Amid mounting alarm over Britain’s stunted economic recovery, Bank of England Governor Andrew Bailey has drawn attention to a crucial but often overlooked casualty: the country’s deepening talent deficit. Speaking at a Federal Reserve symposium in Wyoming over the weekend, Mr Bailey flagged Britain’s sagging labour participation - notably since the pandemic - as a structural impediment to productivity growth.
He stressed that demographic shifts and illness‑related labour inactivity among the young are taking a toll: “Ageing is not going to turn around in the foreseeable future,” he noted, and called for renewed focus on lifting productivity amid stagnant participation rates.
ONS data reveal roughly 2.8 million working-age Britons are inactive due to long-term illness, 700,000 more than before COVID‑19 - and higher than in comparable advanced economies. A House of Lords report earlier this year, found that Britons aren’t, in fact, any sicker - they just say they are presumably to claim benefits. This persistent absence from the labour market narrows the pool of available talent, not just across the economy, but acutely within insurance, which relies on specialist skills from underwriting to risk analytics.
Simultaneously, the insurance sector is grappling with its own demographic time‑bomb. A surge of retirements and a dearth of younger entrants have left many firms exposed.
Ecclesiastical’s recent survey of insurance brokers showed that a whopping 64% of them saw hiring young talent as a strategic challenge. Another survey of 250 UK brokers found that 56% believe the industry faces a talent crisis, and 50% report difficulty hiring those aged 30 and under. A primary barrier: the perception that insurance is lacklustre and uninspiring - a “steady” career, not a vibrant one.
This perception compounds the problem in a labour market squeezed by long‑term benefits dependency. As inactivity swells, so too does pressure on the sector to fill roles requiring technical depth - from cyber underwriters to regulatory compliance specialists - at a time when fewer young people are available or even inclined to join.
Mr Bailey’s warnings should resonate deeply with insurers: with fewer people in work and rising inactivity, wage inflation and hiring competition are intensifying. Some companies report raising salaries or improving benefits to attract scarce talent, which further strains margins amid inflationary pressures - perhaps it is time for the government to help take of at least some of the pressure and follow the House of Lords Economic Affairs Committee advice to take “urgent action”. The committee estimated £10 billion could be saved annually by rectifying the issue.
Without a reversal in participation - and a rebranding of insurance careers - the pipeline risks running dry. Indeed, recruitment specialists in the field caution that gaps in functions like claims, cyber, and underwriting are deepening as retirements accelerate and broad inactivity denies access to fresh talent pools.
For policymakers and insurers alike, the path appears to be two‑fold: re-engage the economically inactive, particularly those sidelined by long-term health conditions, and shore up the talent pipeline through reputation‑building, modern outreach, and inclusive training.
Insurers and trade bodies could consider:
The confluence of long-term illness, demographic shifts, and fading appeal risks compounding a vicious economic and skills shortage cycle. As Bailey outlined, UK growth hinges not only on productivity, but on the strength of its workforce. For insurers, that workforce is the backbone of resilience and innovation.
