The Pipeline Crisis of Talent in Insurance: Why Underwriting and Claims Expertise Will Decide Market Winners and Losers

The London specialty market is not subtle about what it sees coming. In its February 5th, 2026 market update, the London Market Group identifies three strategic imperatives for continued leadership: attracting new capital, targeting new risk opportunities such as AI, cyber, energy infrastructure, and intangible assets, and investing in the quantity and quality of young talent. Then it delivers the key line that matters most for the insurance sector as a whole: its data points to an alarming shortfall in the third area, . . . people and talent (London Market Group, 2026). I agree with that prioritization. It is the eight-hundred-pound gorilla in the room howevver I would sharpen it. Talent is not merely one concern among many. It is the binding constraint that determines whether the industry can absorb capital safely, underwrite emerging exposures competently, modernize operations, and deliver durable claims outcomes in the face of volatility.

The strategic logic is clear. Capital, technology, and product ambition do not execute themselves. Insurance is a people-intensive, judgment-underwriting-driven business wrapped in regulated processes and long-tail liabilities. When experienced underwriters, claims leaders, actuaries, catastrophe modelers, cyber risk engineers, compliance professionals, and distribution specialists are scarce, every other strategic initiative slows down or degrades in quality. In that environment, the sector pays a compounding tax: slower cycle times, weaker risk selection, thinner documentation discipline, higher operational leakage, and a more fragile control environment. Over time, that tax manifests as worse loss ratios, more adverse development, and greater volatility in earnings.

The London Market Group’s demographic arithmetic makes the talent issue concrete. It reports roughly 61,000 market employees, a projected need for 82,200 full-time equivalents by 2034, and an ageing workforce with an expected average age of 46 by 2034 (London Market Group, 2026). The most alarming projection is the under-30 cohort, whose share is predicted to fall from 24 percent to 7 percent over the next decade, paired with evidence that hiring behavior is moving in the wrong direction, as insurance graduate job postings fell 18 percent year over year in September 2025 (London Market Group, 2026). Even if one treats these as London-specific datapoints, the causal mechanism generalizes globally. A shrinking early career pipeline and a swelling technical workload create a throughput crisis in the human capital supply chain. A less attractive professional prospect drives away talent in insurance, and we are failing as an industry to change course.

Why does this extrapolate to insurance writ large, rather than being a parochial London Market worry? For the same worries that keep us all up at night. The entire sector is entering a period where risk complexity is rising faster than institutional skill formation, and it is aggravated by an aging (and retiring) underwriting cadre. The same LMG statement explicitly anchors growth opportunities in AI, cyber, energy infrastructure, and intangible assets (London Market Group, 2026). Each of those areas demands specialized underwriting frameworks, credible accumulation analytics, new policy language discipline, and sophisticated claims handling. Cyber alone illustrates the challenge. Underwriting cyber well is not just about setting a price for frequency and severity. It requires security posture assessment, vendor concentration awareness, systemic event thinking, and a claims approach that can execute quickly under incident response pressure. Multiply that by AI-driven exposures, from model errors and data governance failures to deepfake amplified fraud, and the knowledge burden on insurers expands materially.

The talent constraint becomes a capacity constraint, not merely an HR issue. When expert labor is scarce, insurers cannot scale risk-taking responsibly, even if the opportunity set is attractive. The likely outcome is either a retreat to simplistic rules that underwrite poorly or a slow, cautious deployment of capacity that leaves protection gaps unaddressed, or BOTH. The London Market Group frames new capital as a strategic focus, including the role of insurance-linked securities and structures such as London Bridge 2, which it says has grown rapidly to approximately 1.9 billion dollars of deployed capital (London Market Group, 2026). Broader market data similarly points to ample reinsurance and alternative capital capacity in early 2026, reflecting competitive renewals and significant capital availability (Aon, 2026). Yet capital does not substitute for expertise. A surplus of capital deployed through weak underwriting is not resilience. It is deferred volatility.

The point is not theoretical. Aon’s January 2026 renewal commentary highlights meaningful capacity and competitive conditions at year’s beginning, which, in practical terms, means cedants have choice and pricing pressure can re-emerge when capital exceeds perceived risk (Aon, 2026). That environment rewards disciplined underwriting teams and punishes organizations that lack technical depth. Softening conditions are precisely when talent matters most, because the temptation to trade margin for volume increases, while the consequences of mispriced, poorly structured risk can take years to surface. If a carrier cannot staff seasoned leadership to maintain underwriting standards, or cannot field strong claims and actuarial teams to detect drift early, capital abundance becomes a hazard rather than an advantage.

Authoritative industry research also recognizes that talent shortages are structural risks for insurers, not just for policyholders. Swiss Re’s SONAR work highlights workforce and skill set shortages as an emerging structural challenge, noting that demographic shifts and rapid technological change can intensify gaps in critical sectors and potentially translate into higher claims, disruptions, and broader loss amplification (Swiss Re Institute, 2025). That framing is crucial. The insurance sector is exposed to talent scarcity in two directions: internally, through its own ability to price and manage risk, and externally, because skill shortages in critical services can become insured loss drivers. A shortage of skilled labor in construction, health care, utilities, and cybersecurity can raise the probability and severity of losses, lengthen recovery times, and intensify business interruption and liability dynamics. In other words, talent is both an operational constraint for insurers and a risk driver in the economy they insure.

The modernization agenda reinforces the same conclusion. Deloitte’s insurance outlook identifies ongoing pressures from changing customer expectations, distribution shifts, modernization needs, and talent gaps, emphasizing that insurers are navigating uncertainty while trying to transform operations and capabilities (Deloitte, 2025). Modernization is commonly framed as a technology program, but technology transformations are delivered by people who can translate business needs into reliable systems, governance, data quality, and process redesign. If experienced talent is missing, modernization becomes brittle: implementations take longer, technical debt accumulates, and control weaknesses widen. In regulated financial services, that brittleness directly increases operational risk, conduct risk, and model risk, which can become financial outcomes through remediation costs, supervisory actions, and reputational damage.

Talent scarcity also interacts with the frontier topics that leaders publicly emphasize, including AI. The LMG itself notes that even as debate continues over the potential for AI to change how we work, the demographic imbalance should ring alarm bells, and it stresses that fully trained talent takes time (London Market Group, 2026). That is a subtle but important admission: AI does not remove the need for expertise. It changes the shape of expertise. The industry needs professionals who can govern AI use, validate models, audit decisioning, manage bias and explainability, and ensure that AI augments underwriting and claims rather than quietly degrading them. A workforce that is older on average and thin in early career intake may struggle to replenish these skill sets at the pace required. That becomes a competitive risk and a “risk management” risk.

The practical insurance wide extrapolation is therefore clear. If cadre talent is the binding constraint, the sector should expect a set of predictable second-order effects. Underwriting appetite will narrow in technically complex lines, or capacity will be rationed through tighter terms and higher attachment points. Claims outcomes will become more variable where expertise is scarce, increasing leakage through delays, inconsistent reserving, and/or weaker coverage strategy. Expense ratios may rise as firms compete for scarce talent while simultaneously investing in training and retention. Distribution will continue shifting toward specialized intermediaries and delegated authority structures where expertise is concentrated, which can be efficient but demands stronger oversight, auditing, and governance. Finally, the protection gap will be harder to close, not because risk is uninsurable in principle, but because it is hard to staff the analytical and operational machinery required to insure it well.

If the London Market Group is right about the direction of the workforce pipeline, and the broader industry evidence suggests that it is, then the correct conclusion for the insurance sector is not simply to lament the shortage. It is to treat talent as core infrastructure. That means expanding entry-level and graduate intake in line with long-range demand signals, accelerating apprenticeship and rotational underwriting programs, investing in claims as a strategic function rather than a cost center, and building cross-functional technical academies that bridge cyber, AI governance, actuarial science, and exposure management. It also means designing career paths that retain mid-career experts, because they are the multipliers who train the next cohort, the force multipliers when paired with new professionals, and preserve underwriting culture through the market cycle. The market can attract capital and chase new opportunities, but without talent in insurance chairs to execute, those ambitions turn into unmanaged volatility.

London said it plainly. The talent shortage is critical, industry-wide, and it should ring alarm bells (London Market Group, 2026). I agree, and I would add one final thought. Capital and innovation are episodic accelerants, but talent is the compounding asset. In a world of AI-enabled risks, cyber aggregation, energy transition infrastructure, and intangible value chains, the industry that wins will be the one that can consistently produce and retain competent judgment at scale. Talent in insurance is not a concern. It is THE concern.

~ C. Constantin Poindexter Salcedo, MA, JD, CPCU, AFSB, ASLI, ARe, AINS, AIS

Bibliography

  • Aon. (2026, January 5). Reinsurance Market Dynamics, January 2026. https://www.aon.com/getmedia/14567e4b-eba3-4fa3-a5c8-38ae65afb271/20260105_rmd_jan_2026_report.pdf
  • Deloitte. (2025, October 9). 2026 global insurance outlook. https://www.deloitte.com/us/en/insights/industry/financial-services/financial-services-industry-outlooks/insurance-industry-outlook.html
  • London Market Group. (2026, February 5). London Market remains a global leader, but challenges remain. https://lmg.london/news/london-market-remains-a-global-leader-but-challenges-remain/
  • Swiss Re Institute. (2025, June 12). Emerging workforce and skillset shortages challenge insurers. https://www.swissre.com/institute/research/sonar/sonar2025/emerging-workforce-skillset-shortages-challenge-insurers.html