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Insurers Will Out-Hire Other Sectors

While salaries are stable, or even slightly decreasing, study reveals that insurance CIOs will hire more than their peers in other industries.

The slumping economy and a growing pool of available IT talent will push compensation levels for US-based average starting salaries down slightly in 2003, according to the Robert Half Technology (Menlo Park, CA) 2003 Salary Guide.

The guide estimates a 1.3 percent decrease in average starting salaries from 2002 levels, compared to the 0.1 percent increase that was forecast this time last year.

But while the IT industry as a whole may be hurting because of the economy, some insurance companies are not seeing evidence of pressure on starting salaries. "The base salaries and the structure of annual compensation bonus plans have not increased or decreased," according to Rocky Parker, officer of recruiting and staffing at Columbus, OH-based Nationwide ($24.5 billion in assets). "But we have seen a trend of not having to offer signing bonuses."

No Boom, No Bust

For insurance companies in the boom times of the late '90s, signing bonuses were almost always required to lure top talent to an industry that is often perceived as slow and stodgy, explains Parker. "But now we don't have to entice people to come here," he adds. "People want to come here because we are a much more stable company than many of the technology companies that grew very fast and are now cutting back."

Jean Delaney Nelson, vice president of information services at Minnesota Life (St. Paul, $21.2 billion in assets), echoes Parker. "The most obvious thing is we don't have to offer signing bonuses," she says. "We are more stable than high tech. High tech had inflated salaries, so their salaries will go down. We grew at a controlled rate and we did not have the boom that high tech had." And as a result, Minnesota Life and other financial services companies have not experienced as large a "bust," she adds.

Regardless, it's not just the IT staff that's feeling the pinch. For executive-level positions, Robert Half Technology estimates that, across all industries, this year salaries will fall 2.1 percent for chief information officers, 2.3 percent for chief technology officers, 4.5 percent for IS and 3.5 percent for vice presidents of technology.

At Newark, NJ-based Prudential Financial ($371 billion in assets), however, Dave Fitzgerald, vice president, human resources for operations and systems, says he is not seeing decreases in executive-level salaries. "We are not seeing CIO salaries increase or decrease drastically, but overall compensation is probably down," Fitzgerald says. "That is because cash bonuses and long-term incentives are different," he adds.

And when it comes to hiring for new positions, insurance companies are hiring fewer overall than they did a few years ago. But they are still hiring more than all other industries combined (see chart). "Right now our hiring is low," Fitzgerald says, adding that many roles are filled from internal job posting and retraining of current staff. At Prudential, approximately 40 percent of hires come from employee referrals, with another 40 percent coming from the Internet.

But despite the plethora of IT workers in the market looking for employment, Nationwide's Parker says it is still hard to find good hires. "I would say that finding the best and the brightest is not any easier than it was 18 months ago," he says. "The good players are still employed and are being protected and treated very well by their employers."

Greg MacSweeney is editorial director of InformationWeek Financial Services, whose brands include Wall Street & Technology, Bank Systems & Technology, Advanced Trading, and Insurance & Technology. View Full Bio

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