“Flight risk” is a term that resonates more with bail bondsmen than with claim managers. Nevertheless, flight risk imperils claim operations nowadays. The real assets of insurance companies and claim departments walk out the door at the end of each work day.

Often, those assets are not returning. They are retiring or leaving the business. Insurance claim executives rightly worry about an imminent “brain drain” in claims. A recent Towers Perrin survey of property and casualty claim officers revealed that 82 percent feel that attracting and retaining talent is the top priority for success in the claim industry (“Recruitment a Priority for Claim Officers: Survey,” Business Insurance, 3/24/08).

What are we to do? Interestingly, Towers Perrin urges insurers to embrace new technology, although it does not exactly specify the nature of this “new technology” or how better hardware or software can stem the incipient brain drain among seasoned claim professionals. Pardon the skepticism here. Towers Perrin cites high-level concerns about an exodus of claim expertise. So the solution is … new technology?

Initially, this puzzled me. After some reflection, however, it made sense. It's easier for consultants to sell new technologies than to advocate that management treat claim people better; pay them more; enrich their jobs; create mentoring programs for younger adjusters; or offer attractive career paths. These steps are squishier and take time to implement. They may not involve whiz-bang technology; the high-margin consulting gigs are in IT systems.

Factors Driving the Drain

A claim brain drain stems from the graying of the workforce, job burnout, a sense of narrow career options, and inadequate investment in training and succession. The root cause of the claim brain drain does not primarily lie in technological shortcomings. Even though selling tech solutions may yield higher margins for consultants, technology — by itself — will likely not reverse the claim brain drain.

Admittedly, this exodus is not unique to claims. Other industries face talent succession issues. Still, the claim industry has a bulge of baby boomers on the cusp of retiring. However, today's boomers likely will not retire as early as their parents. One reason is that their 401k's are, in a bear stock market, morphing into 201k's. Another factor is health insurance, as many workers defer retirement until they can qualify for Medicare.

Inflation is another reason to defer retirement. Look at gasoline, or what a pound of hamburger meat cost 30 years ago versus today. “So as long as I am able to work — and people pay me — perhaps it is best if I continue to work, maybe not a 50- to-60 hour week and maybe not even a full 40,” said Kathy Robison, a claim consultant. “Give me some flexibility, and you have my brain for a while longer.”

Some speculate that a way to replenish the ranks of departed adjusters is to tout the intellectual component of claim handling. That is fine but unfortunately, intellectual stimulation does not pay the mortgage, buy groceries, or fill up the SUV's tank with unleaded gasoline.

Further, this implies that other areas of insurance are somehow less “intellectual.” This notion will be a hard sell to underwriters or actuaries, for example. Recent articles note that there is a “dumbing down” of the workforce, a “drone-like” existence that results in upper management believing that a monkey could easily do an adjuster's job. Does this imply that adjusting is so simple that a caveman could do it?

In conjunction with other benefits, however, the intellectual stimulation appeal might work. Standing on its own, however, this plea may have a tough time luring promising candidates into claims. The question remains, “Is the pay, prestige, and advancement potential in the claim field commensurate with the vaunted intellectual stimulation?”

Others seem unconvinced that technology is the answer to the brain drain. Risk Management Consultant David Pilcher believes that new technology is the problem, not the answer. “Individuality and critical thinking, along with dignity, left when claim people were rounded up, stripped of field duties, company cars, and discretionary settlement authority, and then forced into cubicles to stare at computer screens with 'improved' analytics,” he notes. “That's not a career, it's a sentence.”

Unfortunately for many insurers and TPAs, succession planning amounts to keeping the phone number of the local newspaper contact who accepts call-in job ads, or maybe the speed-dial number of a local temp agency. This is hardly a best practice. Because of the imminent brain drain, sage advice in succession planning is “Dig your well before you're thirsty.” The time to identify suitable successors to the seasoned adjusters is not the day that the latter give notice of leaving. By then, you're in too much of a time crunch.

Mentoring and Wikis

Companies can also kick-start formal and ongoing mentoring programs. For example, assign one of the graybeards to a younger claim professional. Require regular meetings and training sessions between the two. Allow time in busy work schedules to accomplish this. Figure out ways to “download” kernels and nuggets of wisdom from the brains of the older virtuosos. Management could foster mentoring through training sessions, capturing knowledge in written form, and developing frequently asked questions (FAQ) manuals that would be available on the office network, and by creating a corporate or office “wiki” on the finer points of claim handling.

A “wiki” is software that allows users to freely create and edit Web page content using any Web browser. If, for example, a claim office employs a crackerjack person who handles motor truck cargo losses, another with surety bond experience, and a third with heavy commercial property experience, then management (perhaps through IT) can create wikis that let the experts record information and garner insights. These are archived and accessible to the entire claim operation and can become a useful learning tool for those still learning the craft.

Like teams in the NFL draft, insurers and TPAs are “on the clock” when it comes to replacing their most seasoned performers. Claim management must compile its own scouting report on young talent, nurture that talent, reward that talent, and incentivize that talent to promote the next generation of claim excellence. When it comes to developing claim expertise for the next generation of adjusters, we should embrace the words of former Washington Redskins football coach George Allen, “The future is now….”

Kevin Quinley is an insurance claim expert and author. He can be reached at kquinley@cox.net. Visit his blog, The Claims Coach, at http://claimscoach.blogspot.com.

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Reversing Imminent Brain Drain

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