May the Work Force Be With You

The insurance industry gains confidence in a warming labor market.

March 07, 2013 Photo
The U.S. economy may have slowed in the second half of last year, but moderate job growth has continued, and the insurance job market continues to improve. The Bureau of Labor Statistics (BLS) reports that the average annual unemployment rate for the insurance industry went from 6.2 percent in 2010 to 4.4 percent for 2012, and I anticipate that this downward trend will continue in 2013. This is great news for job seekers, but it means continued difficulty for employers trying to attract much-needed talent.

The findings of the 2013 Insurance Labor Market Study, conducted biannually by The Jacobson Group and Ward Group, aligned closely with the projections gleaned from the BLS. The study ran from Jan. 9-Jan. 25, 2013, and polled 135 industry organizations. This accounted for 315,000 employees, which is 22 percent of the U.S. insurance carrier labor market. Participants came from every sector of the industry and varied in size. The majority of respondents—77 percent—came from the property and casualty sector, and there was an almost-equal split between regional and national/multi-national carriers.

This iteration of the study indicated a warming labor market, with confidence at its highest level since the study began in 2009. In terms of revenue and staffing projections, we’re seeing very positive trends on both fronts. Expectations to grow revenue are at the highest point since the study’s inception, with 86.3 percent of companies expecting to increase revenue this year. Fifty-one percent of those companies attribute their revenue forecasts to an anticipated change in market share.

You can see this confidence reflected in staffing plans, with 56.2 percent anticipating an increase in staff. This is also the highest number in the history of the study. Twenty percent of companies surveyed intend to increase staff by more than five percent. On the other side of the spectrum, the number of companies intending to decrease staff is the lowest the survey has ever returned at 10.3 percent. These are optimistic projections.

For the fourth straight survey, the primary reason to increase staff during the next 12 months continues to be an increase in business volume. Forty-seven percent of companies listed this as a reason to hire, compared to a previous high of 53 percent in July 2011. Coming in second, with 46 percent of respondents, is expansion. This has remained relatively constant over the past few years, reflecting the long-term process of growth. 

When broken down by discipline, technology roles remain the most in demand. This has been the case for seven out of the eight iterations thus far. More companies are insourcing IT projects, and there are more development initiatives taking place. Sales and marketing roles have made a large jump in likelihood to hire, mostly driven by the life and health industries.

While the likelihood to increase claims roles overall has decreased since previous studies, it still remains number three on our list. Likelihood of hiring is high, especially in the property and casualty sector. In fact, for personal lines companies alone, claims is the largest area of growth. In most cases, this can be attributed to the volume and frequency of major storms and catastrophes in recent years. As companies strengthen catastrophe models, claims will continue to remain a high priority for personal lines companies.

Growth in claims across all sectors also is happening in an effort to boost staffing levels for greater production. In the height of the recession, many claims positions were cut, but companies are now able to ramp back up again.  

The study also asks participants to rank disciplines by difficulty to fill. Across the board, all positions are considered moderately difficult to fill. In this iteration, claims, operations, and accounting proved to be the least difficult for which to recruit. But that begs the question: If claims positions are in demand, why aren’t they more difficult to recruit? This may be a temporary anomaly. The fact that many companies cut down on claims staff during the height of the recession means there is now some slack in the market and qualified talent is available for work. As demand for claims staff continues, the difficulty-to-recruit measure is expected to go up, as well.

When the right skill set is hard to find, many companies will fill claims roles with non-traditional backgrounds to ease the recruiting burden. Oftentimes, companies are able to recruit claims talent from other areas or sectors and quickly bring them up to speed. 

However, there is still a shortage of claims talent in the three-to-10-year range of experience. Many companies discontinued training programs for claims recruits from universities, resulting in a gap in low- to mid-level claims talent.

When faced with these difficult-to-recruit positions, companies are making some changes in their approaches. To attract the best candidates and prevent losing high-performing employees to competitors, employers are incentivizing in new ways. Heightened benefits such as stock options or sign-on bonuses, greater flexibility, and opportunities for growth are taking the spotlight. Pay-for-performance structures are gaining popularity as a workforce motivator.

To tackle the talent gap, organizations are investing more in career development programs. Succession will continue to be a major concern for employers. As budgets open up, the proper resources are going into the training bucket. A grow-from-within approach is recommended to combat gaps in succession and keep a strong bench of talent. Proactive hiring is necessary to prepare for future growth.

If the industry follows through on the hiring plans captured in our study, we can expect to see a 1.2 percent increase in industry employment over the next year. Property and casualty companies that specialize in personal or commercial lines will see greater growth (1.75 percent and 1.74 percent, respectively) versus companies that are balanced (-.09 percent).

While insurers will continue to be faced with recruiting challenges ahead, the outlook is mostly positive for our industry. With an increase in business volume and expansion driving greater revenue, it seems there is plenty of positive energy in the pipeline. As always, employers are advised to evaluate current recruiting and retention strategies to ensure that a strong staff is in place to guide the organization to future success.   

David E. Coons is senior vice president of The Jacobson Group, a provider of talent to the insurance industry. He has been a CLM Fellow since 2013 and can be reached at (800) 466-1578,

About The Authors
David E. Coons

David E. Coons is senior vice president of The Jacobson Group.

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