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Sage and Time

Use an elixir of on-staff and outsourced veterans to minimize the effects of aging.

June 02, 2011 Photo
Is your claims staff wise beyond its years or just experiencing the signs of aging? It's a question the insurance industry needs to ask itself, especially as its talent pool of baby boomers moves into retirement.

The insurance industry in general, and the insurance carrier segment in particular, is getting hit with a "brain drain." Baby boomer retirements are starting in large numbers in what's expected to be a sustained wave lasting decades. Half of those working in the industry today will retire during the next 10 years, and the fastest-growing portion of the industry workforce is over age 60, according to research from the National Alliance Research Academy.

There's a silver lining, though: Many of those who are retiring are not yet ready for a full departure; often, they would like to keep one foot in the industry. They cite reasons that include financial enhancement, the desire to keep active, maintaining professional connections, and sheer love of the job. Some are relocating to more clement climates or to be closer to grandchildren, but they would like to work part-time. Most hope to work remotely, if possible, although many are pleased to frequent the office. Unlike prior generations, they have the technology know-how to make this happen.

The availability of this modified retirement paradigm creates a new option for insurance staffing: domestic remote outsourcing. These "vintage employees" can work on a full-time, part-time or project basis. Many have decades of experience at U.S. insurance carriers, agencies and brokerages. Since these qualified, trained, experienced insurance industry retirees are based in the United States, the usual outsourcing hurdles of business culture, industry acumen, and language are substantially reduced.

The Cost Advantages
The high costs that employers pay to attract employees should be pushing executives to look at new and different ways to bring on qualified talent. But two steps have to be taken: (1) A recognition of the problem and the solution has to be made at the highest corporate levels; and (2) HR executives must be willing to break out of traditional hiring and placement patterns.

In the traditional hunt-and-hire method, there are significant costs associated with young employees—benefits, mentoring and training, to name a few.

Those expenditures may well be worth making to embed a new generation of professionals, but while young hires move up the learning curve, a claims organization must retain its institutional knowledge and culture in order to pass it on to the next generation. It also must continue providing top-notch service characteristic of a veteran force. That's where outsourcing to transitional retirees can make a quality difference.

It's easy to think that, with unemployment running at 9.5% or so, a line of candidates would form for every insurance job, but it's just not so. There are simply not enough qualified applicants. The good news is that those insurance carriers that adjust to the new demography and sociology of the workplace will outpace their peers in attracting skilled help. Baby boomers generally are equipped with the technology and communications experience that allow them to work remotely, either as an independent or as part of an outsourcing organization.
For the employer, this type of arrangement can convert corporate-staff fixed costs (salary/benefits, real estate, and other employee costs) to variable costs (contracting fees). Typically, the employer also faces less concern about age discrimination and benefits issues as compared with a traditional employee relationship.

Getting the Recipe Right
How do you find retired or soon-to-retire employees who want to fill your available positions? So far, traditional employment agencies and recruiters have not tapped this market. You might find a potential contractor through word of mouth or via social/business networking websites, but none of those can yield a guaranteed hit or suffice as a standard employment search method. An alternative is to find someone through an employee-broker that specializes in recruiting and screening retirees for the insurance industry. This is a nascent niche that has gathered steam over the past year, since its development in spring of 2010, and it may offer a more reliable and easily accessible source of expertise and maturity than traditional employment or temp firms.

If you hire a person on an independent, individual basis, contracting issues can be complicated. Not only do pay and workers' comp have to be considered, but a method would have to be established to track work deliverables, ensure confidentiality and data security, and determine who buys and insures technology hardware and software.

A big hurdle is that hiring a retired employee to work remotely requires a new model of work that is not yet established or settled; thus, in-house counsel may see risks in this type of contracting. A workaround is to use a third-party firm that would contract with your company to provide the worker. That individual would then be an employee of the third-party firm, which would handle pay, benefits, workers' compensation, job reviews and related issues. Your company would pay the firm a fee for the worker's time and efforts—much like you would for a traditional consultant or temporary worker. The upside for your company is you get insurance-specific, experienced contractors to perform needed claims work on a remote, outsourced basis, but you retain the flexibility to end or extend the relationship based on results and effectiveness.
Employers are typically concerned with technology, communications and workflow in these relationships. For example, a recommended remote worker may not have experience with the company's specific processes. That has been overcome easily by using a series of checklists provided by the employer. On the communications and database fronts, insurers often use virtual private networks, known by their acronym VPN, to allow remote, secure online access to the system.

Managers will need to adapt to supervising workers who operate remotely—although claims executives actually are a step ahead of many other leaders in the insurance industry. They are accustomed to sending employees into disaster zones and having them work remotely to assess damage and process claims. Secure access to e-mail and database systems is fairly standard for claims departments, and new smartphone applications suggest that even greater off-site interface and productivity is around the corner.

Can claims executives, as people managers, turn these macroeconomic, sociological and demographic changes to their advantage? The smartest ones will.
Sharon Emek, Ph.D., is president and CEO of Work At Home Vintage Employees LLC (WAHVE), a domestic remote staffing company (www.WAHVE.com) that works exclusively with insurance firms.
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