The Talent Shortage: Claims Professionals Weigh In

Firms looking to attract and retain claims talent would do well to explore the potential of formal onboarding and continuing professional development programs.

By: MTI America | August 7, 2023

The insurance industry faces a talent shortage, and companies are struggling to attract and retain claims professionals. In this article, we’ll take a quick look at how the industry got here and, most importantly, dive into the invaluable feedback collected from 140 claims professionals in the industry’s largest scholarly exploratory study focused on workers’ compensation.

Contributing Factors Behind the Talent Shortage

Nikki Jackson, MBA, CPCU, ARM, CDMS, Vice President of Strategy and Marketing at MTI

There are several factors behind the talent shortage itself, but the primary contributing factors include employment rates, working age, COVID-19 and the Great Resignation.

Over the past several decades, the employment rate for prime-age U.S. adults has been dropping, from 64.3% in 1999 to 60.4% in 2018. There are many plausible contributing factors for this, like increased disability benefits (SSDI, VADC), higher minimum wages and increased incarceration rates, as well as shifts in the labor market like import competition and the use of automation.

In addition, the working-age population (15 to 64 years old) decreased in 2020 for the first time in the nation’s history. The major contributing factors to this decline, according to Nikki Jackson, vice president of strategy and marketing at MTI, included a slower birthrate, a fall in immigration, a retiring baby boomer generation and the many deaths caused by COVID-19.

Lastly, the COVID-19 pandemic triggered unprecedented furloughs and mass layoffs to reduce workforce-related expenses in 2020, while the Great Resignation phenomenon disrupted the talent pool as a staggering 2.9% of the U.S. population quit their jobs.

140 Claims Professionals Provide Retention Feedback

Understanding the talent shortage is very real, we set out to understand a) how to attract new talent to the insurance industry, and b) how to retain claims professionals. MTI America recently released a summary of the study’s focus on talent recruitment, so we’ll focus on the claims professional portion of the study.

Three questions guided the investigation:

1. How do claims professionals value the importance of a formal onboarding training program that teaches the new hire how to set up and manage a workers’ compensation claim from the first report to closure?

Of the 140 workers’ compensation claims professionals that participated in this study, over 90% felt that a formal onboarding program was somewhat or extremely important. Some participants (less than 9%) were neutral about the topic, but none of the participants felt formal onboarding was ‘somewhat not important’ or ‘not important at all.’

2. Do claims professionals have higher loyalty if employers offer professional development programs?

When asked about the importance of professional development programs, over 90% of the 140 claims professionals surveyed indicated that professional development programs were somewhat or extremely important. Over half of the participants had 10 or more years of claims experience, and 20% had six to nine years of claims experience. When asked “If engaged in a professional development program, how does/did it impact your loyalty to your employer?” almost 90% indicated a greater degree of loyalty to their employer.

3. When reflecting on their career, do claims professionals feel their tenure is impacted by formal onboarding and professional development programs?

The claims professionals in this study were asked if formal onboarding and professional development programs impacted their tenure, and 60% of participants said “Yes, I stayed with my employer longer.” Seventeen percent felt formal onboarding and professional development programs had no impact, and the remainder (23%) responded, “It is complicated; yes and no.”

Recommendations

“Workers’ compensation claims professionals have a unique set of employee-retention strategies, which should include formal onboarding and professional development programs,” said Jackson. “Traditional retention strategies like recognition, rewards, compensation, vacation and work-life balance are all important, but claims professionals have additional factors such as caseloads, jurisdictions handled, client service instructions etc. that require a different set of retention strategy considerations.”

As is evident from this study, formal onboarding programs are important to workers’ compensation claims professionals and should aim to teach the new hire how to set up and manage a claim from the first report of injury to claim closure.

A common onboarding experience starts on the day of the employment offer and continues for 24 to 54 weeks after the employee’s start date, with the first week or two being the most training-intensive. Many large carriers and TPAs offer entry-level claims professional roles. In this role, the new hire may receive organizational training for three to five days before attending a two-week “claims college.” It’s important to acknowledge that experienced claims professionals also require formal onboarding to help them become acclimated with an organization and their role.

In addition to onboarding, this study demonstrated that claims professionals value professional development programs and feel an increased sense of loyalty when involved in such programs. These professional development programs should focus on improving performance in their current roles and prepare the claims professional for future roles within the organization.

After the professional development program, a survey should be distributed to collect feedback. The feedback may be used during performance discussions and coaching sessions and to evaluate overall morale and loyalty.

Encouraging claims professionals to secure designations and providing the support to secure the same is also an excellent way to increase retention.

Findings Summary

The claims professional survey found a formal onboarding program focused on how to set up a claim from the first report of injury to claim closure was an important retention strategy. The claims professional survey also found that professional development programs resulted in higher employee loyalty.

“When combined, formal onboarding and professional development programs resulted in a longer tenure with the employer,” Jackson explained. “Organizations that implement or develop the attraction and retention strategies found important in this study will have a higher likelihood of combating the talent shortage in the workers’ compensation industry.”

Future Research

During the literature review, it was evident that there was very limited academic research exploring the impacts of formal onboarding programs for claims professionals in the workers’ compensation industry. It would be helpful for claims organizations to share their new hire onboarding data with the industry to establish a set of benchmarks. Internally, organizations should collect feedback from their new hires at determined intervals after the employee’s start date (i.e. at 30, 60 and 90 days) to see what was done well and identify areas of opportunity during the onboarding process.

The academic research exploring the impacts of professional development programs for claims professionals in the workers’ compensation industry was also very limited during the literature review for this study. As with onboarding, it would be helpful for claims organizations to share their professional development data with the industry to establish a set of benchmarks. Employers are also encouraged to survey claims professionals to see what types of professional development categories interest them the most. It would prove beneficial for organizations to secure feedback from those who have completed professional development programs internally to discover areas of excellence and opportunity.

Lastly, members of the workers’ compensation industry should develop their partnerships with schools who offer risk and insurance training and/or degrees, as well as search for talent in untapped talent pools. For example, organizations should stop competing for talent and broaden their talent pools to include individuals from other industries, veterans, retired police officers, individuals with disabilities, those who are returning to the workforce after caring for children, and so on.

To learn more, please visit: https://www.mtiamerica.com.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with MTI America. The editorial staff of Risk & Insurance had no role in its preparation.

For more than 25 years, MTI America (www.mtiamerica.com) provides integrated health solutions serving the workers’ compensation industry. Through our knowledgeable, multilingual staff and in-house RN clinical oversight, we deliver the solutions our customer’s need, while ensuring compliance with legal and regulatory requirements. We provide post-injury to return to work medical services from Physical Therapy, Transport & Translation to Catastrophic & Complex Home Care, Medical Equipment and Diagnostics to Dental and Hearing programs. At MTI we don’t just talk exceptional service, we deliver on those values every day.

How a Carrier Partner Can Help Navigate a Challenging Management and Professional Liability Market

A combination of a choppy economy with increased claims frequency and severity could lead to rate increases in the Management & Professional Liability market.

Rates in the management & professional liability (M&PL) markets were on the rise from 2020 to early 2023 and are now falling rapidly.

M&PL divisions manage a number of different insurance products including management liability (D&O), professional liability (E&O), employment practices liability (EPL), fiduciary liability policies, cyber, etc. In 2023 and into 2024, a big influence on the marketplace has been the extremely aggressive and softening public company D&O market.

Though these rates have been softening for management liability, that may change over the next few years as companies continue to adjust their business models motivated by economic uncertainty. Layoffs were up nearly 200% last year, Forbes reported, even as other recession indicators, like the inflation rate, improved. A recession could lead to an increased claim activity and force carriers to raise rates.

“Whenever there is a meaningful downturn in the economy, we tend to see claim frequency pop up,” said George Schalick, Jr., senior vice president of the Management and Professional Liability Division at Philadelphia Insurance Companies (PHLY).

With continued fiscal uncertainty, businesses potentially already burdened with pandemic-related claims should seek a carrier with a long history in M&PL products. They will provide much-needed risk management guidance and be better positioned to support their insureds during market fluctuations.

Why Insureds Might See an Uptick in M&PL Claims

George Schalick, Jr., Senior Vice President of the Management and Professional Liability Division, Philadelphia Insurance Companies

The current soft market might come as a bit of a surprise as it does not track with previous underwriting cycles and economic conditions. Afterall, many privately held and non-profit organizations struggled during the early days of the pandemic with shutdowns and rapidly declining revenues. But the Government assistance programs, like the Paycheck Protection Program loans, helped keep many afloat during the tough times.

“During COVID many organizations stopped doing business until they were able to sort out all of the health and safety challenges,” Schalick said. “They were forced to lock down, but then all the government assistance programs allowed them to keep people employed. The increased volume of claims we anticipated we would see coming from the lockdowns and restrictions that were imposed upon businesses in the U.S. didn’t manifest at first.”

“Just because there wasn’t an onslaught of reported claims at the beginning of the pandemic, doesn’t mean the circumstances that would give rise to a claim being reported didn’t occur. Courts and the judicial system were closed or slowed and now that they are back open, we’re starting to see the circumstances that occurred during the COVID lockdowns becoming claims today,” Schalick said. “Litigation is progressing.”

Added to the delayed pandemic litigation is a concern over newer claims that might be filed as the country inches toward an economic downturn. Though a recession was avoided in 2023, experts think a soft dip could occur in 2024, with 76% of economists saying there’s a 50% or less chance of an economic downturn this year — that almost always results in more management liability claims.

“During the Great Recession in 2008, we saw an almost immediate spike in claims because of the economic conditions and the pressure it placed on organizations. They were making personnel changes with significant belt tightening almost immediately.” Schalick said.

What’s in Store for M&PL Policy Rates in 2024?

Despite an uptick in claims and increased economic uncertainty, management liability rates haven’t increased, resulting in market-wide pricing levels that may not meet the increased pressure of rising settlements and jury verdicts.

“Rates are going the other direction and settlement values are not falling,” Schalick said.

The mismatch between rates, claim frequency and severity is, in part, because carriers experiencing the dramatic soft market in the public D&O market are seeking premium gain in the private and non-profit market.

“In the public company market, the rates have been decreasing significantly. The rates were increasing in the private, not-for-profit market, and rightfully so, but there’s a desire to supplement overall mid-size D&O for carriers who also write private not-for-profit, and they see that as an opportunity to aggregate premium,” Schalick said. “So the always competitive landscape in the private, not-for-profit market has dramatically increased in the last 18 to 24 months.”

Still, companies of all sizes and types should be concerned about management liability rates in the future. Legal system abuse is resulting in increases in both the amount of litigation and the size of verdicts plaintiffs are receiving.

Certain areas of the country are particularly vulnerable to this type of legal system abuse. As a result, insureds in these localities are likely to be vulnerable to rate increases.

“The environment is so positive for the plaintiff that forces premium increases so carriers are able to stay in that market long term,” Schalick said.

Why a Tenured Carrier Partner Can Help Insureds Navigate An Uncertain Market

It’s clear that insureds are facing an uncertain M&PL market over the next few years. Fortunately, carriers with a long history in the M&PL space will be there to offer stability.

Philadelphia Insurance Companies has been supporting this market for 35 years. PHLY is committed to offering long-term rate stability, even as economic and claims trends start to push premiums upwards. They have an appetite for all sorts of companies, large and small, for-profit and nonprofit alike.

“We’ve been at this game for a long time and are one of the most tenured underwriters in this space,” Schalick said. “We like to stay very consistent.”

PHLY has worked with both for-profit and non-profit on management liability policies. With dedicated M&PL teams throughout the company’s 13 regions, PHLY provides the support agents and brokers are looking for on behalf of their clients. The teams know their regions well and can respond to local trends. They’re also dedicated to making the renewal process as easy as possible for their partners and policyholders.

“We have real confidence in our results, so we focus a lot on making the renewal experience as painless as possible for all agents and insureds,” Schalick said.

The company is also investing in tools to help insureds avoid losses. Earlier this year, they launched a new online risk management platform, PHLYGateway, which offers resources for insureds on how to create an employee handbook and trainings on issues such as recognizing workplace sexual harassment and discrimination.

If insureds have questions, they can consult a Best Practices Help Line, provided via the platform. That way, they can get on the spot risk management guidance to help them prevent claims.

To learn more, visit: https://www.phly.com/mplDivision/managementLiability/default.aspx.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Philadelphia Insurance Companies. The editorial staff of Risk & Insurance had no role in its preparation.

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Sponsored: MTI America

The Talent Shortage: Claims Professionals Weigh In

Contributing Factors Behind the Talent Shortage

140 Claims Professionals Provide Retention Feedback

Recommendations

Findings Summary

Future Research

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