by Patricia L. Harman, PropertyCasualty360.com, December 21, 2017
Much has been made about the changes the insurance industry will be experiencing in the coming months as a significant number of professionals (approximately 25% according to McKinsey & Co.) begin to retire or cut back on their hours. The world of insurance is already full of disruptors that will change how insurance is sold and priced, and how claims are reported.
Technology is changing how insurers capture information from the first notice of loss (FNOL) to the way claims data is gathered both onsite (think drones and iPad apps) and from policyholders who can upload information from their cell phones. As service providers like Lemonade and Amazon disrupt how insureds make purchases, those changes are having a direct impact in the insurance space as they change customer expectations.
Insurers have known for two decades that they would have to grapple with an employment shortage as baby boomers began to age out of the industry. And while technology can help mitigate some of the loss, the institutional knowledge walking out of the door should be enough to encourage insurers to capture as much of that information as possible be it is too late.
(Image: Claims magazine)
Today's Insurance Industry
Like so many industries where workers are expected to do more with less, the insurance claims industry is no different. A review of the results from the 2017 Claims Salary highlights some of the issues that concern adjusters and other insurance professionals.
The respondents comprised primarily insurer claims staff (51%) and independent adjusters/claims managers (17%). The balance were appraisers (3%), special investigators (3%) and other professionals (26%), which included brokers, risk managers and retired claims adjusters.
They’ve worked in the industry anywhere from two to 40+ years, with 81% spending between 11 and 40 years in some aspect of insurance. The majority of respondents (62%) were between the ages of 50-70, but 35% were 49 or younger. They held positions ranging from owner/president/CEO (6%); vice president (8%); adjuster (40%); manager or supervisor (30%); appraiser (1%); and other (15%).
Working Harder and Smarter
Insurance continues to be primarily a male-dominated industry according to the survey results. Of the respondents, 74% were male and 26% were female. Staff adjusters who responded work full-time, which ranges from 39 to 65 hours per week, and for the most part were not paid for overtime, as indicated by 76% of the respondents. However, 13% said they work five or less hours of overtime each week; almost 8% said they work 6-10 hours of overtime, and 3% said they work 11-20 hours more weekly.
For 66% of the staff respondents, the number of hours they work has remained consistent from last year. Only 4% said they had decreased and 30% said they had increased either somewhat or substantially.
For the independent adjusters (IAs), 77% said they worked full-time and 23% worked part-time, and their hours ranged from 10 to 60 per week. Like the staff adjusters, 77% of the IAs said the number of hours they were working had remained basically the same. However, a greater number (15%) said their hours had decreased somewhat and only 8% said that their hours had increased substantially.
Approximately 30% of the IAs believe that the economy has had a substantial impact on their hours, while 54% did not think it had affected the amount of work they received. Almost 16% thought the economy had a negative effect on their business.
Benefits and Salaries
(Image: Claims magazine)
Insurers provide a substantial number of benefits to their employees such as life insurance, health insurance, dental insurance, long- and short-term disability and some sort of pension plan. Independent adjusters also receive these benefits, just not to the same degree.
Staff adjusters are also more likely to receive profit-sharing, stock options, a company vehicle, supplemental life and health insurance, a cellular phone, an iPad and/or laptop computer, and air travel reimbursement than independent adjusters.
The primary benefits for IAs according to the survey were medical and dental insurance, life insurance and a 401K plan, followed by some degree of short- and long-term disability coverage.
Both staff and independent adjusters were offered the ability to telecommute: 60% of the staff adjusters and 54% of the IAs. Forty percent of the staff adjusters and 46% of the IAs said this was still not an option for them within their companies.
Salaries for full-time insurance staff ranged from $41,500 to $180,000 and broke down as follows:
(Image: Claims magazine)
Salaries for independent adjusters fell into every salary category, with 54% of the respondents falling between $60,000 and $125,000.
While in past surveys, adjusters felt that they were fairly compensated despite long hours, respondents in this year's survey voiced their displeasure and frustration about working longer and harder while not being adequately compensated. Some felt that supervisors had unrealistic expectations when it came to the level of work and the effort required to close their claims. A very small percentage felt they were fairly compensated, but the vast majority of respondents did not. Some predicted that salaries will need to increase in order to recruit and keep a talented workforce in the future.
Another challenge for adjusters involved the increase in administrative tasks with little or no support staff to help manage the workload. Cost-cutting efforts such as the loss of a company car or less administrative support are also increasing the frustration for many claims professionals.
Is Insurance Still a Viable Career Choice?
Despite these frustrations, 51% of the respondents still rated the outlook for the adjusting professional as positive, a 12% increase over last year. In addition, 28% thought the industry had a negative future, a 5% drop compared to 2016.
Among the concerns expressed though were the unrelenting work load, the continuous need to work more with fewer resources, the increasingly aging workforce that is not being offset by the addition of younger staff members, and the belief that technology is a substitute for proper claims handling and evaluation by knowledgeable adjusters.
When asked if they would recommend this profession to others, the answer was a resounding “yes” from 70% of the respondents, 1% higher than in 2016.
The concern about the workforce retiring soon comes clearly into focus with this survey as 29% of the respondents said they expected to retire in five years or less. Twenty percent will retire in 10 years or less; 14% in 15 years or sooner; while 17% said they still had 20 years before they could retire and 20% said they’d be working for at least the next 20 years or more. The survey confirmed that retirement is looming for a significant portion of the adjusting profession, which will force insurers to find creative solutions to this loss of trained, knowledgeable personnel.
Training, which has changed dramatically in the last 10 years with the advent of online options, will begin to take on a greater significance as insurers attempt to transfer some of this knowledge from one generation of workers to the next, while teaching their newer employees about the business. The extremely active hurricane season this fall highlighted the need to educate adjusters on how to handle a wide variety of catastrophes in a very short period of time.
Even with improved technology and an influx of independent adjusters to help mitigate the shortage, many new adjusters had not experienced a major catastrophe before. In addition, insurance professionals encountered significant issues due to a lack of resources and infrastructure in multiple areas simultaneously, as well as language barriers with policyholders because of the areas impacted.
(Image: Claims magazine)
Issues that may have seemed fairly distant in the future are now demanding the industry's immediate attention in terms of staffing, training and technology upgrades. How prepared the industry really is will become evident in the customer satisfaction numbers following these catastrophes.
Four hurricanes, multiple wildfires, and several terror-inducing and terror-related attacks have stretched the industry in many directions recently, while highlighting any weaknesses within. Insurers will feel the pain from all of these issues for the immediate future and the solution will not be an easy fix for anyone.