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Study: Insurers Pessimistic On Revenue Growth, More Likely To Trim Workforces

Empty highway
Jeff Chiu
With most states under stay-at-home orders from governors, traffic was down almost everywhere this spring and early summer, and that meant lower crash rates and fewer insurance claims. As a result, many auto insurance companies cut rates or sent checks.

As COVID-19 continues to hang over the economy, more insurance companies say they’re pessimistic about revenue growth and likely to shed employees in the next year, according to a new labor market study.

Around 17% of property-casualty insurers (and 20% of large insurers) say they plan to decrease their full-time staff over the next 12 months; that is up from 8% in January before COVID-19 hit, according to the survey. And, that 17% figure is the highest figure reported in the insurance labor market study since 2012.

Those companies planning to shed employees expect it to be less than 4% of their total workforce. The most common reasons cited for decreasing staff are to right-size overstaffed departments, anticipated decreases in business volume, automation improvement that requires fewer staff, and reorganization.

Meanwhile, just 58% of insurers expect to grow revenue over the next year, down from 77% in January. Large insurers are slightly more optimistic about revenue growth than the industry at large (73% vs. 58%), according to the survey.

As in other industries, insurers are facing a lot of uncertainty thanks to COVID-19. Auto insurers already have sent billions back to their customers, who are driving (and crashing) a lot less. Insurers also are facing lawsuits over business interruption claims, and workers’ compensation carriers are likely to see many effects, too.

Meanwhile, those insurers that are looking to hire continue to face a very competitive environment for finding the right talent, according to the survey, conducted twice a year by the Chicago-based The Jacobson Group and Ward, part of Aon.

Recruiting difficulty has not eased and in fact has increased slightly, the survey found. Actuarial, technology, and analytics positions are the most difficult positions to fill.

There are around 252,000 open positions in the finance and insurance sector, Jacobson and Aon reported.

“There’s been a pause, but not necessarily a change in direction, at a lot of companies, and there are still a significant number of open jobs in the industry,” said Greg Jacobson, CEO at The Jacobson Group.

Insurers also report encountering more candidates who are unwilling to relocate, or take the risk of changing jobs—being the “last one in, first one out”—during a pandemic.

“It’ll be really interesting to see how it evolves over the next 6 to 12 months, with virtual recruiting and onboarding for those types of positions,” said Jeffrey Rieder, partner and head of Ward, a benchmarking firm that’s part of Aon.

Bloomington’s economy relies heavily on the finance and insurance industry, serving as the headquarters for both State Farm and Country Financial.

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Ryan Denham is the digital content director for WGLT.
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