Briefing: Do Musk’s comments on a ‘permanent shortage of excellent talent’ resonate in the UK?

By Yiannis Kotoulas

The issue of talent in the tech sector became the issue de jour over the festive period.

On Christmas day 2024, billionaire tech chief executive Elon Musk tweeted: “There is a permanent shortage of excellent engineering talent. It is the fundamental limiting factor in Silicon Valley.”

Sounds familiar, doesn’t it? Swap Silicon Valley for the UK insurance technology sector and the words could have come from one of many people that have previously spoken to Insurance Times about the same issue.

At the beginning of January, for example, technology firm Socotra’s chief operating officer Ekine Akuiyibo told Insurance Times that firms were facing an IT talent and skills shortage.

Musk’s comments were made in the context of an ongoing debate on the issue of skilled immigration in the US – which he argued was clearly beneficial.

The conversation has exposed fractures in the support base of newly inaugurated president of the US Donald Trump – much of which opposes more immigration – but, closer to home, it also brought up considerations on the issue of the UK insurance technology sector’s talent pipeline – or at least it did for me.

Musk, alongside fellow US tech sector heavyweight Vivek Ramaswamy, argued that, to reach its potential, the sector had to hire the best talent from all over the world, rather than limiting its hiring pool to domestic candidates.

Challenges in context

The problems of tech talent in the UK are different, however, and even more so when specifically considering the insurance sector. US giants like Meta, Google and Microsoft are internationally competitive in that the globe’s top tech talent actively seeks out opportunities there.

This is not really the case where software engineer and IT roles in insurance are concerned – certainly not to the same extent. 

At last year’s exclusive Insurance Times Broker CEO Forum on 14 November 2024, when chief executives from UK brokers large and small gathered to discuss issues, talent was high up on the agenda. 

One broker chief executive, who spoke on a panel that discussed the issue of talent, explained: ”If you ever went to [the Massachusetts Insititute of Technology] and surveyed the top 100 computer science graduates on where they were going to work after they graduated, the top two might become entrepreneurs, the next two might go to Google, the next two to Meta and then so on to banking, the defence industry, etcetera.

“When you get to the bottom two, then they may be going into insurance software. The problem with that is that the monetary value of compensation that the biggest players can pay, so the unfortunate truth is that insurance tech is never going to compete in that arena.”

Despite an acceptance that the very highest level of tech talent will end up elsewhere, this is demonstrably not an apocalyptic scenario for the insurance sector. 

The UK insurance technology industry is flourishing – its challenge is simply one of adopting a different attitude and approach to hiring talented techies.

Holistic approach 

One such tech firm in the UK insurance sector that has pivoted its approach to hiring is RDT. 

The tech firm, which creates claims and policy management and automation software, has not hired an experienced software engineer for over three years – instead, it relies on a pipeline of apprentices that the company hires at school or college leaving age.

Fiona Mason, chief human resources officer at the firm, disagreed with Musk’s assertion on the lack of talent.

She told Insurance Times: ”I don’t think there’s a scarcity of skills, you just can’t expect the schools or the universities to [develop them] for you. What we do is hire for potential, but train for skills. All a degree tells you is that a person is capable of learning.” 

RDT performs outreach activity in local schools to put itself in front of school children and then, every summer, brings a small number of 16 or 17-year-olds into its office for work experience.

After identifying promising candidates, the firm will then bring the children in for another week over the summer holidays and talk to them about apprenticeship opportunities with the firm while also testing for basic capabilities that can be developed. Then, when it approaches hiring time, RDT utilises an approach that see “almost all” of its hiring come from this pool.

Mason added: “This approach to hiring works really well because we’re hiring people we already know, we already know their tech knowledge is sound and that they can navigate the office.

“We also don’t really push the insurance bit at this stage. We’re looking for techies and we’re a tech company because, honestly, not many people are seeking to get into insurance.” 

This is an increasingly common solution to the issue of maintaining a talent pipeline – hiring into insurance technology roles from outside insurance can be expensive and require some retraining, but apprentices can be taught the necessary skills on the job and then moulded into valuable insurance technologists. 

The important bit, however, is making sure that these young people are properly supported, so that all the effort put into outreach and training is not wasted on that talent leaving the industry after a couple of years.

As Mason concluded: ”If you’re going to have this sort of programme, it has to be holistic, involve learning and training and be about support on interpersonal growth. If you’re not set up to provide that whole-person support, then this sort of thing will fail.”