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Filling the Bench

Claims organizations must be creative now to attract talent before it’s too late.

October 23, 2015 Photo

The talent crisis is here, and despite years of warnings and research, the insurance industry is unprepared to combat the growing labor drain. The need for a solution is real and immediate. On the cusp of a mass exodus of tenured professionals, the industry finds itself with an immense skills gap and unable to attract young talent. We are undoubtedly amid the most competitive recruiting environment that the industry has ever faced.

Compounding the issue even further is the industry’s virtually nonexistent unemployment. The Bureau of Labor Statistics (BLS) has reported the unemployment rate within the insurance industry at a low 2.3 percent for August 2015. The average rate thus far in 2015 is at just over two percent, and it is predicted that industry unemployment will hover between one and three percent through the remainder of the year.

While the industry’s talent supply continues to decrease, its demand continues to increase. In addition to filling positions due to natural attrition, 65 percent of companies also plan to increase staff during the next 12 months, according to the 2015 Mid-Year U.S. Insurance Labor Outlook Study, conducted by The Jacobson Group and Ward Group. This is the second-highest recorded rate in the history of the study.

Though positive, these labor market trends are having a profound impact on an already challenging environment. Organizations are feeling the impact on their ability to fill open positions, including claims roles. With continued low unemployment, strong job growth, and an increasingly shallow pool of incumbent talent, the claims sector is set to hit a breaking point in terms of labor recruitment.

Job Growth Remains a Primary Focus Throughout Insurance

With organizations looking to fill understaffed areas and expand beyond their recession-level staffing, the insurance industry is focused on growing its labor force. The study’s reported expectations for increased staff in the coming year represents a seven percent growth over July 2014, and is nearly double the 35 percent reported in July 2009 in the midst of the economic downturn.

In fact, staffing within the industry has reached historic levels. There are now 1.52 million individuals employed within the insurance industry, a number that the industry hasn’t seen since December 2003. This represents a growth of nearly 95,000 new positions since the industry’s low in April 2011. And the number of job openings within insurance continues to rise. For 2015, it is seeing an average of 240,000 insurance job openings monthly—more than double what was reported seven years ago.

Some of this growth can be attributed to a number of emerging roles within insurance, including analytics and big data. Today, 25 percent of insurers are investing in big data and analytics, resulting in an industry job growth rate more than five times that of the overall national employment growth rate, according to analysis by the Accenture Institute for High Performance. Year after year, the study has seen a 10 percent increase in the number of companies planning to expand technology and analytics-related staff, and the upward momentum is expected to continue. Already, the number of these jobs is forecast to rise 92 percent in the next two years. Within claims, the move toward more automated and sophisticated processes is driving the increase in open technology roles. However, it is clear that these job openings are being created at a pace far beyond the current growth of the industry’s labor pool.

Temporary Staffing Continues to Impact Insurance

Following the industry’s recovery from the recent recession, it was predicted that interim staffing would experience a sharp decline. However, temporary employees continue to maintain a strong presence within the insurance industry. In August 2015, the temporary penetration rate for the overall labor market—the number of temporary jobs as a percent of total employment—reached 2.04 percent. This marks monumental growth from the 1.34 percent reported in July 2009. In fact, since January of this year, temporary employment within the U.S. economy has increased by 52,200 jobs.

Within the insurance industry, there are an estimated 30,000 temporary professionals currently employed. Companies are increasingly turning to contract workers as a solution to the growing knowledge gap. Seventy-six percent of organizations participating in the recent study responded that they are planning to maintain their use of temporary employees; this is the second-highest rate in survey history.

Following a recent drop in high-cost catastrophes and the resulting damage in commercial and property claims, a number of organizations are turning to seasonal, contract staff for claims and customer service roles. The scalability of this staffing solution enables insurers to bring on qualified, trained staff for seasonal or geographic needs without maintaining a roster of full-time employees. As a result, the usage of interim talent is expected to continue to increase within the claims sector in the coming years.

Insurance Talent Recruitment Heats Up

The face of the insurance industry’s talent market has changed considerably over the past decade and will continue to do so. Insurance industry professionals are rapidly aging with those aged 55 and older increasing by 74 percent in the past 10 years, and as a result, a wave of retirements—estimated at 25 percent of the current workforce—is expected to rock the industry by 2018, according to a report by McKinsey & Company.

As recruitment difficulty intensifies, results show that nine out of the 12 roles surveyed for—including claims— were reported as being moderate to difficult for successful recruitment. In addition, most roles have seen an increase in their recruitment difficulty levels. Actuarial, analytics, and executive positions top the list of difficult areas to fill. On a scale of one to 10, claims difficulty was rated at 4.9, with the lack of incumbent talent joining the claims sector, making it more and more difficult to find skilled claims professionals.

When looking at current market demand, technology, claims, and underwriting top the list of functions where companies are most likely to increase staff. Property and casualty personal lines organizations are anticipating the greatest increase in staff compared to commercial and balanced lines organizations. Much of this demand results from widespread retirements within the claims industry, as well as areas still understaffed from the Great Recession.

What Does the Future of Claims Look Like?

With a slightly older median age—43 years old compared to the overall economic median of 42—the claims industry will not be spared in the impending talent crunch. It, too, has fallen behind in terms of building a bench of emerging talent to replace its currently aging population. As a result, claims organizations are beginning to face a drastic talent shortage that is only expected to grow in the coming years.

With the majority of claims individuals happy with their current jobs and intending to stay in their roles until retirement, the market is static in terms of lateral career movement. Additionally, job responsibilities are being updated to reflect the functions being left behind by retiring boomers. For example, a claims manager may take on much of the work formerly done by a recently retired supervisor. As a result, new employees are needed to help with some of the functions that are superseded by the newly added tasks, which creates a gap at the bottom.

There also is a growing executive skills gap at the top, as some professionals are not interested in moving into executive positions due to the increased responsibilities and hours. In addition, as the 40-somethings age, they often move from outside claims to office claims roles to lessen physical demands. This is opening up a number of jobs that need to be filled by emerging talent.

Faced with an entrenched workforce that is not interested in shifting roles or organizations, insurers are finding an increasing lack of potential claims talent to meet the current demand. The focus must shift toward recruiting and engaging the next generation of claims talent.

The millennial generation currently accounts for 25 percent of the U.S. workforce, and is expected to form 50 percent of the global workforce by 2020, according to PwC research. This generation offers a timely and much-needed solution to the influx of talent necessary within claims. With graduates from risk and insurance programs meeting 15 percent of the need at best, claims organizations must look beyond standard campus recruitment to build their talent pipelines.

Out-of-industry talent also may be key to filling the needs of claims organizations. With a number of positions compatible to a career in claims—including field customer service representatives, delivery drivers, and meter readers—there is a large amount of untapped talent available. Often, these individuals have been well trained in providing customer service and have experience working independently. They have several transferable skill sets that claims organizations must look for in order to build a base of incoming talent. In addition, a claims position provides these individuals an alternate, long-term career path, which is a unique selling point that organizations should highlight and promote.

Claims organizations also should consider outreach at community colleges and other nontraditional educational venues. Community colleges have developed into a particularly strong system within the U.S. and provide a unique opportunity to reach out to emerging young professionals. Already, insurers have embraced the value of partnering with these institutions locally. Zurich North America, for example, recently teamed up with a local community college to provide an insurance apprenticeship program that enables students to attend school while simultaneously being employed by the company. Designed to build interest in insurance as a career and Zurich as an employer, the program is being touted as a potential solution to the need for an influx of young talent. Claims organizations may look to this model to build a relationship with their local education centers in order to begin bridging the impending labor gaps within the industry.

As organizations remain focused on growing their staff, insurers must look at the reality of the current climate and rethink their staffing strategies. As recruiting difficulty across disciplines and sectors continues to intensify, the industry must be creative in engaging the next generation. In order for claims organizations—and the greater insurance industry—to maintain continued success and progress, they must develop a contemporary, evolved recruiting strategy. The key is to get one step ahead and to begin building a bench of talented young professionals to help weather the growing talent storm.   

For a full results summary, please visit  2015 Mid-Year U.S. Insurance Labor Outlook Study.

About The Authors
David E. Coons

David E. Coons is senior vice president of The Jacobson Group.  dcoons@jacobsononline.com

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