Move over Indianapolis, Lansing is next major insurance hub

ALAIEDON TWP. — The pace of hiring has been so brisk at Jackson National Life Insurance Co. over the past few years that it has filled the 314,000-square-foot Alaiedon Township headquarters it built in 1999.

The insurer began a $100 million expansion project last year, which will include a new 225,000-square-foot building to house 1,100 information technology and legal associates, but the project won't wrap until October.

"We have absolutely no more space here," said James Sopha, president of Jackson National, which employs 2,600 at its headquarters.

A challenge for the company, perhaps, but, a boon for the region.

As Jackson National continues to add more people in IT and customer service in the next year, it will push Greater Lansing's employment in the insurance and financial sector to 10,000.

That will put the region on par with insurance hubs such as Hartford, Connecticut and Indianapolis, Indiana, said Bob Trezise, president and CEO of the Lansing Economic Area Partnership, Inc..

"This is the tipping point for getting us on the national map as a major player in the industry," he said.

The six insurance companies headquartered here — Jackson National, Accident Fund Insurance Co., Delta Dental of Michigan, Auto-Owners Insurance, Farm Bureau Insurance of Michigan and Michigan Millers Mutual Insurance Co. — have a combined employment of 6,392.

Smaller insurance company branches located in the region account for roughly 900 more jobs while the financial industry adds roughly 2,600 jobs. Combined, it adds up to a sector of nearly 9,900.

When the industry reaches the 10,000 worker milestone, industry leaders said, insurance companies across the country and organizations that support them increasingly will consider Greater Lansing as a place to do business.

"It's like when you own a restaurant and another one plops down next to you," said Lu Battaglieri, senior vice president of Okemos-based Delta Dental of Michigan. "When you have multiple options for people, it brings more people to the area — but for us it's in terms of getting good employees. I look forward to it."

Historically, the three pillars of the region's economy have been Michigan State University, the auto industry and state government. Insurance and finance is ready to join that vital group. "This is the fourth pillar," Trezise said.

"My prediction is that in the next decade or two, this pillar will dominate the others."

Assured growth

The insurance industry is one of the fastest growing sectors in the country, projected by the federal Bureau of Labor Statistics to grow at a rate of more than 2% a year through the end of the decade.

"It's an industry where there aren't highs and lows with the economy because people have to buy insurance," said Lori Conarton, communications director at the Insurance Institute of Michigan.

Of course, the strengthening economy and increases in employment and net household wealth help.

"There's a growth in the number of employees being hired that need insurance," said Jim Robinson, CEO of Farm Bureau Insurance, which has expanded from agricultural insurance to 10 other areas of coverage since 1949. "More people are buying cars, homes and boats too. All of that needs to be protected."

The same goes for Lansing-based Accident Fund, which has expanded its workers' compensation coverage to most of the country through three other brands separate from itself: United Heartland, CompWest and Third Coast Underwriters, the latter having just expanded to Oklahoma.

Delta Township-based Auto-Owners Insurance recently acquired North Carolina-based Atlantic Casualty Insurance Company, which will allow the Fortune 500 company to offer high-risk insurance and expand its footprint from 26 states to 48.

There are factors beyond the more robust economy driving growth, John Lindauer, the company's corporate communications manager, said in an email.

"Reliance on automation and data analytics has increased the need for more I.T. and actuarial staff," he said. The increase in widespread weather events also is creating "a growth spurt in claims," which the company has created special teams to address.

Behind Jackson National's growth? Baby boomers. Every day 10,000 of them reach retirement age in the country.

"The baby boomers are the wealthiest generation in the history of humanity and they are a primary focus as more retire," said Sopha, whose company helps people invest their money so they can receive an annual income after retirement.

New health care laws also affect the industry.

Since the Affordable Care Act went into effect and Michigan expanded Medicaid, Delta Dental has added roughly 600,000 new policy holders in the state, Battaglieri said.

"It's brought in a lot of new people into the insurance world," he said.

Investing in talent

The insurance companies based here formed between the 1880s and 1960s because of the proximity to lawmakers at the Capitol, the affordable cost of living and the talent pool trained by the longstanding programs at MSU and Olivet College, said Mike Hubbel, former director of Olivet's Risk Management and Insurance Center, which started in 1980.

"It does attract attention when you have a known labor pool," Hubbel said. "Insurance companies pay attention to where their employees are coming from."

Auto-Owners has partnered with MSU's actuarial science program, hiring its graduates in recent years as well.

Jackson National partnered with MSU in 2013 to employ roughly 300 students part-time in downtown East Lansing through The Zone, to train them for future employment at the company.

The Zone, in a former Barnes & Noble storefront on busy Grand River Avenue right across the street from campus, gives students a chance to set their own hours and gain experience in the industry before graduation. That creates a crucial talent pipeline, MSU and Jackson National officials have said.

"Having access to young talent is important for our continued success," Sopha said. "Recruiting has become more and more competitive and we wanted to get closer to the university. These graduates are highly sought after."

That's because, in 10 years, it is estimated that the insurance industry will need to replace 40 percent of its workforce due to retirement, according to the Insurance Institute.

"We're almost at a crisis," Conarton said. "We need to start attracting youth because we'll need employees to replace the people who are retiring in the next five to 10 years."

It's rare that a high school student dreams of working in insurance, but part of attracting the younger generation starts with changing their perception of the industry, said Mike Maurer, Accident Fund's regional director.

"They say, 'I don't need to be concerned with insurance, it's boring,'" Maurer said. "The idea is have them make a career in insurance a choice instead of just an opportunity to get a job."

Maurer oversees something called the Insurance Leadership Academy, which will teach 21 students from Lansing School District and Ingham County ISD what the industry has to offer and give them the opportunity to earn college credit at Ferris State University as well as three Associate in General Insurance certifications.

The program is modeled after one that Eaton County runs with Farm Bureau Insurance and Olivet professors, which is now in its fifth year.

"I think it's a really good opportunity at Accident Fund because we get to see people actually doing work — we're not just in the classroom," said Mac'Quinn Norris, a senior at Everett High School, during a tour of the company's downtown Lansing headquarters. "I just want to try something new and see if I like it for a career."

Career potential

It was the sleek business suits that piqued Eric Dawdy's interest. In 2011, when he was a senior at Holt High School, he attended a student-run seminar at Olivet College.

"I never saw myself being in the insurance industry myself — I wanted to be a plumber," Dawdy said. "I looked down at the panel of students and said, 'This is what I want to be one day.'"

Dawdy is now a senior at Olivet and an intern at Accident Fund's headquarters in downtown Lansing, where he mentors the students in the leadership academy. On Sept. 28, he'll be hired on as a business development associate.

"I have friends at MSU who haven't yet graduated college," Dawdy said, "and I have a full-time job."

It pays well, too, on average. The median salary for an insurance sales agent in Michigan is $48,000. An actuary typically makes $94,000. The average annual income in the Lansing region is $45,000, according to the U.S. Bureau of Labor Statistics.

"It's a stable career," Conarton said. "The high school students I talk to, they've experienced their parents on highs and lows during the recession. The insurance industry doesn't have that."

And, unlike the region's auto industry or its state government workforce, insurance is growing.

"I think we should be focusing our workforce development on the insurance industry," Trezise said. "These are good jobs that are well paid across all skill levels where you can have a career's worth of upward mobility. You don't find a lot of industries that can say that to people."

Contact Alexander Alusheff at (517) 388-5973 or aalusheff@lsj.com . Follow him on Twitter @alexalusheff.

Employment data

Jackson National Life Insurance Co., 2,600

Auto-Owners Insurance, 2,000

Farm Bureau Insurance of Michigan, 662

Accident Fund Insurance Co., 600

Delta Dental Michigan, 430

Blue Cross Blue Shield of Michigan (branch), 400

Michigan Millers Mutual Insurance Co., 100

Other insurance branches, 500*

Financial services employment*, 2,600

Total: 9,892

*Numbers taken from 2013 Lansing Economic Area Partnership study

Local insurance companies

Jackson National Life Insurance Co.

Founded: 1961

Location: 1 Corporate Way, Alaiedon Township

Services: Annuities and retirement planning

Auto-Owners Insurance

Founded: 1916

Location: 6101 Anacapri Blvd., Delta Township

Services: Life, home, auto and business insurance

Farm Bureau Insurance of Michigan

Founded: 1949

Location: 7373 W. Saginaw Hwy., Delta Township

Services: Auto, business, crop, farm, health, home, life, flood, motorcycle, boat insurance and retirement planning

Accident Fund Insurance Co.

Founded: 1912

Location: 200 N. Grand Ave., Lansing

Services: Workers' compensation, fraud protection, workplace safety consulting

Delta Dental of Michigan

Founded: 1957

Location: 4100 Okemos Road, Okemos

Services: Dental insurance

Michigan Millers Mutual Insurance Co.

Founded: 1881

Location: 2425 East Grand River Ave., Lansing Township

Services: Business, commercial auto insurance, workers' compensation

Source: LSJ research

By the numbers

9,900: insurance and financial employment in Greater Lansing

10,000: number of insurance and financial jobs that will make region a hub for growth

6: major insurance employers located in Greater Lansing

$48,000: median salary of an insurance sales agent

$94,000: median salary of an actuary

Sources: Lansing Economic Area Partnership Inc. and Bureau of Labor Statistics