The London market has infamously struggled to attract young talent – and Insurance Insider analysis shows that its difficulties could create a cliff-edge when it comes to the next generation of leadership.
While the challenge of recruiting to junior positions is well known, this publication’s analysis looks at the age cohorts of London market directors and asks where the next generation of leadership will come from as the proportion of mid-career market participants shrinks.
Our analysis uses the London Market Group’s London Matters report, published in May, as its main source of data on the industry’s current age breakdown.
That report in turn uses the Lloyd’s Market Policies and Practices return for its demographic data.
Taking a bottom-up view, this latest update shows that the proportion of the London market that is under 40 stood at 51% in 2023, unchanged from the year before but less than in 2014, when it was 57%.
However, this analysis instead looks at the problem from the top down. Using information about the directors of Lloyd’s managing agents sourced from Companies House, we looked at the age of individuals running these firms as a proxy for the broader London market.
This shows that of the 510 directors appointed – in both executive and non-executive positions – to the 56 managing agents currently active in the market, only 51, or one in 10, are held by people appointed before they turned 40.
Many of the people in this position have already aged out of the bracket, with only eight directorships held by people still in their 30s.
More than five times as many directorships are filled by people currently in their 70s and 80s.
The largest cohort of directors are those who were appointed in their 50s and are still in their 50s, as shown below.
Overall, more than three-quarters of all current directorships are held by individuals currently in their 50s or older.
To put things more simply, there are multiple active directors of managing agencies who were born during the Second World War, but none yet who were born after 1987.
Cliff-edge ahead?
The skewing of senior positions towards an older age range is hardly surprising, given the experience and connections necessary to fulfil such roles.
The problem, however, is with the supply of talent coming through to take over as this generation’s crop of leaders begins to retire (even if that is at age 80).
The LMG data shows the number of people in the market under 40 has shrunk over the past decade rather than grown.
If we expect the next generation of directors to be appointed in their 50s or perhaps 40s, it is not hard to imagine that in a decade’s time, the industry will face a shortage of suitable candidates from within its own ranks.
“The London Matters data suggests that overall, the market hires about 1,200 young people as apprentices, graduates or simply entry level roles every year,” said Wagstaff.
“If the total market employs 60,000, this is possibly not enough; for example, EY in the UK employs around 20,000 but hires around 1,500 each year at entry level.”
She added that the figures become more alarming when considering that around 70% of London market talent is hired by just eight firms each year, meaning that for some companies, the top-heavy demographic is even more extreme.
“Firms need to hire and hire more,” Wagstaff said.
“The LMG firmly believes that collective action to help firms address the pinch points in the hiring process could be one answer.”
The market has begun to address these challenges with some success through collaborative approaches.
The London Market Group’s Futures Academy – which returned this week with more young people and supporting companies than in its inaugural year in 2023 – is an example of how the market can work together to begin solving the problem.
But as our analysis suggests, the market must sustain and even increase its efforts to improve the talent supply.
The London market has already been through several years of talent warfare, driving up compensation and restricting the ability of some businesses to grow. If it does not shore up its shaky talent pipeline, it could face challenges in securing talent among its top teams as well as the rank-and-file.
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