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Rebuilding Leadership for the Industry’s Talent Crisis

Author

Lisa Stevens
AVP of Executive Development
LIMRA and LOMA
lstevens@loma.org

September 2026

For decades, the insurance industry has relied on a common promotion strategy: identifying its highest-performing individual contributors and elevating them into leadership roles. This approach assumes that technical expertise and individual performance naturally translate into the ability to lead and develop others. During periods of workforce stability, longer employee tenures and slower organizational change, insurers could often manage the challenges of this strategy. Today, however, evolving workforce dynamics, rising customer expectations, technological disruption and increased business complexity have exposed the gap between technical excellence and leadership effectiveness.

In addition, current market conditions have turned this common strategy from a perceived strength into a potential vulnerability. According to the U.S. Bureau of Labor Statistics, the insurance industry has lost approximately 40,000 positions year over year, while an estimated 400,000 experienced professionals are expected to reach retirement age by the end of 2026.

As seasoned employees leave the workforce, organizations are losing institutional knowledge, industry expertise, and leadership capacity at a pace that many struggle to replace. Today’s talent shortage has intensified the need for stronger leadership pipelines and succession strategies.

Many organizations continue to rely on "accidental managers" to lead teams. Coined by leadership consultant Gary S. Topchik, the term “accidental manager” describes high-performing individual contributors who are promoted into management roles without the training and support needed to succeed as leaders. Two decades after the term was introduced, it remains relevant within the industry, where technical expertise is often mistaken for leadership readiness.

Leadership roles require a different set of capabilities such as coaching employees, developing talent, leading through change, influencing outcomes, and making strategic decisions that differ significantly from those that drive individual performance. When organizations fail to prepare new leaders for these responsibilities, the impacts can include lower employee engagement, increased turnover, inconsistent team performance, and a weakened leadership bench, all of which are consequences the industry cannot afford during a period of significant workforce transition.

Accidental Managers

Accidental managers are not necessarily the result of poor judgment but rather the outcome of an industry that has historically rewarded technical mastery (e.g., producers generating revenue, underwriters protecting profitability, and claims staff solving complex problems). Promotion to leadership became the reward for excellence. For years, such promotion worked because employee tenure was longer, mobility was lower, and institutional knowledge remained concentrated within organizations. Today, skills required to sustain a modern workforce extend beyond technical expertise and require investment in leadership capabilities.

The Cost

Skills required to respond to a customer inquiry or to calculate actuarial risk are fundamentally solo, and reward technical expertise and execution. Making the shift from individual contributor to leadership requires a thoughtful shift toward mastery of new capabilities (e.g., active listening, coaching, conflict resolution and psychological safety).

When high-performing individual contributors are promoted without leadership training, they often default to what they know best: tactical/technical expertise. They unintentionally micromanage work, override team decisions or manage customer accounts when challenges arise. While such actions are well intentioned, they often leave teams feeling disengaged and managers stretched thin. The consequences are significant in an industry struggling to attract/retain talent. The Applied Systems Re-Generation Report 2025 found that nearly 1 in 3 young insurance professionals have considered leaving the industry. Increasingly, frontline managers have become one of the most influential factors in employee engagement, professional development and retention. Organizations that fail to equip leaders with the skills to coach, communicate and develop talent risk undermining their own workforce strategy.

Figure 1. The insurance Talent and Leadership Gap

Humans and Artificial Intelligence (AI)

Adding to these leadership challenges is the growing use of AI systems. Per Pacific Life's Underwriting Outlook Survey, nearly half of underwriting executives are utilizing AI. Yet, the primary concern keeping executives up at night is not technology itself but the challenge of balancing automation with human expertise.

This is an example of where the concept of the accidental manager can go sideways. AI technology is often treated as a threat or a micromanagement tool when placed in the hands of untrained leaders. Transformational skills are required to reshape how teams operate alongside automation. Organizations that benefit most from AI will not be those with sophisticated technology but rather those with leaders who build employee trust, drive adoption and foster new ways of working. Technology implementation is ultimately a leadership challenge before it is an operational one. Instead of monitoring day-to-day work, a transformational manager coaches teams to become high-level advisors who use AI insights to manage more complex decision making and needs.

Redesigning Career Architecture

Solving this industry’s need to grow leaders requires a review of how industry career progression is defined. Leadership must be treated as a specialized discipline, not an automatic reward for technical performance. Four practices to consider include:

  • Establish diverse career tracks to enable high-performing individual contributors to earn greater compensation, influence strategic decisions, and mentor others without being required to lead direct reports. This helps ensure that employees who want to coach and develop others move into leadership roles.

  • Provide "control tools" to help leaders and teams transform uncertainty into action and drive engagement, adaptability and performance during change.

During digital transformation initiatives, financial pressures, market volatility or regulatory requirements, new managers often unintentionally project personal feelings of uncertainty on teams. Effective insurance leadership training can equip managers and teams with practical tools to distinguish between issues they cannot control (e.g., regulatory changes, economic conditions) and actions they can directly influence (e.g., service, process discipline, communications).

  • Help leaders move from a “fixer" to a coach mindset to help employees think critically, solve problems independently, and navigate increasingly complex risks without constant managerial intervention. Traditional on-the-job training teaches employees to find risks and errors. While valuable for claims handling, this mindset can be damaging when applied to leadership. New leaders must be trained to ask thoughtful open-ended questions instead of immediately providing answers.

  • Evaluate and reward leadership behaviors with the same rigor applied to performance metrics. Many organizations continue to evaluate managers using the same metrics that define individual success. Leadership effectiveness should instead be assessed through indicators such as employee retention, internal promotion rates, team engagement, knowledge transfer and talent development outcomes because what gets measured gets prioritized.

Cultivating Future Leaders

Talent gaps will not be resolved by aggressive hiring strategies. Findings from the Jacobson Group and Aon Insurance Labor Market Study show that 43% of insurers plan to maintain flat headcounts. Because insurers are focusing on strategic placement rather than general headcount growth, maximizing talent productivity and morale is key.

By intentionally selecting and developing industry leaders with emotional intelligence, transformational agility and coaching capabilities, organizations can build resilient workforces. This approach retains talent and inspires employees to build long-term careers.

The retirement gap facing the industry is a leadership succession issue rather than a workforce challenge. As seasoned talent leaves the industry, organizations must ensure that institutional knowledge and culture are transferred to the next generation of leaders. Future viability of the insurance industry depends on the ability to develop leaders who are as disciplined about developing talent as they are about managing technical risk.

Organizations that solve this challenge will not only retain talent but will create a competitive advantage in an industry facing unprecedented transformation.

 

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