Where Have All the Adjusters Gone?
Introduction
The workers’ compensation industry faces a talent shortage, and companies are struggling to attract and retain claims professionals. This talent shortage impacts many stakeholders along the claims journey, including the administrator, employer, injured or ill employees and their families, providers, and a host of other vendors and representatives (Barnes-Cook, 2021). So, where have all the adjusters gone? There are a number of factors, but the primary contributing factors include employment rates, working age, COVID-19, and the Great Resignation.
Employment Rates
Over the past several decades, the employment rate has been dropping for prime-age US adults. The overall annual employment-to-population dropped from 64.3% in 1999 to 60.4% in 2018. There are many plausible contributing factors like increased disability benefits (SSDI, VADC), higher minimum wages, and increased incarceration rates. For example, Social Security Disability Insurance rates in working-age adults have been on the rise as employment rates fell in recent decades. Other major contributing factors include shifts in the labor market like import competition and the use of automation (Abraham & Kearney, 2020).
Working Age
The working-age population (15-64 years old) plateaued in 2019 before dropping one-tenth of a percentage point in 2020. According to the United States Census Bureau, the decrease was the first time the working-age population shrank in the nation’s history (Grisham, 2020). The major contributing factors to the decline included a slower birthrate, a fall in immigration, a retiring baby boomer generation, and many deaths caused by COVID-19 (Grisham, 2020).
COVID-19 & The Great Resignation
The COVID-19 pandemic triggered unprecedented furloughs and mass layoffs in 2020 to reduce workforce-related expenses. In July and August 2020, 200 senior insurance executives were surveyed on actions and plans for furloughs and layoffs. Participant responses noted that 67% already utilized furloughs, and 68% used layoffs to reduce work-related expenses. In March of 2021, when the virus was declared a pandemic, the unemployment rate was 5.9%. In April 2020, the rate rose to 6.7% before peaking in August 2020 at 7.35% (Pantelimon, Posedaru et. El., 2021).
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