Staying Competitive in the Challenging Labor Market

Is the best talent passing you by?

November 07, 2022 Photo

With 2023 on the horizon, the industry’s tight labor market shows no signs of relief. Insurers are challenged with attracting and retaining the talent necessary to meet their business needs while navigating unprecedented movement at all professional levels. Meanwhile, an industry-wide realignment persists as both professionals and employers more clearly define their long-term needs and preferred working environments.

The U.S. Bureau of Labor Statistics (BLS) reports that job openings within finance and insurance reached record levels in June and July 2022, hitting 476,000 and 473,000 open positions, respectively. For comparison, this is 100,000 more open roles than the previous record, set in January 2022. Amid this abundance of jobs, current unemployment for insurance carriers and related activities remains low at just 1.7%, compared to 3.7% for the larger U.S. economy, according to the BLS August 2022 report.

Yet, despite these numbers, the majority of insurers plan to add to their head counts in the coming year, according to The Jacobson Group’s Q3 2022 Insurance Labor Market Study, conducted in partnership with Aon-Ward. This semi-annual study, which has collected revenue and hiring projections from carriers across all sectors of the industry since 2009, found 71% of property and casualty insurers plan to increase staff in the next 12 months, while just 4% anticipate staff reductions. Respondents say this anticipated growth is mainly due to expected increases in business volume, followed by areas currently understaffed.

The likelihood of P&C insurers increasing claims staff is at the highest level the study has ever recorded. Of all the functions surveyed, claims roles are the third most in demand, following only technology and underwriting. Of those planning to add claims staff, 30% are most likely to hire entry-level individuals while 70% seek experienced claims employees. Along with increasing staff, 79% of P&C insurers plan to grow revenue, with nearly half of respondents attributing this growth to anticipated increases in market share.

In our Q1 2022 study, claims recruiting difficulty reached its highest level in the survey’s 13-year history. This sentiment persists in Q3, with claims roles reported as only slightly less challenging to fill. Given the tight market, low unemployment, and abundance of open roles, it is vital that insurers focus on how they can creatively and effectively not only recruit talent, but also retain their existing employees.

Where Has the Talent Gone?

There are multiple factors contributing to the deficit of claims talent. For years, the median age of insurance employees has been higher than that of the overall workforce, according to BLS data. Retirements have accelerated in light of the pandemic, impacting the availability of more seasoned talent. On the other end of the spectrum, claims roles often serve as a stepping stone to other opportunities within insurance. However, entry-level talent is in high demand and insurers are actively competing with companies both inside and outside of the industry to attract and retain these individuals.

Along with an aging workforce and increased competition, many companies paused on backfilling open roles and adding claims staff early on in the pandemic, reacting to the decrease in overall claims activity. As a result, it is likely many individuals left the industry for other opportunities. Now, as the world moves forward and resumes more regular behaviors and activities, there are fewer claims professionals available to fill open roles.

At the same time, the insurance industry, along with the larger economy, is experiencing “the Great Reshuffle” of talent. The BLS shares that voluntary quits have reached all-time highs in 2022, with 105,000 finance and insurance professionals choosing to quit their jobs in July alone. Professionals are leaving their current positions in search of opportunities that seemingly better align with their personal and professional goals and passions, such as the ability to work remotely. Lateral moves are also much less common, unless there are substantial motivating factors. It is up to insurers to focus on how they can counteract these trends by appealing to potential talent and growing them within their organizations.

Remaining Competitive

In the last three iterations of Jacobson’s semi-annual study, insurers were unable to meet their hiring expectations from the year before. The inability to achieve these hiring goals is largely due to their inability to fill open roles, rather than a change in needs. In order to best resonate in today’s market and successfully compete in the war for talent, past talent strategies must be refreshed and refined.

Invest in your current employees. Especially in the current candidate’s market, ensuring that your existing talent is engaged and satisfied with their roles is essential. Your employees are other organizations’ potential candidates and are most likely being actively recruited.

Consider how you can cultivate loyalty among your team. Ask questions around their individual needs and priorities to understand what it will take to keep them with your organization before it is too late. This includes focusing on career paths and development opportunities available to them within your company. Do your employees understand the opportunities that are available to them within the organization? Claims provides a solid foundation to move into many areas within the industry. This could include moving up into claims management roles, or moving into more specialized areas such as commercial liability, cyber, or medical malpractice.

Once these goals are identified, work with employees to build a plan to achieve them. This may mean giving them broader exposure within the organization, nominating them for committees or organization-wide projects, offering opportunities for re-skilling, and investing in professional development and certifications.

Along with providing visibility into their future with your company, ensure that they have a sense of connection in their day-to-day tasks. Consider how you can facilitate relationships among your team and foster a feeling of shared purpose and belonging. If your team members are remote or hybrid, focus on opportunities to recreate the “water cooler” conversations that are lost in virtual environments. This could be as simple as initiating periodic team lunches or coffee breaks, pairing individuals on projects, or setting aside time during all-staff meetings to discuss topics not directly related to work.

Be creative in your recruiting. As you work to combat the shallow talent pool, expand your recruiting parameters and look for talent in nontraditional places. Explore similar roles and industries that leverage the same transferable skills and talents as your open positions. Appeal to a broader candidate base by taking a fresh look at standard position descriptions and thinking through how they can be more compelling and inclusive. Often, companies tend to include long lists of responsibilities within their job postings rather than focusing on the greater impact and value a position will create. Distill lists of requirements down to those that are truly necessary for the role and cannot be easily learned on the job. This will ensure you are not excluding any individuals who are otherwise fully qualified.

Additionally, think about how your talent pool will be impacted by geographic restraints. Is the role able to be performed remotely? If not, could those in-person needs be met by coming into the office once a month or quarter?

In years when hurricane seasons are less active, you may also consider how to leverage independent contractors who typically focus on seasonal catastrophe claims. If project work has been light for an extended period, these individuals may be open to other income-generating opportunities, or they may be interested in more job certainty and a steady paycheck—especially if you are able to offer flexibility within their roles.

Rethink your interview process. Interviewing in the current environment is much different than it was even a year ago. Candidates have become accustomed to having the upper hand and will not hesitate to walk away from opportunities that are not aligned with their expectations. Now, instead of companies primarily interviewing and evaluating a candidate, the playing field has been leveled. Insurers must impress and engage candidates from their first interactions, understanding what is important to them and acting with intention to win their interest and stand out among other opportunities.

In the past, interview processes commonly spanned weeks and included multiple in-person interviews. However, in today’s market, the entire hiring process is often condensed into a week or less. The ability to act fast is key to avoid losing talent to competing organizations. As you streamline your process, determine how you can remove any unnecessary steps, such as written assessments or multiple applications, to ensure that you are not unintentionally deterring qualified individuals.

Along with creating a positive candidate experience, ensure your offer packages are competitive and in line with the current market. The BLS reports that claims wages have increased by more than 5% in the past year. As competition for talent continues to intensify, it is likely wages will continue to rise. Flexibility in hours and location has also become an expectation. Jacobson’s Q3 2022 Insurance Labor Market Study found 88% of P&C insurers are planning to adopt hybrid environments long term; 53% are planning to offer full-time remote work; and 34% will provide flexible hours. Consider what other organizations are offering candidates and ensure that you are providing a compelling compensation package.

Rethinking your approach to recruiting and retaining talent is essential in today’s market. The insurers that are able to adapt to candidates’ changing expectations, reevaluate their current talent strategies, and focus on the individual needs of their employees will be primed for long-term success.

About The Authors
David E. Coons

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

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