Salary Survey 2011: Along for the Bumpy Ride

After all, the "Great Recession" has inflicted more harm to the nation than just cyclical job loss and stifled—if not paralyzed—consumer spending. It has created meandering fissures in the foundation of modern-day business operations.  Emphasizing the residual effects of the slump, a chief economist for IHS Global Insight recently reported that "more jobs were lost in [this] recession, which officially ended in June 2009, than in the previous four recessions combined."

Moreover, recent indicators of financial feebleness have led private economists to elevate the anticipated unemployment rate for 2012. The median forecast for unemployment during the next presidential election, for example, is projected at 8.5 percent, according to the 51 economists Bloomberg News surveyed in August 2011. That is a steep mountain to climb. Our workforce lost millions of jobs, and that represents millions of positions either eliminated altogether or replaced with a fraction of the previous capacity. For a legion of hardworking claims professionals, a record-setting year for national catastrophes has magnified the stressors associated with the rash of staff cuts and waning resources.

It is also important to consider these changes in the overall global context: Global catastrophes during the first half of the year has already made 2011 the costliest year on record with respect to economic losses. According to Munich Re, a total of 355 events occurred, equating to $265 billion in loss. In the U.S. specifically, there were 100 events causing more than $18 billion in losses. Earlier in the year, I.I.I.'s Dr. Hartwig noted that three events that transpired during the first six months of the year were added to the list of the 16 costliest insured world disasters.

Keep in mind that these numbers do not factor in damages inflicted by Hurricane Irene or the wildfires that burned through large swaths of Arizona, New Mexico, and, most recently, Texas. (At press time, the blazes in Austin had not yet been fully extinguished).

Catastrophic Thinking
Combined with a pervasive sense of resentment in being asked to do more with less, sans explicit accolades has shifted the psyche of many claims professionals in not-so-subtle ways, since the 2010 salary survey. When asked whether they would recommend the profession to others, 78 percent of survey respondents rendered an enthusiastic "yes." Just one year later, however, the response was overwhelmingly lackluster, as comment after comment rolled in about "exploding responsibilities" and "hiring freezes, even though positions have been cut and workloads have never been higher."

A 50-year old independent adjuster making $56,000 annually called the profession "extremely stressful and challenging, yet rewarding in terms of resolving claims in a timely manner for both the policyholder and carrier."

Although one could argue this sort of predicament—striking a balance between workload, quality and contentment—is a reality for all industries now, the claims realm carries the added burden of showing poise in times of extreme distress. This means maintaining a certain level of detachment. It also means staying calm and consoling frazzled policyholders when the adjusters themselves may be fretting about where to find lodging for the night. Before you become too flustered, hang in there. Keep reading. Sure, the slew of unfortunate twists and turns in the form of tornadoes, hurricanes, and earthquakes have created an influx of claims and hardships but they also emphasize the necessity and value of this noble profession.

So to the more than 500 claims professionals—from independents to insurance company vice presidents and everyone in between—who judiciously completed the 21st iteration of our annual salary survey, we offer you our sincere gratitude. By showing us how you are faring in today's climate, from on-the-job practicalities, constraints, and pockets for improvement, to sharing mechanisms for growth, you are acting as advocates for your peers and your country. You are also acting as instrumental allies in ensuring that the industry stands on solid ground.

A Battle Cry Is Heard
On many levels, this year's results represented a battle cry for America's workforce. We've touched on the stubbornly high unemployment rate. During the waning days of summer, there was no net job creation. A Gallup poll alluded to a "1 in 2 chance that an American believes the country is still in a recession." Meanwhile, the National Bureau of Economic Research released findings that "47 percent of Americans polled said their household could not come up with $2,000 in 30 days."  LPS Applied Analytics further emphasized the strain on communities and businesses, noting "working at the current rate, it would take 61 years for lenders in New York State to foreclose on all houses currently in default."

Indeed, as of September 2011, as many as one in four households face foreclosure and/or are behind in making mortgage payments. As such, going home is arguably more difficult than going to work for some.

One survey respondent, an insurance company senior vice president with 32 years in the claims industry, acknowledged shattered hope that the recession had subsided and expressed concern about the predicted "double dip." He noted that the claims industry, however, seems to be faring relatively well in light of "all of that" and that the intellectual perks should not be underestimated:

"The insurance industry in general and the claims-handling [arena] are not as stable as they once were, but it is still interesting, challenging, and satisfying as a career choice."

A 27-year industry veteran agreed that certain positives of a career in claims remain (aside from a paycheck):

"Specialty lines claims management is never boring," said an insurance carrier senior vice president making $310,000 annually. "Oftentimes it challenges even the most experienced professional's technical capabilities. I have not seen a great influx of young professionals yet, but I do believe there are opportunities for those interested in developing a rewarding career."  

Unbearable Workloads? Rookies Say "No Thanks"
He did not elaborate as to possible reasons young professionals are shying away from the profession, but a claims manager of an independent adjusting firm charged that a lack of training opportunities and considerable workloads may deter those who enter the industry.

"I feel that an overall lack of training in the last 20 years has resulted in far fewer 'up and comers,'" said the 49-year-old woman who resides in Illinois. "The workload is very heavy, and the new people are burned out in a matter of one to five years. They get discouraged and choose to leave the industry. The expectations are higher than they have ever been."

"Accountants and financial people now run insurance companies," she continued. "Those folks have rarely worked as [P&C] underwriters or claims adjusters and therefore do not understand the business fully.

"Even though technology has been embraced and leveraged to cut costs and staff, it has not lived up to its expectations," she said. "That is because adjusters now spend 30 percent of their time handling claims and adding value, and the remaining 70 percent telling the company what they just did.  I believe it will get worse before it gets better though. The soft market has persisted; the economy remains tough. As long as the businesses that need insurance are down, insurance will be down."

The horror stories were plentiful and persistent. Close to 70 percent of this year's respondents said their workloads had "stayed about the same," but I gathered that "the same" referred to hefty caseloads and long hours, with no expectation of letting up anytime soon.

"Since the downsizing about 2 years ago, I am the only claims adjuster handling the personal injury claims and the property damage claims for the entire United States," lamented one insurance company adjuster with 8 years of industry experience. "I have no back up and my work load has increased by at least 60 percent."

The adjuster went on to say that even though he has requested help, if only to secure an additional staffer capable of working on a part-time basis, upper management informed him that hiring additional staff is simply not an option.

"I am now doing the work that three staff members formerly handled," he continued. "That was dwindled down to two at one time. Now it is just me. I am overworked, under compensated, and ready to leave this profession all together. There is no advancement in the company, so I feel utterly stuck."

Reality or Perception?
As in past years, the invariable workload tug-of-war between staffers and management was documented heavily. One habitual theme is that staffers-at-large remain divided in terms of the current state and future outlook. By this, I mean perception versus reality. It's also possible that the upper echelon of management is just as disgruntled—or inundated with constraints—as the freshest crop of adjusters. From a humanist standpoint, in times of upheaval, isn't it all too easy to point fingers and vilify others? It bears mention that some of the most impassioned pleas for solutions—or at least the ones that resonated with Claims—originated from managers with tenures spanning decades. These seasoned veterans also proved to be staunch advocates of their hardworking teams, showing a tremendous investment in their growth, as well as to the collective success of the industry:

"Company claims professionals are typically undercompensated and underappreciated for their relative responsibilities and contribution to the success of their organization," said one supervisor. "Ultimately carriers are going to have to pay the claims team better to retain the good ones."

"Workload modeling used for adjuster staffing appears to be increasingly unrealistic," added another. "Most insurance claim exposures cannot be handled as a "one-and-done."

A mid-level claims professional working in Nebraska and reporting an annual salary of $64,000 said that staff "had not received a raise in four years."

Aside from the fear associated with not meeting managers' expectations, a prospect made scarier by anemic resources, some did readily admit that contentious relationships with managers are being tempered by flexible working options and increased cooperation. Sixty-two percent of the insurance companies we polled offer telecommuting options for claims staff. Additionally, nearly 4 percent of survey respondents reported that they are now offered iPads or other tablets with which to perform their job duties.

A middle-aged president of an independent adjusting firm in the Southeast said that managers need to keep innovating and brainstorming strategies, without burdening already frazzled claims professionals. He suggested outsourcing certain functions so that claims could be handled more quickly. From a human resources standpoint, this makes sense. The implicit promise of enlisting outside help is a sincere acknowledgement from higher-ups of an employee's ongoing contributions and a commitment to their success.

Salaries In A Coma
Compensation is another way that a company indicates the value of a given employee. The feedback received seemed to corroborate this rationale, as those reporting six-figure salaries generally expressed greater job satisfaction and more optimism to effectuate positive changes than did their five-figured counterparts.

Last year, nearly half of the independents adjusters said the economy "detrimentally impacted their businesses." Their stance seemed to soften a bit this year, despite the cost of gas and thus traveling expenses to survey damages. By contrast, the average salary for insurance company adjusters plummeted to $64,543 this year, compared to $72,042 in 2010. One plausible explanation is that the well-paid adjusters chose to complete the survey last year. It seems unlikely that salaries that have been consistent throughout the past several years would now falter. Stagnate, sure. But decline? That seems unlikely.

On the whole, however, salaries inched up in most title categories. Average earnings for independent managers/supervisors rose from $96,959 to $103,279. Insurance company managers/supervisors saw similar (favorable) increases—from $93,505 in 2010 to $97,178 in 2011. With the exception of a subtle uptick in the number of laptops available, there was no significant fluctuation in the benefits offered for both insurance company staff and independents.

One Fine Day
So is there an upside to the economic downturn? What constitutes a decent life-sustaning, family-supporting wage these days? Over the years, claims professionals have demonstrated that their worth far surpasses any conceivable calculation of monetary sums. What's more, regardless of industry trends, there will always be a need for proficient claims staff. Given the average industry tenure, one could say several things about claims, one being that they are not a fickle lot whose devotion wavers with the value of the U.S. dollar. Though it pains me to type this, the 2011 findings indicated justifiable disenchantment and compelling case for change. I hope the worst is behind us. Claims professionals are poised for greatness. Maybe not today, but someday very soon we will be able to enlighten Millennials about the meaningful, intellectually invigorating and—more often than not—personally satisfying "perks" of this valiant endeavor. Let's encourage them to rise to greatness and truly believe in the possibility of brighter days ahead.