By Nikki S. Jackson, CPCU, ARM, CDMS, Vice President of Strategy & Marketing, MTI America
The workers’ compensation industry faces a talent shortage, and companies are struggling to attract and retain claims professionals. This talent shortage impacts many stakeholders along the claims journey, including the administrator, employer, injured or ill employees and their families, providers, and a host of other vendors and representatives (Barnes-Cook, 2021). So, where have all the adjusters gone? There are a number of factors, but the primary contributing factors include employment rates, working age, COVID-19, and the Great Resignation.
Employment Rates
Over the past several decades, the employment rate has been dropping for prime-age US adults. The overall annual employment-to-population dropped from 64.3% in 1999 to 60.4% in 2018. There are many plausible contributing factors like increased disability benefits (SSDI, VADC), higher minimum wages, and increased incarceration rates. For example, Social Security Disability Insurance rates in working-age adults have been on the rise as employment rates fell in recent decades. Other major contributing factors include shifts in the labor market like import competition and the use of automation (Abraham & Kearney, 2020).
Working Age
The working-age population (15-64 years old) plateaued in 2019 before dropping one-tenth of a percentage point in 2020. According to the United States Census Bureau, the decrease was the first time the working-age population shrank in the nation’s history (Grisham, 2020). The major contributing factors to the decline included a slower birthrate, a fall in immigration, a retiring baby boomer generation, and many deaths caused by COVID-19 (Grisham, 2020).
COVID-19 & The Great Resignation
The COVID-19 pandemic triggered unprecedented furloughs and mass layoffs in 2020 to reduce workforce-related expenses. In July and August 2020, 200 senior insurance executives were surveyed on actions and plans for furloughs and layoffs. Participant responses noted that 67% already utilized furloughs, and 68% used layoffs to reduce work-related expenses. In March of 2021, when the virus was declared a pandemic, the unemployment rate was 5.9%. In April 2020, the rate rose to 6.7% before peaking in August 2020 at 7.35% (Pantelimon, Posedaru et. El., 2021).
The Great Resignation, which began in 2021, is another major contributor to the talent shortage in the insurance industry. This phenomenon disrupted the talent pool, with a staggering 2.9% of the US population quitting their jobs (Reexamining Retention Strategies, 2021).
Today, employees are skilled in their field and technology, making them vulnerable to competitors (Hamel & Zanini, 2019). Some insurers increase employee retirement funds and offer profit sharing to create a higher retention rate. Others are increasing their compensation packages. According to Rhatigan (2016), one in four employees would leave their current employer for a 10% increase in pay.
About Nikki Jackson
As a former adjuster, Nikki Jackson, MBA, CPCU, ARM, CDMS is passionate about attracting and retaining talent in the risk and insurance industry. She believes seasoned experts and new talent will implement innovative, technology-enabled solutions to transform the workers’ compensation industry for our society as a whole.
Sources
Abraham, & Kearney, M. S. (2020). Explaining the Decline in the US Employment-to-Population Ratio: A Review of the Evidence. Journal of Economic Literature, 58(3), 585–643. https://doi.org/10.1257/jel.20191480
Barnes-Cook, M. (2021). Automation builds trust & improves workers’ comp claim outcomes. Property & Casualty 360, Retrieved from http://ezproxy2.library.drexel.edu/login?url=https://www.proquest.com/trade-journals/automation-builds-trust-amp-improves-workers-comp/docview/2547480718/se-2?accountid=10559
Hamel, G., & Zanini, M. (2019). The end of bureaucracy. https://hbsp.harvard.edu/product/R1806C-PDF-ENG
Pantelimon, F., Posedaru, B., Grigorescu, E., & Plăcintă, D. (2021). Labor market trends during the COVID-19 pandemic. Informatica Economica, 25(2), 50-63. doi:http://dx.doi.org/10.24818/issn14531305/25.2.2021.05
Rhatigan, C. (2016). The 4 industries with the worst retention rates [Web blog post]. https://www.tinypulse.com/blog/industries-with-the-worst-retention-rates
Reexamining retention strategies in the great resignation‘ era. (2021). New Orleans CityBusiness, Retrieved from http://ezproxy2.library.drexel.edu/login?url=https://www.proquest.com/trade-journals/reexamining-retention-strategies-great/docview/2590816788/se-2?accountid=10559
Zachary Grisham. (2020). United States Census Bureau Statistics.
Disclosure:
MTI America is a WorkCompWire ad partner.
This is NOT a paid placement.