The Jacobson Group and Ward Group conducted an Insurance Labor Market Study, based on interviews with both sides of the insurance market: life/health and property/casualty.

Tech Decisions posed several questions to Greg Jacobson, Co-CEO of The Jacobson Group, on employment trends for the insurance industry and insurance IT departments. His answers are below.

Tech Decisions: Why do you feel insurance performs so well in terms of employment in relation to other businesses?

Greg Jacobson: First, there is a baseline need for insurance, regardless of the short-term economic conditions. Of course, if exposures are not growing or even shrinking, the labor market will be affected. The change in demand for insurance is not typically as dynamic as other industries.

Second, many—but not all—of the efficiencies have already been rung out of the system. Health insurance claims already have an extremely high auto adjudication rate. Commodity P&C products are often underwritten electronically. Therefore, large swings in insurance employment are not going to increase efficiency, but rather decrease opportunities.

Finally, regardless of the returns, the industry is very often awash with capital. Of course there are cycles; but even in this economic downturn, extremely high capital levels—especially in property/casualty—create a need for employees to build for the inevitable turn-around.

TD: Do the 12-month revenue and staffing plans in your report surprise you as being overly ambitious?

GJ: Our study looks at future staffing plans, as well as executed plans. Revenue projections rose by nine percent in the past six months, which suggests a slight overestimate but nothing substantial. Forty-four percent of the companies polled anticipate a hiring increase. I must emphasize that in uncertain economic times, a sizeable portion of the hiring will be done on a temporary basis, so we can expect to see the temporary staffing levels rise first, which is not reflected in Bureau of Labor Statistics reports.

TD: Increases in technology staffing are near the top in the P&C market and second in the life market. What do you take from these numbers?

GJ: After years of holding off on capital spending, companies are upgrading their technology again. A significant growth in hiring and total expenses will occur in this area as organizations begin making massive investments in their technological infrastructures. Further, there seems to be an interest in returning to in-house resources over external approaches.

TD: Technology also costs some people jobs through increased automation. Are we near the end for those types of savings by insurance carriers?

GJ: Twenty-three percent of survey respondents named automation as a reason for reducing staff, making it the number one determinate of staff reductions. However, since the survey's inception in July of 2009, the number of companies citing automation has continued to decrease, suggesting that automation may have reached its peak.

It's also important to note that 53 percent of businesses reported an increase in business volume as the top reason to ramp up staff levels. Even though certain processes can be automated, employers will still require a full staff in other areas to take on heightened volumes and to take advantage of new business opportunities.

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