According to a recent survey from Manpower Group, 45% of companies say they have a hard time finding the talent they need. That’s up from 40% in 2017. Much of the time, these organizations have plenty of applicants for open positions, but few of these candidates have the technical skills they need to fill the role.
Insurance organizations are especially hard hit by the lack of qualified candidates. McKinsey & Co. reports that by 2018, more than a quarter of the insurance workforce will be nearing retirement while according to the Bureau of Labor Statistics, less than a third of insurance employees are under the age of 35. Not only will insurers need to fill the talent gap caused by retirement, but they also need qualified talent.
Consider underwriting and claims professionals. Organizations are looking to hire professionals who are technically proficient and understand the specific nuances of their insurance products, but they also must have exceptional communication skills. Claim analysts, for example, need to have productive conversations with claimants who may be under considerable emotional strain. Underwriters need technical skills, but they also need to be able to effectively communicate their case decisions. Candidates with all of these qualifications can be hard to find, leaving many operations stretched thin.
Continuing our discussion with Ray DiDonna, SVP, Underwriting and Claims for RGAX, and Don Russell, President of SALT Associates, a claims services provider recently acquired by RGAX, we asked them what they’re hearing when they talk with insurers about talent challenges and the strategies they recommend to help resolve them.
The Harsh Impact of Unexpected Talent Shortages
As many insurers are painfully aware, talent issues can hit you by surprise. Don points out that, “Many talent shortages are temporary. You might have unexpected turnover that leaves you shorthanded for a few months; sometimes even longer. But insurers also have to be able to respond with appropriate resources when they see surges in new claim volumes or have a shortfall in expertise for a certain product line. They need to be ready.”
Don says that he often talks to insurers looking to address problems caused by an understaffed claims department. Business leaders are aware that employees who are under constant pressure to do more in less time can make costly mistakes or suffer a drop in productivity, which can impact their results.
The stress can also exacerbate the talent shortage. Employees get burnt out and start looking for new opportunities in another company or even in another field (the best are usually the first to leave because they have the most opportunities). HR professionals consider annual turnover rates around 10% to be healthy, but even that level can leave you scrambling to fill open positions. “When turnover starts to pick up, insurers often find themselves in a real bind that can affect customer service and even their results,” says Don.
Ray adds that the C-Suite can also be the first to notice problems caused by talent shortages. “A CFO might spot something unsettling such as a sudden spike in claims approvals, or a high-level underwriting leader could be concerned about unfavorable underwriting results or poor turnaround times. It might even be the head of marketing looking for the root cause of a drop in their net promoter score. All of these issues can be the result of an understaffed claims department, so the sooner they can resolve the issue, the sooner they can get back on track.”
Addressing Talent Shortages
Don and Ray agree that insurers need to start thinking about their talent shortage more strategically. Increasingly, insurers are turning to outsourcing. Often, it starts as a temporary solution to a short-term staffing problem, but in the long run, insurers see the benefits of outsourcing and look at it as a strategic approach to reducing the risk of an unexpected talent shortfall.
As an example, Don shared a story from SALT’s work with a particular client. “We did a project for one of the largest life insurers in the country. They were seeing slightly higher turnover rates than usual, and that left them shorthanded. Surprisingly, they had never looked at outsourcing the claims management function before, but they needed to do something quickly, so they decided to give us a call."
“At the end of the project, they did an analysis to see if the benefits of outsourcing that we’d discussed at the onset of the project were realized. Turns out, they were even better than expected – with more than 70% reduction of onboarding time using our pool of experienced talent. All they needed to do was teach our people to use their systems and processes, and on average, these team members were around 50% more productive than their in-house staff.”
“From a C-Suite perspective, one of the biggest benefits is the agility that outsourcing provides,” added Ray. “Outsourcing lets them staff up a claims or underwriting department in less time, and then scale back just as easily when the rush is over. Outsourcing also transfers the HR risk to us. We do the worrying about staffing, employee concerns and issues, etc. rather than our insurer customers. They pay us a fee, and we take care of the rest.”
Talent Management: The Power to Transform
Insurance companies are in a tough spot. They’re under constant pressure to reduce operating costs, yet customers’ expectations are changing. They want an insurance company that understands their situation and will work with them to process their claims as quickly and painlessly as possible. If they don’t get what they want, they’re quick to change insurers.
Outsourcing your underwriting or claims work isn’t about scaling back or downsizing. It isn’t even all about the bottom line. According to Ray, “It’s about restructuring your business model to increase agility, improve asset utilization, and create a customer experience that is second to none. Right now, insurers that are able to do this are going to create a competitive advantage. As we move into the next era of insurance, an era that will undoubtedly be driven by technology, anything less isn’t going to be good enough. Smart companies are building talent management into their transformation strategies now.”
Need Help Addressing Talent Shortages?
Get in touch with our team to discover how RGAX’s insurance services team can review your current talent management strategy, address challenges and develop a scalable plan for the future.