Industry Hiring Trends and Evolving Employee Demands

About a year ago, there was a bit of panic in the insurance labor market as carriers spoke of losing employees to rivals that were paying significantly more money. At the same time, the industry was dealing with economic challenges such as unusually high inflation rates. Now that at least some of the dust has settled, where does the labor market stand for claims and the insurance industry?

Jeff Rieder, partner, head of Ward Benchmarking, recently reviewed some 2023 industry data with claims executives at CLM’s Chief Claims Officers Summit (CCO Summit) in Baltimore that shed light on some of the key industry labor trends.

The fallout from the challenges carriers talked about last year has resulted in a continuing rise in people costs, driven by inflation, turnover, and economic uncertainty. The turnover for carriers was 14.2% in 2022, according to data from the 2023 “Ward HR and Employee Benefits Study.” Rieder pointed out the high level of voluntary turnover (11.7%) vs. involuntary (2.6%). However, he said the six-month trailing turnover data he is tracking is down about three points compared to a year ago. The concerns are still there, he noted, but they are dissipating. Interestingly, Rieder pointed out that larger companies showed a lower turnover rate in 2022 (13.2%) than small (13.9%) or mid-size companies (15.6%), which is a reversal of recent trends.

Meanwhile, legislation around the country on the issue of pay parity has complicated the situation for organizations that may have paid a premium to recruit talent from rivals. Some of the pay equity laws proposed or passed in certain states and cities involve disclosure of salary ranges and pay data. 

Rieder noted this means companies in those states or cities must post the pay for any open position, so if a position is posted in New York, an employee in Iowa may see the salary and ask why they can’t get the same pay. Beyond that, though, Rieder said, “What that also means is, if an employee comes to you and says, ‘What’s my pay relative to the pay scale?’ you’re required to provide that information.” Essentially, employees can use this new dynamic to demand raises and drive wages higher. Companies should prepare for this shift, as Rieder added that it is only a matter of time before the pay-parity legislation in states like California, Colorado, and Maryland is enacted elsewhere.

Plans for the Future

Data from Ward and Jacobson Group at the beginning of the year showed that companies expecting revenue growth over the next 12 months was up six points to 79%, and companies expecting to increase full-time employees was down one point to 67%. Rieder said those numbers have come down over this year when looking at the latest data that was only just released. “We’re seeing more organizations holding flat,” he said, with the percentage of companies expecting to keep employee levels stable over next 12 months increasing to close to 30% compared to 23% in the data released at the beginning of 2023. In addition, Rieder said the latest data shows companies expecting to add staff over the next 12 months is about 60%, down from 67% at the beginning of the year.

While all roles within insurance saw a decrease in the likelihood of increases to staff, claims was the number-two function that insurance companies are hiring for, slightly behind technology and just ahead of underwriting. In addition, the likelihood of adding claims staff was only down slightly from 2022, while technology saw a much steeper decline.

Carriers are mostly looking for experience when it comes to claims, with the Q1 2023 Jacobson Group and Ward “Insurance Labor Market Study” showing that 70% of claims employees likely to be added to companies’ payrolls will be experienced, while 30% will be entry-level. Rieder noted, though, that it is still tough to find those experienced claims professionals.

Still, overall, companies are saying it is easier to recruit now compared to a year ago. At the beginning of the year, nearly 25% of companies said their ability to hire talent is moderately or significantly worse compared to the year before. This was down from about 50% in June of last year, Rieder said, and updated data shows that figure dropping to about 16%.

Employee/Employer Dynamics

Employees still have some influence when it comes to the balance of power between employees and employers. As an example of that, Rieder said, “Tell your employees they all have to come to the office five days a week and you’ll have a revolt. But,” he added, “there are very few companies that are doing that.” In fact, 84% of employees at companies that participated in the 2023 Ward “HR and Employee Benefits Study” had a flexible work arrangement that involved either hybrid or permanent work-from-home arrangements.

This tracks with what employees say matters most to them. Aon’s “Global HR Pulse” survey shows 73% of employees value flexible working arrangements, and 72% value work-life balance. Meanwhile, 71% value career development, followed by benefits (68%), compensation (63%), and recognition (59%).