Within the next 25 years, the gap between the supply of workers and the demand in the United States will grow to 35 million, according to a recent seminar presented by Deloitte Touche Tohmatsu. This means that the war for talent is just beginning, the financial service consulting firm warned.
As early as 2010, as baby-boomers approach retirement, there will be an estimated shortfall of 10 million U.S. workers. At the same time, the 35-44 age group will see a decline in its labor force presence, while the over-55 age group will increase. By the century's mid-point, a 47 percent shrinkage in the working-age population is predicted.
The insurance industry will not remain immune to these symptoms of an aging work force. Deloitte predicts that recruiting college graduates and other new talent into the industry will become increasingly difficult. “There is a declining pool of well trained workers,” Deloitte noted. “There is a large number of underwriters and claim adjusters that will need to be recruited in order to meet future employment requirements.”
If left unaddressed, these problems will lead ultimately to a lack of available leaders to fill management ranks, the company cautioned. Therefore, it is essential that insurers devise a skill management strategy. A first step would be building a pipeline of critical talent. This involves understanding which work-force segments are critical to business success. For insurers, those segments would be underwriters, claim adjusters, and sales agents, Deloitte argued.
At the time that the research was conducted, 70 percent of company adjusters were aged 40 or older. While the average age of claim staff increases, the number of professionals sitting for advanced professional designation examinations continues to decrease. In 1992, 52,500 CPCU exams were administered. By 2004, that figure had diminished to 18,000. During the same period, the number of AIC exams given dropped from 16,500 to 11,000.
Meanwhile, the labor demand for adjusters is expected to grow by 15 percent in the next seven years. During the next decade, the industry will need 87,000 hires to fill 260,000 expected adjuster positions in 2012. Deloitte calculates the current number of claim adjusters at 227,000, with an annual attrition based on an estimated annual average turnover rate of 15 to 20 percent, or approximately 27,000.
Investing in the quality of employees can produce a healthy return, Deloitte maintains. Companies that invest in talent management strategies show better financial performance. The stocks of publicly traded companies on Fortune's annual 100 Best Companies to Work For collectively were three times as successful as the S&P 500 and Russell 3000 indices from 1998 to 2004.
In order to successfully weather the employee shortage, insurers need to focus on work force segments that generate disproportionate value, integrate human capital programs to create cohesive talent strategies based on business priorities, and sustain those strategies by improving change management, training, and technology.
Deloitte suggests that the insurance industry invest in new and more aggressive training approaches to deepen skills within underwriting and claim work forces, in order to develop the next generation of leaders. Insurers also need to foster a culture of constant learning and openness to new ideas that will allow them to keep up to date on learning and innovation.
As the shortage becomes more critical, insurers may want to consider employing semi-retired insurance professionals, increasing diversity within work-force segments, creating innovative ways for recruiting college graduates, and upgrading intellectual capital with new knowledge and tools, Deloitte advised.
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