The insurance sector is experiencing profound change. Consolidation is reshaping markets, climate risk is placing new demands on underwriting and investment strategies, regulators are raising expectations around governance, and artificial intelligence is redefining how insurers operate.
In this environment, the quality of leadership will determine which organisations adapt successfully. A considered leadership assessment strategy is no longer optional. It is an essential part of building resilience, succession depth, and the organisational agility required for the years ahead.
This article outlines what leadership assessment involves, why it has become so critical for insurers, and how HR and learning and development teams can build a strategic approach that delivers meaningful, measurable impact.
What Leadership Assessment Means for Insurance
Leadership assessment refers to the structured evaluation of leadership potential, behaviour, and readiness. Assessments often combine several methods:
- Psychometric testing to measure cognitive style and behavioural tendencies
- Situational judgement exercises and simulations to observe decision‑making under pressure
- 360‑degree feedback to gather perspectives from colleagues, teams, and boards
- Structured interviews and narrative reviews to evaluate values, ethics, and leadership approach
For insurance firms, assessment is not simply a recruitment tool. When applied strategically, it:
- Supports succession planning and strengthens C‑suite and board pipelines
- Identifies internal talent before external hiring becomes necessary
- Provides evidence for regulatory fit‑and‑proper requirements
- Guides leadership development initiatives, ensuring they address the right gaps
Leaders in insurance often progress on the basis of technical expertise in underwriting, claims, or actuarial functions. While that experience is vital, it does not always ensure strategic vision, people leadership, or the ability to manage complexity at scale. Leadership assessment fills that gap by providing objective insights into who is ready – and who can be developed – to lead the business forward.
Trends Shaping Leadership Needs in Insurance
Leadership assessment strategies must respond to the realities of today’s market and anticipate those of tomorrow.
Climate, M&A, and Regulation
Rising climate risk continues to impact claims, underwriting, and capital requirements. The insurance‑linked securities market grew by more than 20 percent between 2022 and 2023, reshaping how insurers manage balance sheets and exposure.
Mergers and acquisitions have accelerated, with late 2024 activity almost double that of the first half of the year. Integration requires leaders who can align cultures, oversee complex governance structures, and maintain stability under scrutiny. Regulators, meanwhile, are increasingly focused on the competence and succession planning of those in key leadership roles.
Artificial Intelligence and Digital Transformation
AI is now embedded in underwriting, claims, and customer engagement. A 2025 study by Mckinsey & Company found that nearly all C‑suite leaders (99 percent) report familiarity with generative AI, yet only 59 percent of U.S. Property and casualty carriers believe their organisations are ready to fully leverage it. Leaders must not only understand the technology but also the ethical and regulatory implications of its use.
Talent Gaps and Trust
Leadership is also about trust. Deloitte research shows that organisations with high levels of trust achieve 2.3 times better performance. Yet fewer than 20 percent of insurers have designated trust ownership at C‑suite level. Mercer’s 2025 global talent trends report highlights a focus on trust, equity, and resilience. Strategic leadership assessment helps insurers identify and develop leaders who can deliver on those expectations.
From Tools to Strategy
There is an important distinction between using a single assessment instrument for a hiring decision and building a comprehensive leadership assessment strategy.
A tool provides a snapshot. A strategy embeds assessment into the fabric of the organisation, connecting it to succession planning, leadership development, and governance processes.
The return is clear. Studies show that organisations with mature talent strategies deliver up to six times higher shareholder returns. Some leadership development initiatives demonstrate up to seven times return on investment in their first year. For insurers, a strategic approach to leadership assessment means stronger pipelines, fewer failed hires, and a more prepared leadership bench.
Nine Critical Factors for Choosing an Effective Leadership Assessment Approach
Before implementing an assessment program, insurers should evaluate the following considerations:
- Define Objectives
Define whether the aim is hiring, internal talent development, succession planning or risk governance. Each use case demands different methods and follow‑up. If succession planning is key, include simulations of future board decisions or regulatory crises.
- Reflect the Insurance Context
Generic tools risk missing real leadership pressure points. Look for frameworks designed for regulated firms that measure risk awareness, governance skills, climate risk understanding and digital literacy.
- Ensure Validity and Reliability
Select tools backed by data that show predictive accuracy. Ask vendors for evidence that test scores correlate with business outcomes. If possible, benchmark tools against internal performance measures.
- Align with Your Competency Framework
Align assessment domains with your leadership model. If your firm emphasises inclusive leadership, climate governance and AI‑driven strategy, ensure those areas appear in your framework and assessment content.
- Balance Technology with Human Judgment
Combine technology‑driven data (psychometric or simulation outputs) with human judgment—like structured interviews, coach reviews or narrative input. This mixture gives richer insight into how someone will lead complex insurance situations.
- Consider the Candidate Experience
Assessment reflects on your brand. Executives expect fast, clear, respectful processes. Poor assessment experiences lead to drop‑outs or negative referrals. Even busy executives may share feedback about a long or cold process.
- Link to Development
Assessment must feed into real development: coaching, stretch assignments, formal training. Otherwise, it’s just data sitting on a shelf. Embedding follow‑through gives return and builds buy‑in.
- Address Global and Cultural Relevance
For multinational insurers, tools must be valid across cultures. Ensure translation, cultural norm filters, and unbiased benchmark data.
- Evaluate Cost Versus Value
While price is a factor, the cheapest solutions often fail to deliver meaningful insight. High‑quality assessment programs are an investment that reduces mis‑hires, strengthens succession, and produces measurable returns.
Common Pitfalls to Avoid
Even well‑intentioned assessment efforts can falter. Common missteps include:
- Relying on one tool such as a personality test, which provides only a partial view
- Using outdated models that omit emerging competencies like climate governance or digital leadership
- Overlooking bias in tools developed for homogenous candidate pools
- Failing to act on findings, leaving reports unused rather than linking them to development and planning
Addressing these pitfalls turns assessment from a procedural exercise into a driver of organisational performance.
How Leadership Assessment Will Evolve by 2030
The next five years will bring significant changes to how leadership potential is assessed:
- AI‑driven analysis will become more sophisticated, but human oversight will remain essential for judgment and ethics.
- Continuous assessment will replace one‑off events, with regular check‑ins providing a clearer view of progress.
- Greater focus on soft skills – resilience, adaptability, and inclusivity will become as important as technical expertise.
- Transparency will rise in importance, as regulators and candidates expect clarity on how assessments work and how data is used.
Insurers that begin building assessment strategies now will be better prepared for these shifts – and for any regulatory expectations that come with them.
A Practical Roadmap for HR and L&D Leaders
Building a leadership assessment strategy involves more than selecting a vendor. It requires a deliberate approach that connects assessment to the organisation’s broader goals.
Step 1: Define Leadership Success
List key competencies your leaders must have: risk awareness, regulatory fluency, climate literacy, AI understanding, inclusive leadership, board governance. Build or refine your leadership framework now.
Step 2: Select the Right Tools
Identify tools to measure the competencies. Could include:
- Personality and cognitive assessments
- Simulations (e.g. catastrophe event, regulatory crisis)
- 360‑degree feedback focused on governance and diversity leadership
- Structured executive interviews
Ensure each tool maps to your objectives and model.
Step 3: Secure Senior‑Level Support
Explain the strategic value:
- Risk mitigation and governance oversight
- Strong leadership pipeline
- Enhanced brand trust and retention
- Evidence‑based succession planning
Get buy‑in from boards and C‑suite, so assessment is seen as strategic rather than procedural.
Step 4: Pilot and Adjust
Start with one business unit or function. Run assessment for a cohort of leaders or successors. Collect feedback from participants and stakeholders. Adjust tools, length, debrief methods as needed.
Step 5: Integrate Across Talent Practices
Once refined, integrate into key decisions:
- Succession planning and promotions
- Development programmes and coaching
- External search and executive onboarding
Keep assessment longitudinal and re-evaluate leaders every 12‑18 months.
Step 6: Track and Demonstrate Impact
Use KPIs such as:
- Retention rate of assessed leaders versus average
- Internal placement rate into senior roles
- Cost of turnover avoided
- Performance correlation post‑assessment
Insurance retention typically ranges 86‑92 percent for home insurers. Measuring the impact of assessment on retention or internal mobility helps prove value. Many development programmes deliver 7x ROI in the first year when linked to performance metrics.
Assessment in Action: Insurance Examples
Case: Post‑Merger Integration
After a mid‑size P&C insurer combined with a specialty line provider, leadership gaps emerged in the integration team. A structured assessment using simulations and peer feedback identified internal talent for joint roles. That reduced external hires by 50 percent and cut integration delays.
Case: Climate Risk Readiness
A European insurer facing shareholder scrutiny planned for climate risk exposure. Assessment included climate literacy simulations, ESG governance scenarios, and coaching. Graduates of the programme led sustainability strategy across investment and underwriting functions.
Case: AI Implementation
An insurer deploying AI tools tied assessment to talent readiness. Leaders assessed for AI literacy, change leadership, and ethical governance took part in rollout roles. That improved adoption speed and internal trust. 47 percent of C‑suite leaders report talent skills gap slows AI progress.
Conclusion
Leadership assessment is no longer a peripheral HR exercise. For insurers, it is a strategic necessity – ensuring that the right leaders are in place to handle regulatory demands, digital transformation, climate challenges, and future growth.
When assessment is integrated into talent and succession strategies, it creates measurable value: stronger pipelines, reduced mis‑hires, and leaders equipped for the complexities ahead.
Eliot Partnership works at the centre of global insurance leadership. We help insurers design and implement assessment strategies that are rigorous, relevant, and future‑ready. If your organisation is looking to strengthen its leadership pipeline, we can help you create an assessment strategy that delivers lasting impact.
