Labor Market Study: 14% of Carriers Plan to Reduce Headcounts

Fourteen percent of insurance companies plan to reduce employee headcounts in the next year, according to numbers from Aon and The Jacobson Group’s latest insurance labor market study.

Jeff Rieder, partner at Aon and head of STG Performance Benchmarking, said this carrier reduction number has increased “significantly” since the initial pandemic recovery. The percentage of companies planning reductions peaked in July 2020, “but we’re almost back to that type of level,” he said.

Greg Jacobson, CEO of The Jacobson Group, explained that the majority of companies that decreased their staff sizes by more than 5% in the past 12 months had exposure to personal lines. Taking a step back, half of companies that reduced staff at all had exposure to personal lines.

“I think that personal lines is driving a lot of … or maybe most of any of the reductions in staff,” he said. “We’re still seeing pretty steady hiring in commercial lines, and, in fact, maybe more hiring than anticipated in the life and health side of the business.”

Aon and The Jacobson Group have conducted the biannual labor market study for 15 years.

The study analyzes current and future labor trends for the insurance industry. The latest survey covered about 293,000 employees that work for insurance companies — a little more than 18% of the total industry. Eighty-three percent of participants work in the property and casualty insurance sphere.

The latest release of the study found that while 79% of insurance companies expect to grow their revenues, just 52% of companies plan to increase staff, and 34% plan to maintain current staffing levels.

Automation is the most common reason that companies plan to reduce headcounts during the next 12 months, the study reported, followed by areas being overstaffed. Many companies are rebalancing portfolios, Rieder explained, and many multi-line P&C companies have pulled back on personal lines operations.

Related: Nationwide Plans 5% Reduction in Employee Headcount

As companies rebalance their portfolios, they’re finding that they may not need the claims policy processing customer service type positions to support declining business. Human resources, finance, information technology are other areas that Rieder said can be consolidated as carriers see more efficiency coming through their business.

Still, both Rieder and Jacobson don’t see the expected reductions tanking the industrywide employment count. Rieder said he thinks many employees in displaced positions will find jobs at other insurance companies. Some may leave for other industries, he said, but he believes “many positions will, particularly if they are related to claims or underwriting or any type of distribution-focused position, will stay in the industry.”

The total number of employees working for insurance companies in the U.S. stands at a little more than 1.6 million. Aon and The Jacobson Group predicted that carrier job growth would flatten in their early 2024 report, and “I think that’s pretty much what we’re seeing,” Jacobson said.

Zooming out beyond carriers and to a total industry view that includes distribution, however, reveals a different story. In the past year, the industry has added nearly 42,000 jobs, Jacobson said, to reach a total employment headcount of 3.025 million.

This is the first year that the number has passed the three million mark.

“Insurance carrier employment is kind of steadying out, but we’re not seeing a slowdown in the total growth of the industry overall,” Jacobson said.

Other Notable Numbers

• Sixty-four percent of small insurance companies plan to add staff during the next year. This is 12 points and 23 points higher than medium-size companies, respectively.
• Seventy-nine percent of carriers expect to grow their revenue during the next 12 months. This is two points higher than what was reported in the previous version of the survey, recorded in January.
• During the next six months, 72% of companies expect most employees to work a hybrid schedule. After the next six months, 6% are expecting to change their approach to require more in-office work. Currently, 4% of carriers require daily in-office work.
• Underwriting, claims and technology roles are expected to have the greatest growth during the next 12 months. Actuarial, executive and analytics positions were reported to be the most difficult to fill.
• As more than half of insurers plan to hire in the next year, industry turnover has slightly slowed. The Jacobson Group and Aon report that recruiting is likely to remain “relatively difficult throughout the remainder of the year and into 2025.”

Topics Carriers