Demographic trends have long fueled a talent drought in insurance. In fact, executives responding to a recent McKinsey & Company self-assessment cited human capital — rather than any asset — as the industry’s scarcest resource.
The causes for the staffing shortfall are well known: a multi-year failure to attract and retain a younger workforce. Yet, anecdotal evidence suggests a labor market reckoning dubbed the “Great Resignation” may be worsening the challenge, particularly within disability claims departments.
Claims teams are no strangers to understaffing. In February 2021, SALT Associates and RGA released the results of a survey of U.S. insurance carriers detailing employees’ views on claims management and job satisfaction. The research revealed that workers’ devotion to employers was slipping long before the outbreak of COVID-19, and workplace culture may bear much of the blame. In the RGA/SALT study, a scant 35% of claims professionals said they felt highly valued by their employers, and only 28% said they were very satisfied with their work.
These employees are far from alone. In August 2021, the U.S. Bureau of Labor Statistics reported that an unprecedented 2.9% of the U.S. workforce, some 4.3 million people, quit their jobs even as unemployment benefits also ran out. This is part of an ongoing trend of employees voluntarily leaving their jobs starting in spring 2021 in the United States and popularly called the “Great Resignation” or the “Big Quit”. Observers speculate that the trauma of the ongoing pandemic and accompanying economic and health shocks have led many workers to reprioritize their most fundamental needs and look for greater work-life balance, increased job safety, and a deeper sense of purpose and challenge.
Such complaints may sound familiar to claims leaders. The RGA/SALT survey revealed that dissatisfaction was highest among claims professionals who face monotonous “busy” work, overwhelming caseloads, and a lack of recognition. Large insurers and small carriers have begun to raise the alarm that this lack of satisfaction may be leading to an uptick in turnover, with claims professionals increasingly quitting without another job lined up or leaving the industry entirely.
Large insurers and small carriers have begun to raise the alarm that this lack of satisfaction may be leading to an uptick in turnover, with claims professionals increasingly quitting without another job lined up or leaving the industry entirely.
So where can insurers look for remedies? When it comes to retaining these skilled workers, the survey findings suggest a high-tech, high-touch, intellectually challenging workplace culture may be more important than market reputation or compensation. This requires claims leaders to solve two problems at once – widespread misperceptions and longstanding underinvestment:
Problem of Perception
For years, insurance carriers have been trying to rethink strategies to attract, engage, and retain a workforce, with mixed results. Nearly 400,000 employees are expected to retire from the industry within the next few years, according to the U.S. Bureau of Labor Statistics, and far fewer new recruits are available to fill these roles.
Research points to widespread misperceptions about insurance as one cause, particularly among the largest working generation: millennials (born between 1977 and 1994). In a self-assessment designed by McKinsey & Company, insurance executives themselves saw the industry as too conventional, rigid, and internally oriented. No wonder the next generation is reluctant to consider careers in insurance. In a survey by The Institutes, eight in 10 millennials had limited awareness of career options within the industry, and 44% of respondents to a Valen Analytics survey said they “did not find a career in insurance interesting.”
Claims teams may be more vulnerable to these perceptions given the discipline’s traditional overreliance on administrative tasks. Research suggests that millennials are less likely to gravitate toward volume/production-based jobs, preferring variety and roles that are more focused on problem-solving.
Claims adjudication is nothing if not intellectually challenging, yet many new hires are often asked to perform large volumes of repetitive functions below the level of their ability and training. In RGA’s recently completed U.S. Group Disability Claims Management Benchmarks survey of claims professionals at nearly a dozen major U.S. carriers, respondents reported that short-term and long-term claims increased in 2020 by 13% and 3% respectively, yet productivity kept pace. Could this increase in output have come at the cost of higher levels of burnout and attrition in 2021?
RGA's U.S. Group Disability Claims Management Benchmarks survey of claims professionals reveals that short-term and long-term claims increased in 2020 by 13% and 3% respectively, yet productivity kept pace.
Findings from the RGA/SALT survey suggest discontent was growing. Claims professionals reported spending 39% of time outside of claims analysis, including such administrative tasks as filing, letter writing, and compiling reports. Another 10% of analysts’ time was spent in meetings, leaving only about half of every day available for claims adjudication.
Understaffing and increasing caseloads can make such routine and bureaucratic work seem even more burdensome. In the RGA/SALT survey, respondents commonly complained of “feeling like I work in a call center” and of “the stress of wearing too many hats” and sensing that “claims is perceived as an afterthought.” Some respondents noted that efforts to increase work-life balance had been “challenging” even prior to the pandemic, and a lack of training and growth opportunities were significant complaints.
The good news? Such perceptions need not be the reality. Confronted with lockdowns and the rise remote work, many insurers have taken the opportunity to reskill teams, redefine the nature of certain claims roles, and recalibrate incentives and expectations. RGA/SALT’s survey suggests that when insurers invest in training and career development opportunities, claims personnel become more motivated and satisfied. Adding resources to relieve caseloads and reduce administrative burdens can also improve morale and provide an advantage in the battle for talent. Many claims teams are more digital, virtual, and flexible than at any time in history, and it is incumbent upon insurers to do a better job of making this progress visible to prospects.
Many claims teams are more digital, virtual, and flexible than at any time in history, and it is incumbent upon insurers to do a better job of making this progress visible to prospects.
A Problem of Technology
As it turns out, “going paperless” was not just a good pre-COVID-19 idea. Digitization formed the foundation of the industry’s successful transition during the pandemic according to RGA’s U.S. Group Disability Claims Management Benchmarks survey. U.S. survey participants revealed that COVID-19 spurred their employers to fast-track investments in data analytics, mobile apps, electronic claims management systems, and more. The shift could not come too soon.
The next generation of claims professionals are digitally native, and the “analog” history of insurance may also be prompting turnover. Respondents to the RGA/SALT survey suggested that time lost jumping back and forth between multiple unconnected technologies and negotiating upgrades and enhancements weighed on morale, yet decades of underinvestment has made many claims departments highly dependent on multiple unrelated technologies that can be tenuously stitched together, if at all. A survey by RGA, conducted just prior to the pandemic, showed that just one in four insurers (28%) used an expert claims system to assist in claims management and settlement, and fewer than 18% of those covered the complete end-to-end claims process.
If a lack of technology investment fuels attrition, digitizing operations can present a powerful solution. As paper-processes proved untenable amid social distancing and lockdowns in the pandemic, carriers digitized data collection and entry, from claims reporting to evidence collection. This work to increase the efficiency and consistency of claims processes has the added benefit of improving talent retention. Only consider that a typical claims analyst may, for example, send six or seven letters to accompany payments or offer status updates while administering a single claim – correspondence that could be automated and streamlined easily. In RGA/SALT’s research, employees noted that digitizing routine or standard tasks could significantly ease workloads, enhance efficiency and offer overall value.
This work to increase the efficiency and consistency of claims processes has the added benefit of improving talent retention.
This SALT/RGA survey suggests that cultivating a workplace culture that fosters individual growth and team success confers a competitive advantage. Claims professionals who share pride and confidence in the value of their work are the best recruiters for any team or company.