The True Cost of Bonus Season in Insurance

It’s bonus season in the insurance sector, and it’s carrying an attritive sting. Every year, I watch the same pattern unfold. Performance reviews conclude in Q4, compensation decisions are finalized in Q1, bonuses are paid in March or April. Then, like clockwork, I begin receiving calls from senior insurance talent who are ready to put themselves back on the market.

End-of-year reviews and bonus payouts create a predictable decision point for employees: once their annual incentive is known, and especially once it is paid, they reassess whether to stay or leave. Their decision usually reflects wider questions about progression, scope and long-term opportunity that have been building for months.

While it feels sudden, Q2 attrition is very cyclical, creating a foreseeable post-bonus vulnerability window that firms can plan for before they’re left scrambling.

The decision to leave starts before the bonus lands

From a search standpoint, Q2 is consistently one of the most active periods of the year. By the time bonuses are finalized, most executives already know where they stand.

If someone feels recognized, fairly rewarded and positioned for progression, the bonus strengthens their commitment to the firm. If they feel misaligned on pay, scope or influence, the bonus rarely changes their view; it simply becomes something they wait for before exiting.

While 66% of insurance professionals say a reduced bonus contributes to their decision to look for a new role, there’s usually a lot more going on beneath the surface. Leaders assess not only their compensation but also their strategic influence, succession prospects and long-term equity in the business. When those elements feel uncertain, it translates into visible exits.

Why promotions alone rarely stabilize retention

Title adjustments are common during review cycles and can provide temporary reassurance. But if compensation structure, equity participation or strategic authority remain unchanged, the promotion does nothing but strengthen that individual’s positioning in the market.

I frequently speak with candidates who were promoted shortly before deciding to leave, whose new title enhanced their credibility and improved their leverage during negotiations.

Retention depends on alignment between responsibility, reward and long-term opportunity. A change in title without structural alignment rarely resolves deeper dissatisfaction.

The value of pre-bonus talent assessment

Once an executive submits their resignation, your strategic advantage walks out the door. At that point, you have no shortlist, no market mapping, and you may even have no successors ready to step up. The search begins under time pressure, with revenue exposure and internal disruption increasing by the week.

A stronger position is to treat bonus season as a predictable risk. My best piece of advice is to conduct talent assessments in Q4 so that you’re pre-empting the bonus season fallout. Before performance conversations begin, the board or CHRO should have a clear view of:

• Which executives are under-compensated
• Who carries disproportionate revenue responsibility
• Which high performers have unclear succession pathways
• Where succession depth is thin

That internal assessment highlights exposure and allows leadership teams to address retention risks before compensation conversations crystallize them.

Proactive market mapping creates leverage

Rest assured, competitor firms know how to weaponize bonus season. In Q1, they discreetly map the market, identifying leaders who are likely to reassess, and benchmarking where stronger incentive upside could prompt movement. It’s a highly effective strategy, with 82% of insurance professionals saying higher bonus potential influences them to accept a new offer.

Firms can use the same market mapping tactic to proactively mitigate post-bonus attrition risk. Executive search firms are often better positioned to support this work than internal teams. We operate across competitor groups and adjacent sectors year-round, so we have live data on compensation shifts, leadership mobility patterns, and emerging succession candidates.

We also have trusted relationships with executives who will not engage directly with a competitor’s HR team, yet are willing to speak confidentially with a search partner.

If a resignation does occur, a firm that has already done this work can move with speed and clarity. They know who is credible and fits the culture, and what compensation level will secure them. That preparation shortens time-to-hire and reduces the likelihood of misalignment.

The same intelligence strengthens retention strategy. Market mapping reveals which of your leaders are most exposed based on portability of book, market demand and competitor appetite. When you see how the market currently values your top performers, you can adjust reward, remit or progression where risk is highest.

The financial risk of a “wait and see” approach

The true cost of bonus season is never the bonus itself. When a senior leader exits unexpectedly after payout:

• Productivity slows as teams absorb additional responsibility
• Leadership attention shifts from strategy to firefighting
• Searches launched under urgency come with higher premiums
• Operational strain intensifies in functions already running at capacity
• Client relationships may be handed over to less experienced hands
• Reputation can erode if key brokers or accounts perceive instability
• Attrition clusters; one visible departure prompts others to reassess

These ripple effects carry real financial weight. But with disciplined preparation, they are avoidable. Identify potential flight risks in Q4, partner with search firms early in Q1 to map the market, and treat retention as an ongoing system that’s grounded in competitive incentives and meaningful progression. Organizations that think about these issues only after resignations land are accepting a predictable, measurable risk.

Partner before the cycle breaks

Insurance is a relationship-driven industry. Retaining top talent requires the same strategic foresight applied to underwriting risk or managing capital. Bonus season is inevitable. Attrition does not have to be.

As a Hanover search partner, I often work with firms early in the year, mapping talent and stress-testing succession before compensation conversations turn into departures. That kind of preparation provides leverage, preserves choice, and allows firms to compete from a position of strength rather than urgency.

Reach out to me directly if you’d like to plan for bonus season before it plans for you.