WTW surveyed insurers on annual incentive plan (AIP) and long-term incentive (LTI) funding for performance cycles ending in 2021. A total of 72 participants — 40 life & annuity (L&A) insurers and 32 property & casualty (P&C) insurers — gave insight into their incentive plan payouts and base salary increase budgets as well as their approaches to attracting, retaining and motivating technology talent.
Median payouts were significantly higher for L&A companies than P&C companies for 2021 (141% and 105%, respectively).
L&A
P&C
Approximately 50% of the total survey sample reported their AIP funding was 21% or higher for 2021 than 2020. Although a higher percentage of L&A companies reported higher funding for 2021, more than half of P&C companies also reported higher funding levels (78% and 58%, respectively).
Median payouts for plans ending in 2021 for both L&A and P&C companies were significantly above those reported in our 2020 survey.
L&A
P&C
For 2021, 60% of participants indicated a merit increase budget of more than 3%.
Approximately 50% of the total sample reported they are using enhanced sign-on bonuses or retention awards to attract and retain technology talent. The increased use of “top talent” awards reflects the growing pressure insurance companies feel to compete directly with technology companies (and the importation of tech company pay strategy). While some companies have taken more systematic approaches to rewarding tech talent (i.e., differentiated salary structure/targeted positioning/pay mix), opportunities exist to further segment employee populations and maximize the impact of Total Rewards offering.
A significant sample of companies are also looking outside the traditional external labor market for talent, by reskilling and upskilling their current workforces, leveraging third-party software/talent sources or acquiring/partnering with other companies for this talent.
This year’s survey responses from the insurance industry on payouts, salary budgets and attraction/retention strategies for technology talent reflect what many of our clients are experiencing: a talent market that is the most competitive in a generation or more. Insurers are responding to those pressures with enhanced pay outcomes and innovative talent approaches. WTW is supporting the industry in these efforts, as the focus turns to salary and incentive design for 2023 and beyond.