
there's a big job to do to expand our skills
base, and get more people into employment. The government has
made some promises around this. They have said that by
2028, 2029, they'll be up to 1. 2 billion pounds invested in
that skills' environment. They've announced more money for what they're
(16:20):
calling colleges of technical excellence. So all of these things
need to happen. But I think what's really important, as
well, is this needs to be co- designed, so that
businesses, different industries and sectors are all working with those
local skills' infrastructures. Local skills improvement partnerships is one of
those forums to allow businesses, colleges, and other sort of
(16:43):
local skills' organizations to come together. Apprenticeships is a really
important thing, as well, that's sometimes overlooked. And it's hard
sometimes for SME businesses to think, " Well, how do I go
about this? It's quite complicated. What's involved?" So that's something
else that we would ask the government to do more
on, to simplify that system so that more SME businesses
(17:04):
feel that it's easier for them to access apprenticeships, and
build up their own skills force in that way.
Vanessa Baffoe (17:10):
And finally, Nicky, what's the one thing that you think
brokers should be doing today to help their clients stay
resilient, and also to be competitive in the face of
ongoing workforce challenges?
Nicky Johnson (17:23):
The best thing that brokers could do to help their
clients really is to work with them, educate them on
the risks around the skills shortage, and just make sure
that they have an approach in terms of risk assessment
and mitigation that suits their business, that meets their cost
requirements, so that actually their best place to deliver quality
services products, and to make sure that they're well set
up and organized well as a business, so that they
(17:43):
reduce their likelihood of making claims. And they can also
discuss, obviously, with insurers, any specialized requirements around, for example,
business interruption insurance or specialized endorsements that will help their
business once they've got themselves sorted and organized about what
they want to do from a skills gap point of view.
Vanessa Baffoe (17:59):
It's been really good speaking you. Thank you so much, indeed. Nicky and Shazia,
great to have you both on Insurance Tomorrow. Thank you
so much. Thank you.
Shazia Ejaz (18:06):
Thank you. Thank you.
Nicky Johnson (18:06):
Pleasure. Thank you, (inaudible) . Yes.
Vanessa Baffoe (18:07):
Well, with that in mind, we'll bring this episode of
Insurance Tomorrow to a close. Massive thanks to Nicky Johnson,
who's Head of Workforce Change and Productivity at Allianz UK,
and also to Shazia Ejaz, who's Director of Research at
the Recruitment and Employment Confederation. And a massive thank you
to you also for joining. Don't forget, you can subscribe
through your normal podcast app, so you'll never have to
(18:30):
miss an episode. And while you're there, why not leave
us a review? We'd love to hear from you. Until
next time, see you soon.
(Music).
Vanessa Baffoe (00:07):
Hello, and welcome back to another episode of Insurance Tomorrow, brought to you
by Allianz Insurance. I'm Vanessa Baffoe. Now, today we're diving
into a topic that's increasingly difficult for UK businesses. So
what am I talking about? The shortage of skilled workers. Now,
this is a challenge that's so significant that it ranks
in the top 10 of the Allianz UK Risk Barometer.
(00:29):
For small and medium- sized enterprises, this is not just
a headline, this is a daily reality that impacts their
ability to stay competitive. Well, I'm pleased to say that
we are joined by Nicky Johnson, who's head of Workforce
Change and Productivity at Allianz UK, and also Shazia Ejaz,
who's Director of Research at the Recruitment and Employment Confederation.
(00:50):
They'll be sharing their thoughts on how these workforce challenges
are reshaping risks, driving up insurance costs, and also crucially,
what brokers can do to help their clients navigate through
these complexities. It's great to have both of you here
with us. Welcome to Insurance Tomorrow, Shazia, to set the
scene, can you just outline the skill and the nature
(01:11):
of the skilled workforce shortage in the UK, particularly in
relation to small and medium- sized businesses?
Shazia Ejaz (01:18):
Skills shortages are still a really important issue for the
UK economy. Not just the UK economy, it's a global
issue, actually, but we've been on a journey with the
levels of skill shortages. So if we think about pre- COVID,
there were lots of skill shortages in the economy. And
a few years ago, people might even remember queuing up
(01:39):
at sort of petrol forecourts, because there wasn't enough petrol
reaching the pumps, because there weren't enough drivers to take the
petrol around the country. And I think that was a
real jolt for the economy. And then, after COVID, a
lot of people that were here returned home, because they
weren't able to work, so lots of people returned to
(02:00):
Europe. And after Brexit, as well, there were a number
of people that felt that they weren't necessarily welcome in the
UK, so we lost a lot of skills over that
period, as well. And it's a slow journey to recover,
and certainly there are bits of the economy that continuously
still struggle with skill shortages. Health is one of those,
(02:23):
IT, computing, what we register as sort of executive professional roles, but
all sorts of jobs within those sectors. Employers are still
struggling to fill those roles.
Vanessa Baffoe (02:34):
Such an interesting point there that you make, Shaz, about
that slow journey to recover. And actually, Nicky, what's your
take on that?
Nicky Johnson (02:41):
Yeah, I mean, I think that's right. And there are
particular sectors that are impacting insurance topics. So, for example,
construction shortage, skilled trades and labor, et cetera. So there
are high peaks in demand, so storm demands, and stuff
like that. We are seeing skill shortages impacting, more generally,
in terms of the ability to and repair. So there
(03:01):
is a general shortage, as you've outlined, in a number
of sectors, and I think that does have direct impact
on people's insurance arrangements.
Vanessa Baffoe (03:07):
So Shazia, how's a shortage of skilled workers influencing the
risk landscape for businesses?
Shazia Ejaz (03:12):
It's a really important issue for employers and businesses to
have to contend with, because obviously if you want to
grow or scale your business, and you can't get the
people that allow you to do that, then that curtails
all sorts of opportunities, it curtails profits. The government say
that their priority is to grow the economy, but you
(03:34):
can't grow the economy unless you have the people to
do it. So it's a huge issue. Also, skill shortages
means that it drives up the cost of employing people,
because those shortages mean that their skills are in demand,
so it pushes up wages so that impacts ... the cost
of employment is impacted, which is obviously a huge issue,
especially for smaller businesses, as well.
Vanessa Baffoe (03:57):
And Nicky, I'll throw the same question to you.
Nicky Johnson (03:59):
Yeah, of course. And I think that's absolutely right. The
other thing you'll see is it impacts a wide range
of risks for businesses, generally, but particular of SMEs. So
you're looking at operational risks. If you haven't got the
staff to do the work, are you running more risks
of error, product defects, service demand failures? If you are
not able to source skills in new and high demand
areas, can you expand and really take on the competition
(04:22):
in emerging areas? So there might be other risks as
well around compliance with industry standards and compliance requirements. And
increasingly specialist skills like data skills and data protection, health and safety,
cyber skills, that even SMEs need access to, those skills
are in demand and actually can hold you back, as
a company, if you don't have easy access to those skills.
Vanessa Baffoe (04:43):
Nicky, in what ways are labor shortages and skills gaps driving
up business insurance costs directly? And with that I mean things
like increased claims, but also indirectly looking at longer reinstatement
times, higher repair costs.
Nicky Johnson (04:57):
There are kind of direct and indirect costs to those.
So direct costs would be around things like where people
are trying to replace skilled labor with some automation, you're
going to have more sophisticated machinery and plant, and that's
going to incur perhaps potentially higher insurance premiums. There are
also costs around making sure that you don't find yourself
making more claims. So if you've got a shortage of
labor or it's badly trained, that you may end up
(05:19):
with errors and accidents that result in more claims. The
ability to recover, as well, from instances is critical, because if
you can't recover quickly, if you haven't got the right skills, then
your business interruption insurance is going to be influenced, as
well. So there are a number of direct impacts. There
are also a number of indirect impacts. So, for example,
the shortage in sectors we've talked about where we, for
(05:40):
example, put care packages in place for people who are
seriously injured. The lack of health and care resources, in
that sector, means that those packages are harder to find
and that they're more expensive. Equally, things like shortages in
construction and plumbing will lead to both immediate indirect costs
of increased repair costs, but also longer term issues. So,
(06:00):
for example, the lack of plumbers is resulting in push-
fit piping rather than copper piping, which results in more
escape of water claims over time. So there are lots of implications
across the insurance spectrum.
Vanessa Baffoe (06:11):
And we've seen materials cost inflation and also the supply
chain issues that we've seen pushing up reinstatement costs. And
so with that in mind, I'm just really keen to
know, how does the workforce shortage, then, interact with these
factors to add to the risks and costs for businesses
and insurers?
Nicky Johnson (06:30):
I mean, I think in terms of the impacts with
the increase of material costs, actually labor costs are, quite
often, the higher proportion of a claim cost. And what
you see there is extended repair time. So even if
you've got the materials, sometimes you don't have the skilled
labor to do that reinstatement and repair. So EV technicians,
drying technicians for property damage, et cetera, all in high
demand. And actually, that can extend the time at which
(06:52):
repairs can be taking place. If that extends significantly, then
what you are going to find is that there may
be secondary issues. So in properties, if they're in bad
repair, then you might get further structural issues, mold, et
cetera. So you end up with an overall inflation of
claims costs in terms of expertise and secondary damage. And
that means that insurance indemnities go up, reserving goes up,
(07:13):
and the overall costs for claims will increase. And alongside
that, as you've mentioned, we've got labor inflation costs, so
high demand, storm surges, et cetera, then you're going to
have increased costs around call- out charges, overtime, et cetera,
so all of those things add up to very expensive
claims. And so, for brokers advising people, it's really about
(07:35):
making sure they avoid making claims in the first place, but
also then making sure they've got good recovery strategies.
Vanessa Baffoe (07:40):
Well, sounds very sound to me. What about you, Shazia?
Shazia Ejaz (07:43):
Workforce planning, in general, is a huge issue for the
UK economy. So there are obviously different levels. There's the
government's announced its industrial strategy recently, and they've got priority
sectors within that. And for those priority sectors, one of
the things that they've asked those industries to do is
to come up with workforce plans. That's crucial, so that
(08:04):
actually we know that if we want to invest in
a certain bit of the economy, potentially something like AI,
digital skills, well we need to make sure that there are
people coming into the workforce that are skilled up that
can grow and that can fuel those industries. But it's
really important then that, to mirror that, that individual organizations
(08:25):
think about what it is that they need. If you
are an organization, you need to be thinking, " Five years
down the line, where is my business going? What are
the sorts of skills that I need?" And you've got
to start planning early. And that investment in skills needs
to be considered as exactly that. It's an investment rather
than a business cost, because it's a false economy to
(08:48):
try and grow your business, but not be thinking about
the skills that you need. And that means upskilling existing
workforce, but it does mean also thinking about how you
are going to acquire those skills into your business.
Vanessa Baffoe (09:00):
That's a really good point there. Nicky, I can just
see you going ... nodding along in agreement there.
Nicky Johnson (09:05):
Yeah, absolutely. (inaudible) Yeah, exactly. I think that's right. Increasingly,
SME businesses, where they're under pressure competing with larger firms
for talent, will need to look at diverse pipelines and looking
at apprenticeships, people coming into the workforce in their early
years with T- level qualifications, but also looking at other
sources around the workforce in terms of returners, people coming
(09:25):
out the armed forces into shortage skill sectors with high
levels of training. So there are lots of places to look
for people, and it's just about making sure that you
have the right strategies to attract and, more importantly, retain
those people when you get them.
Vanessa Baffoe (09:38):
Nicky, let me just come to you on this one,
because are there particular sectors or types of businesses that
are feeling the impacts of the gap and the skill shortages
a lot more acutely? And, if so, how should brokers
tailor their advice to clients that are at risk of these areas?
Nicky Johnson (09:54):
Yeah, sure. So I think we've covered earlier some of the
sectors that are really under pressure, and that's things like
healthcare, and social care, IT and cyber, AI skills would
be in there as well. Construction is a big one
and obviously that impacts from an insurance perspective quite significantly.
And emerging technologies, generally, whether that's sustainable energy or EVs,
et cetera. So there are a number of sectors that
(10:16):
are going to feel that pressure, and that will be
exacerbated for SMEs where they're in perhaps geographic locations where
it's hard to attract specialists or where they rely on
key person dependencies or mixed skill roles where they're asking
for more than perhaps large employers might do. So they really
need to kind of keep an eye on that. From
a broker perspective, I think there's a couple of things.
Firstly, is trying to work with their clients so that
(10:37):
actually they avoid making claims in the first place. So
things like looking at industry standards around good practice for
escape of water management and all those kinds of things.
So they're putting themselves in a position of managing risk
generally well and therefore not making claims, which obviously puts
the pricing and accessibility to insurance products on a much
better footing for them. But then actually when they're working
(10:58):
with their clients, look at risk management assessment and risk
management strategies. So the kind of things we've talked about
from a workforce perspective in terms of enabling them to
look at the broadest range of solutions that they might
have to any critical issues.
Vanessa Baffoe (11:10):
And Nicky, from an underwriters point of view, how are
insurers then adapting their approach to risk assessment and also
areas like pricing, as well. And I say all of
this in light of the workforce shortages that we are
seeing and that you've also mentioned, as well. And there
are also new questions on requirements that brokers should be
(11:30):
aware of.
Nicky Johnson (11:31):
Yeah, absolutely. So you touched earlier on the shortage of
skills in insurance. Certainly, from insurer perspective, you are seeing
insurance firms relying more heavily on automation and AI in
terms of their ability to look at risks, and then
utilizing underwriters on the more complex aspects of risk management.
But from a client perspective, I guess it's more around
making sure that there are robust workforce plans in place,
(11:55):
that people are aware of their key person dependencies, and
that they've got mitigation plans in place for those, that
there are business continuity plans, so that if something does
go wrong, businesses are able to recover quickly and well
from that. And also that they're able to demonstrate that
they have a robust workforce in terms of the training
that they've had and therefore the level of quality that
they're able to provide in the services or products that
(12:16):
they deliver to their customers to avoid potential for claims
around failures there or even accidents and errors that will occur
if you've got a shortage of workforce or people that
are not well skilled to do the job.
Vanessa Baffoe (12:28):
Let me come to you first actually Shazi on this.
What are actually some of the steps, the practical steps,
that brokers can take to help their clients to mitigate
those risks that are associated with the shortage of skills, whether
that's through risk management areas, such as business continuity planning,
and also insurance solutions, for example.
Shazia Ejaz (12:46):
What I can say for brokers that are thinking about
how do we help our clients? One of the things
I would say is to try and get the right
advice. So we've talked about planning. My organization is a trade
association for recruitment and employment businesses. We know that our
members, recruiters up and down the country that help people,
deploy people in various sectors around the UK, they are
(13:09):
skilled experts in how to access these skills, and to help
businesses manage their workforce needs, to help them do that
planning that we've talked about. So I think it's really
important to reach into your local recruitment sector and find
out how they can support you. Also, to make sure
that you are speaking to that local skills and business
(13:31):
environment. So there are lots of organizations that are at a local level, so
the British Chambers, for example, will be connecting with colleges
and other businesses to make sure that they understand what
the issues are, so that they can try and redress
them and come up with local plans to redress them.
And I think it's really important for your brokers and the insurance
community to be part of that conversation and to be
(13:53):
part of that infrastructure that looks at what the local
economy needs, so that they can help access and plan
for meeting those skill shortages, as well.
Vanessa Baffoe (14:02):
And Nicky, what about you?
Nicky Johnson (14:03):
Yeah, I mean I think all of the above, but
I think the first point is really education. So quite
often, if you don't think about the workforce planning and
your skills' profile, you only really realize you've got a
problem when it happens. So actually, just that education around
what the risks are. And then, the ability to give
their clients some advice around how to do a risk
assessment in this sort of skills space, and then how
to mitigate some of those risks. So encouraging clients to
(14:25):
make sure that they've got good workforce plans, that they're
training their people properly, and that they're looking at some
good workforce metrics in terms of being able to then
predict what the future might hold for them, and get
ahead of the game, and make sure that they can
recruit the right people at the right time, so that they've
got a seamless transition into the future plans that they
want for their business.
Vanessa Baffoe (14:42):
Now this is a part that I just want to just
say, let's just look ahead. We don't have any crystal
balls here, do we? But just looking ahead, how do
you see the skilled workforce shortage evolving, Nicky, over the
next 2, 3, 4, 5 years time? And what could
this mean for business insurance costs and also cover availability
for SMEs?
Nicky Johnson (15:02):
So we talked about critical sectors, and there are sort of 10
critical sectors that the government feels will be in need
of perhaps up to 15% more jobs by 2030. Now
that's nearly 800,000 people. And so, there is going to
be, I think, more pressure around these sectors in the
future and we should expect, over the next three to
five years, to see that pressure increase. And so, it
really is about making sure that clients are on top
(15:24):
of this, and that they understand the skills that they
need now and for the future, and can really start
to plan for that in a meaningful way, and tapping
in, as you say, to resources available to them locally
to help them do that.
Vanessa Baffoe (15:34):
What about you, Shazia?
Shazia Ejaz (15:35):
So this is an issue that needs quick action, in
a joined up way, by both businesses and employers, local
skills' infrastructure, so colleges. What we do know is is
that this problem's not going away anytime soon. We've had
it for a long time, and actually as we were
saying earlier, we've got ageing populations, we've got people that
aren't well enough to work. There's too many people that
(15:58):
are either not in education or not in employment, so
there's a big job to do to expand our skills
base, and get more people into employment. The government has
made some promises around this. They have said that by
2028, 2029, they'll be up to 1. 2 billion pounds invested in
that skills' environment. They've announced more money for what they're
(16:20):
calling colleges of technical excellence. So all of these things
need to happen. But I think what's really important, as
well, is this needs to be co- designed, so that
businesses, different industries and sectors are all working with those
local skills' infrastructures. Local skills improvement partnerships is one of
those forums to allow businesses, colleges, and other sort of
(16:43):
local skills' organizations to come together. Apprenticeships is a really
important thing, as well, that's sometimes overlooked. And it's hard
sometimes for SME businesses to think, " Well, how do I go
about this? It's quite complicated. What's involved?" So that's something
else that we would ask the government to do more
on, to simplify that system so that more SME businesses
(17:04):
feel that it's easier for them to access apprenticeships, and
build up their own skills force in that way.
Vanessa Baffoe (17:10):
And finally, Nicky, what's the one thing that you think
brokers should be doing today to help their clients stay
resilient, and also to be competitive in the face of
ongoing workforce challenges?
Nicky Johnson (17:23):
The best thing that brokers could do to help their
clients really is to work with them, educate them on
the risks around the skills shortage, and just make sure
that they have an approach in terms of risk assessment
and mitigation that suits their business, that meets their cost
requirements, so that actually their best place to deliver quality
services products, and to make sure that they're well set
up and organized well as a business, so that they
(17:43):
reduce their likelihood of making claims. And they can also
discuss, obviously, with insurers, any specialized requirements around, for example,
business interruption insurance or specialized endorsements that will help their
business once they've got themselves sorted and organized about what
they want to do from a skills gap point of view.
Vanessa Baffoe (17:59):
It's been really good speaking you. Thank you so much, indeed. Nicky and Shazia,
great to have you both on Insurance Tomorrow. Thank you
so much. Thank you.
Shazia Ejaz (18:06):
Thank you. Thank you.
Nicky Johnson (18:06):
Pleasure. Thank you, (inaudible) . Yes.
Vanessa Baffoe (18:07):
Well, with that in mind, we'll bring this episode of
Insurance Tomorrow to a close. Massive thanks to Nicky Johnson,
who's Head of Workforce Change and Productivity at Allianz UK,
and also to Shazia Ejaz, who's Director of Research at
the Recruitment and Employment Confederation. And a massive thank you
to you also for joining. Don't forget, you can subscribe
through your normal podcast app, so you'll never have to
(18:30):
miss an episode. And while you're there, why not leave
us a review? We'd love to hear from you. Until
next time, see you soon.
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