The Insurance Industry's High Turnover: What's The Real Reason?

The insurance industry is currently experiencing high employee turnover, with a rate of 12-15%, up from 8-9% in the past decade. This trend is attributed to various factors, including burnout, digital transformation, aging employees, and the difficulty of hiring top talent. Carriers must focus on improving retention and providing comprehensive health benefits to support employee health and well-being. Additionally, the transition to digital and new ways of working during the pandemic has emphasized the importance of flexibility, positive relationships, and modern workplace values. The high turnover leads to substantial costs, including recruitment fees, training expenses, and lost income. To address these challenges, companies need creative tech solutions and a strong company culture that promotes employee satisfaction and growth.

High staff turnover affects the bottom line

The high turnover rate in the insurance industry can also lead to increased unemployment and worker's compensation claims, which can impact premiums and result in more lost income and missed opportunities. The training costs for new employees are also a significant expense, as the industry transitions to digital and new ways of working, requiring upskilling and reskilling of employees.

The difficulty of hiring top talent and the time and resources required to upskill current employees can lead to understaffed teams and increased employee churn. This can create a cycle where companies are constantly playing catch-up, unable to retain employees and struggling to fill vacancies.

The high turnover rate in the insurance industry can also impact sales and revenue. When employees leave before the company can fully benefit from the training provided, it costs the company money. Additionally, when employees leave to seek higher salaries, companies may need to negotiate and offer higher pay to retain talent, impacting their bottom line.

To mitigate the effects of high staff turnover on their bottom line, insurance companies need to focus on improving retention rates and creating a strong company culture. This includes offering comprehensive health benefits, promoting employee well-being, and providing opportunities for job advancement and positive interpersonal relationships.

The insurance industry is struggling to hire new talent

The insurance industry is facing challenges in attracting and retaining talent, resulting in a talent gap and high employee turnover. Several factors contribute to this phenomenon. Firstly, the industry has been undergoing a digital transformation, and employees need to reskill to adapt to new ways of working. This transition has also solidified the importance of flexibility, good relationships with colleagues and supervisors, and modern workplace values such as diversity, inclusion, and environmental consciousness.

Secondly, insurance employees often face burnout due to long hours and frequent stressful events. This, coupled with the difficulty of hiring top talent and upskilling current staff, leads to understaffed teams and increased employee churn. Carriers must address these issues to retain employees and avoid high voluntary turnover rates.

Additionally, the insurance industry is facing a talent shortage in a candidate-driven market. According to a Deloitte survey, 43% of insurance talent employees find it increasingly challenging to identify skilled candidates in various functional areas, including claims. This challenge is further exacerbated by the aging workforce, creating gaps that are difficult to fill.

Furthermore, the insurance industry's unique nature, particularly in sales roles, requires a specific mindset and skill set. Effective screening and hiring practices are essential to ensure new hires possess the necessary attitudes and abilities to succeed in the insurance sector. Thorough screening can help identify candidates who can adapt to the work environment, reducing potential turnover.

To address these challenges, insurance companies must focus on improving retention and training efforts. This includes providing comprehensive health benefits to support employee well-being and promoting a strong company culture that fosters connections between employees and the company's mission. Carriers should also explore creative tech solutions and invest in employee training to adapt to the industry's evolving landscape and projected growth.

Burnout and the need to reskill contribute to high turnover

Burnout and the need to reskill are significant contributors to the high turnover in the insurance industry. Insurance employees face long hours, frequent stressful events, and the challenge of adapting to new technologies and processes. This leads to high stress levels and burnout, causing employees to seek better opportunities or leave the industry altogether.

A study by Canada Life found that insurance was among the top five industries with burnout rates above the national average, with 39% of insurance professionals experiencing burnout. The pandemic has also played a role, with the transition to digital ways of working and new workplace values such as diversity and inclusion, environmental consciousness, and flexible work arrangements.

Additionally, the insurance industry is undergoing a digital transformation, and employees need to reskill to stay relevant. According to a PwC survey, 39% of insurance professionals believe their job will become obsolete within five years. Insurers need to invest in training for advanced technological skills like data analysis, machine learning, and cybersecurity. McKinsey estimates that the demand for strong technological skills in the insurance industry will increase by 55% by 2030.

The cost of replacing employees is high, with external hiring being costly and difficult. Successful reskilling, on the other hand, is a more cost-effective solution, costing less than 10% of a role's salary. However, the insurance industry has been slow to adapt its training processes to virtual environments, and legal review requirements can delay course development, further complicating the rapid development needed to upskill employees.

To address these challenges, insurance companies must focus on preventing burnout, providing support for their employees, and creating a resilient organization. This includes promoting work-life balance, offering flexible work arrangements, and fostering open communication. Additionally, insurers need to prioritize talent strategy alongside business strategy, investing in rigorous learning and development (L&D) infrastructure, and incorporating digital and on-the-job learning. By addressing burnout and the need for reskilling, insurance companies can improve retention and reduce the high turnover rates they are currently experiencing.

High turnover impacts workers' compensation claims and premiums

High employee turnover in the insurance industry has been linked to several factors, including burnout, the need for digital reskilling, aging employees, and a challenging labour market. As companies grapple with these issues, they also face the financial implications of high turnover rates, which extend beyond the loss of talent.

One significant impact of high turnover in the insurance industry is the correlation with increased workers' compensation claims. As turnover rates rise, so too can the number of claims, which can adversely affect a company's experience rating. This, in turn, leads to higher premiums, resulting in increased costs for businesses. The higher number of claims can also be attributed to the increased risk associated with a high turnover rate. Insurers interpret high turnover as an indicator of a larger client base or more extensive contracts, which inherently carry greater risk. Consequently, businesses with high turnover rates may find themselves exposed to higher claims and increased premiums.

The financial consequences of high turnover rates in the insurance industry are not limited to workers' compensation claims and premiums. There are also direct costs associated with recruitment, such as advertising, agency fees, and the time spent on interviewing and screening candidates. Furthermore, the loss of talent due to high turnover can result in missed opportunities and hinder a company's ability to capitalise on rising turnover, defined as the gross amount of money a business generates before expenses and taxes.

To mitigate the impacts of high turnover on workers' compensation claims and premiums, companies can focus on improving employee retention. This can be achieved through competitive wages, targeted benefits, and the creation of a positive work environment. Offering flexible work arrangements, providing clear internal career paths, and fostering good relationships between coworkers and supervisors can also contribute to reducing turnover rates. By addressing the underlying factors contributing to high turnover, insurance companies can alleviate the financial burden associated with workers' compensation claims and premiums.

The insurance industry requires a specific mindset, and hiring the wrong people leads to higher turnover

The insurance industry has been undergoing a transition to digital and new ways of working, which has brought to light the importance of flexibility and good relationships with colleagues and supervisors. The industry has also been facing a challenging hiring landscape, with almost half of companies believing that hiring talent has become more difficult than in the previous year.

The insurance industry requires a specific mindset, especially if new hires will be involved in selling. It is crucial to screen applicants thoroughly to ensure they possess the necessary attitudes and skill sets for the role and the company. Hiring individuals who can adapt to the work environment can lead to lower turnover rates. Providing opportunities for career advancement, such as promotions to management, can also reduce turnover as employees are less likely to leave for lateral moves.

Burnout is a significant issue in the insurance industry, with employees facing long hours and frequent stressful events. This, coupled with the challenge of hiring top talent and upskilling current employees, leads to understaffing and, consequently, higher employee churn. Carriers must focus on improving retention and training efforts to prevent high voluntary turnover rates.

To address these issues, insurance companies should prioritize building a strong company culture that fosters connections between employees and the company's mission. Creating a positive environment for interpersonal relationships and offering comprehensive health benefits to support employee well-being can also help reduce turnover.

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