Soon more claims adjuster jobs will be available than professionals to fill them, leaving insurers scrambling to fill the gap.
- Lori Chordas
- September 2018
- Problem at Hand: After a spate of storms last year, insurers struggled to mobilize enough claims adjusters.
- New Generation: As many of today’s adjusters approach retirement age, the industry is facing a hard sell when it comes to attracting younger generations.
- A Need for Education: College and university risk management and insurance programs do not offer degree programs for claims adjusters. The use of online training programs is one way to attempt to fill the void.
As Hurricane Harvey bore down on Texas in August last year, teams of adjusters mobilized to the cities closest to the storm's expected path of destruction.
Hundreds more made the trek to the damaged cities after the Category 4 storm made landfall. In the weeks and months to follow, even more adjusters were needed to handle the more than 670,000 personal and commercial property insurance claims generated by the mammoth storm.
Harvey, followed by Hurricane Irma a month later, led to a critical shortage of claims adjusters, forcing carriers for the first time to publish their fee schedules to entice adjusters to work for them, said Dave Kaltenbach, owner of 2021 Training, a Texas-based online claims adjuster licensing program.
The hurricanes last year caused billions of dollars in insured losses, but they also drove home a message—that the insurance industry faces a shortage in the ranks of its claims foot soldiers.
Claims adjusters are often among the first on the scene after a catastrophe strikes and play an invaluable role in getting claims processed, people settled and repairs underway.
“A total loss is a devastating experience and people are in shock,” said David Coons, senior vice president at The Jacobson Group, an insurance industry talent search firm. “They need someone to hold their hand through the process and that's an invaluable aspect that adjusters love about their job,” he said.
But the average age of claims adjusters is now over 40. Nearly half of those professionals are expected to retire in the next 15 years, according to The Jacobson Group.
The lack of new talent being drawn into the industry, high burnout rates and the graying of the sector will play a large hand in that.
An anticipated rise in natural catastrophes also will add to the claims adjuster crunch.
Climate change, human activity, environmental mismanagement and variations in resilience and vulnerability are expected to increase claims volatility and the need for more adjusters.
A KPMG survey of more than 300 senior insurance executives found a significant risk that insurers face in connection with hurricanes is a lack of claim handling personnel.
David Coons, The Jacobson Group
"There are exciting, boundless opportunities for adjusters. We just need to keep raising awareness about those opportunities and what those jobs can entail in the future."
Marketing to Millennials
Last year's competitive market for adjusters begs the question: Will there soon be enough adjusters to fill the talent gap and respond to the next round of catastrophes?
Jacobson's Coons isn't so sure. While he said the shortage isn't considered a crisis yet, he expects it could be on the near horizon.
“Certainly at least until we begin encouraging more young talent to move into the industry and consider careers like claims adjusting,” he said.
Millennials are well-suited for those positions.
The young cohort, those born between 1981 and 1997, are tech-savvy, altruistic and desire having a positive impact on others' lives.
“I can't think of a better profession than being an insurance adjuster that encompasses everything that millennials are interested in,” said John Henderson, president of Wickizer & Clutter, a regional independent adjustment firm in Missouri.
However, promoting insurance jobs such as claims as an exciting, life-long career has been a difficult sell. Millennials are instead moving into industries such as technology, health care and finance.
“Claims is rarely the first career choice they think about. So we're going to have to do a better job in recruiting and getting out to college campuses. We need to get our message out there as to what insurance adjusters really do and convince young adults that a claims job isn't just a gig but a true, long-term career,” Henderson said.
Insurers are hoping grassroots efforts such as The Insurance Careers Movement will help to recruit the next generation of claims professionals and industry leaders.
In 2016, more than 600 insurers, agents, brokers, trade associations and industry partners created the cross-industry, multiphased initiative to raise awareness of career opportunities in insurance. Since its launch, each February is now marked as Insurance Careers Month.
Insurers are now filling the claims adjuster talent gap with temporary or interim staff and calling on retirees during peak catastrophe seasons.
“But we have to get more creative in our recruiting efforts. We have to become more outspoken about the value of the position and the rewards people can expect from an adjuster job and what they can bring to it,” said Marianne Petillo, owner of ROM Reinsurance Management Co. and an affiliated partner with J.P. West Insurance.
It's never too early to spread that message.
Rebecca Wheeling, vice president of the National Association of Catastrophe Adjusters, became an adjuster in her mid-30s. However, she wishes she had known about career opportunities in claims at an earlier age.
“What other job offers individuals the opportunity to travel, meet people, explore new areas and help others? Every day adjusters get the opportunity to do that, whether it's estimating damages according to the insured's policy or simply offering a smile to someone in need,” said Wheeling, who is also the CEO and co-founder of Schedule It, an insurtech that increases adjuster productivity by automating the scheduling of inspection appointments for property and casualty claims.
Writing on the Wall
The industry has long been aware of the impending claims adjuster shortage. Yet, many insurers failed to put plans in place to fill the gap.
Now they're left scrambling to change that.
This year claims is the second likeliest area to see an increase in staffing behind technology, according to the 2018 Semi-Annual Insurance Labor Market Study by The Jacobson Group and Ward Group.
“However, claims positions remain moderately difficult to fill, especially because the industry isn't attracting as much new and young talent as we need,” Coons said.
The good news is that demand is driving up salaries. The average annual salary for property and catastrophe claims adjusters nationwide has climbed to $60,000, according to reports.
Insurers' views about the claims functions also are changing. For years the claims department was stigmatized as the undervalued, cost center of an organization, Petillo said.
But the growing use of tools such as drones, satellite imagery and artificial intelligence is breathing new life into claims and changing the way claims are submitted, adjusted and paid.
The effort to attract talent into any industry often begins when people are young and considering their career options, colleges and courses of study.
While there's a growing number of college and university risk management and insurance programs across the nation preparing young people for insurance careers, none offer a degree program in claims adjusting.
Online programs are one way to try to fill the void.
Online learning offers numerous advantages, including no geographic boundaries, said Jon Lyon, an insurance professor at Florida State College at Jacksonville. Also, students can attend classes anytime in a less intimidating environment than in the classroom and can communicate openly with instructors through email and online chats.
FSC offers a state-approved, 40-hour online insurance claims adjuster workforce certification program that trains students to investigate claims, review policy information and write detailed reports. Upon successfully completing the program and passing a final exam, students earn the accredited claims adjuster designation without having to take the state exam.
A high school diploma or GED is the base education required to become a catastrophe adjuster, but some insurance companies prefer that an applicant have an associate's or bachelor's degree. Some states require licensing and others allow adjusters to work under an insurer-held license.
Schools like the Adjuster School and 2021 Training, both of which are accredited by the Texas Department of Insurance, offer online and classroom training courses to prepare and award students with an all-lines adjuster's license. Courses are taught by instructors with years of claims experience.
Along with its pre-licensing program, 2021 Training offers an Xactimate (software for property claims) training program and a practical adjusting program that combines live classroom-style teaching and online instruction to offer students insiders' tips from adjusters in the field.
Insurers often look for more than just a piece of paper. They also want years of industry experience in the field, NACA's Wheeling said.
“That's a challenge for newly licensed and recent grads who lack experience. Our industry needs to build education programs that focus specifically on how to properly handle a claim. Historically, adjusters have learned by mistakes or their peers,” she said.
Adjusting to Change
The insurance industry is faced with a talent shortage driven by increased staffing demands, a growing midlevel talent gap, impending retirements, virtually nonexistent industry unemployment and a shallowing talent pool, according to Jacobson.
By 2020, nearly 400,000 jobs will be available in the industry.
Insurers are slowly adapting to the shortage of claims adjusters.
“We now allow body shops to write auto estimates, and some insurers, like Allstate, allow insureds to take photos of damages that claims reps can use to make estimates,” Florida State College's Lyon said.
Advances like that will continue to evolve.
Technology is shifting the role of claims professionals away from administrative or workflow-related tasks and increasingly toward higher-level claims adjusting and management of customer expectations, according to an EY report.
With that comes new skill set requirements, including enhanced analytical capabilities, the ability to view situations through multiple perspectives, problem solving and teamwork skills, said Emmanuel Manuelidis, corporate vice president of claims and litigation at H.W. Kaufman Group, a Michigan-based specialty insurance organization and parent of Burns & Wilcox, an independent insurance wholesale broker and managing underwriter.
While technology will remain a central part of the claims-adjusting process, so too will the need for human interaction.
“It's been said that claims is where the promise is kept. That will never change,” Jacobson's Coons said.
While technology has helped alleviate some of the things adjusters do, such as using drones instead of having to physically climb on roofs, “the reality is you still need human capital and that's becoming less and less available to us,” Coons said.
NACA's Wheeling, however, isn't as concerned about that as she sees the higher expectations insurers are placing on adjusters.
“We see plenty of people willing to be adjusters and go into the lion's mouth in large events. They're willing to sleep on air mattresses and stay away from their families for months to help others. The challenge is their lack of knowledge and experience,” she said.
While the insurance sector may have gotten off to a late start in preparing for the impending talent gap compared to other industries, “we now realize the true impact of the shortage and we're working more diligently toward bridging the gap,” Coons said.
“There are exciting, boundless opportunities for adjusters. We just need to keep raising awareness about those opportunities and what those jobs can entail in the future,” he said.
The shortage of adjusters will be felt across the insurance industry. Personal lines carriers, who are typically saddled with high claims volumes, will be hardest hit.
Commercial carriers likely won't feel the shortage as sharply, but many are doing their best to maintain strong rosters for years to come.
Zurich North America, for example, has developed a number of recruiting and training initiatives, including an apprenticeship program to attract and draw claims talent into the organization.
The apprenticeship program draws on the success of its parent company's program in Switzerland.
Zurich apprentices enroll in classes at Harper College in Palatine, Illinois to study topics such as insurance and business.
On alternate days, they gain on-the-job training by working at the company's North American headquarters in nearby Schaumburg, Illinois. After two years, apprentices earn an associate's degree from Harper and continue to work at Zurich.
Training remains a struggle in the industry.
For years, many large carriers offered internal claims adjuster training programs.
“Even companies without those programs benefited by waiting for trainees to go through a program and then scooping them up,” said Marianne Petillo, owner of ROM Reinsurance Management Co. and an affiliated partner with J.P. West Insurance.
However, many of those programs have gone by the wayside. Only a few insurers still offer courses or certification programs geared to adjusters.
Zurich Insurance Group (A.M. Best # 086976)
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Lori Chordas is a senior associate editor. She can be reached at firstname.lastname@example.org.