The labor market for the MPL insurance industry is going into a transition phase as we approach the second half of the 2020s. In some respects, this matches the state of staffing in the broader property and casualty insurance sector, as approximately 50% of current employees are projected to enter retirement by 2028.
Nevertheless, hiring is increasing with 65% of property and casualty insurers anticipating adding staff. Despite this encouraging news, there seems to be a gap between the high numbers of employees insurance carriers expect to hire and the lower numbers of millennial and Gen Z workers looking at insurance as a possible career.
What will this transition look like for MPL specifically? We spoke with Julie Czarnik, Assistant Vice President and Engagement Director at The Jacobson Group, and Matt Leach, Principal and Senior Consultant of Total Compensation Solutions, LLC, to provide an overview of the MPL labor market environment and the future of staffing in light of the COVID-19 pandemic, return to work mandates, generational talent shifts, and how the sector can make itself more attractive to potential hires.
Competitive Labor Market
“The labor market in the insurance industry is competitive,” said Czarnik. While unemployment in the US has risen slightly over the past year, there’s still very little unemployment in insurance, at 1.8% of the total workforce. This diverges from the US economy in general: July unemployment figures revealed that unemployment rose from a low of 4.1% to a still low 4.3%.
“MPL tends to follow the rest of the insurance industry in terms of the tightness of the labor market,” Czarnik noted, although this has been offset to an extent by a number of consolidations which have “made it a bit more challenging, because there’s less opportunity in MPL.” She shared one thing that distinguishes MPL from the rest of the P&C insurance sector: fewer younger people moving into leadership roles. “I think organizations tend to be a little smaller and flatter at the top; there’s a lot of tenure and people in general are working longer,” she added.
Similarly, Leach said, “There’s an underlying demographic problem in MPL where most of the MPL Association member companies have a workforce that’s closer to retirement age than college age. The challenge is finding younger people to replace leaders who retire. This points to the specificity of MPL, which as opposed to P&C generally, requires a skillset that is above what we see in a typical P&C company, which leaves many companies scrambling without success to find workers with MPL-specific experience. It’s tough, especially in claims and risk management.”
At the same time, some carriers are struggling to adjust to the new environment about pay transparency. “A lot of the MPL companies are in states where pay transparency is the law of the land, and we definitely see higher base salaries and redesign of base salary systems to be more competitive” in alignment with the market, said Leach.
Impact of COVID-19 Pandemic on the MPL Job Market
Not only is unemployment lower, but the more significant measure—attachment to the labor market, as in being employed or seeking a job—is consistently high. Workers are less likely to experience long bouts of being without work due to higher demand.
This has had a profound effect on the typical office workplace, including insurers. As we all know, the pandemic contributed to an unreversed trend away from the typical office workplace and toward remote work. Remote work is estimated by the Bureau of Labor Statistics at 13%, but in all likelihood, this is an underestimation, with private surveys showing increased numbers of workers with a hybrid office-remote schedule during the week. In other words, the tight labor market is likely encouraging those people who found that remote work suited them during the pandemic to pursue jobs that offered them greater flexibility.
Leach also said, “Shortly after the pandemic people weren’t happy with their pay, they were demanding more money, and a lot of companies were giving off-cycle pay increases to keep their workers appeased.” Though that has abated over FY 2024, the demographic threat means turnover within the MPL industry could outpace historical norms for the foreseeable future, he added.
Return-to-Work Mandates
Companies all over the economy that had to resort to remote work during the pandemic have been attempting to return to the old ways and exert more control over the workspace by mandating employees to return to the office since the official end of the pandemic. The problem is that this can exacerbate the tendencies we have seen in the tighter labor market by damaging the trust and loyalty between employees and employers.
Work relations in such an environment are not necessarily better in companies that are more remote or vice/versa. Research seems to indicate that these relations depend on whether workers feel that they have input into where and how they work. A mandate to return to the office may be a general indicator that this company’s employees feel they have little power over their work process, which is a large risk for sectors like MPL insurance which depend on highly skilled, long-term employees.
“Especially for smaller mutuals who have called their employees back into the office, it can be a significant challenge, as many individuals have worked successfully as remote employees,” Czarnik said. “Having flexibility is huge, and because of the regionality of smaller carriers, we have seen a pull on talent toward larger carriers that have more flexible in-office requirements. This is especially beneficial for organizations that embrace a remote culture. They have been able to tap into talent from organizations that don’t offer that kind of flexibility.”
Size as well as geographic unevenness matters. Leach said, “if you’re a California MPL company, you can pay well below California [wages] and still attract somebody from the Midwest or southeast,” paying above the going rate for employees there who work remotely. The trend towards remote work doesn’t seem to have halted since the declared end of the pandemic.
As Czarnik related, during the pandemic workers discovered that they can achieve as well or better outside of the office. “That made the mandate to return to the office a tough message.” In MPL, Leach estimates that “most companies have gone with the hybrid, three days of the week on [at the office], two days off.”
Though there are still many organizations, especially in the South and Midwest, that have successfully implemented such in-office mandates, there also seems to be a trend toward organizations offering fully remote work, says Czarnik. They are especially attracting underwriters, many of whom are enjoying the shift to remote work and are attracted to organizations which offer this greater flexibility, she continued, leaving “MPL companies to fight over the same workforce.” This is great for workers, but this “talent-poaching” environment leads to problems in organizations that are slower to adapt.
How MPL Companies Can Attract Talent
With a dwindling pool of aging workers approaching retirement, and with many qualified workers looking more closely at remote opportunities within a tight labor market, how can MPL organizations attract the talent they need to survive and thrive? “Today’s MPL management needs to be more flexible and keep an open mind about professionals from other parts of the insurance industry,” Czarnik said. “Workers who have experience in non-medical P&C insurance, for example in special liability lines or professional liability lines, have a lot of transferability in functional areas of MPL insurance.”
Understanding how to attract talent not just for one role, but to help build organizational capacity in the long term is crucial, Czarnik said. “You may need to replace an executive-level role, but it’s also important to assess your current bench. Consider hiring a seasoned professional who has a few years of availability left in their career. They can mentor and prepare an internal employee who is not ready for the next step yet, but can be with the right investment in their development,” she added. “MPL companies should consider where there’s flexibility when they can’t find an individual with the exact skill set they want. Especially when it comes to the executive level, organizations should be planning for gaps early on. Then, by the time they need to fill the role, the candidate is already familiar with the industry and the nuances of MPL. This proactive approach can save the company 12 months searching for a new executive.”
There are also, as Czarnik noted, roles within MPL such as finance, accounting, and marketing which may not require specific MPL experience. For these roles, organizations can afford to be more flexible and “open up their networks to people who have been providers, maybe even policyholders, who have an interest in the field and can contribute,” she said. “Some MPL companies sit within the captive market for large hospital systems, which also presents an opportunity for recruitment. There’s talent that understands the needs of physicians and even of large hospital systems who can come and excel in the carrier environment.”
She also thinks that MPL has an advantage in attracting talent from outside the field that many companies have not clued in on: “MPL organizations are culturally so passionate about serving the insureds or their members, which really resonates with people. Once those individuals tie themselves to the mission, they become very loyal.” In one job search for a finance role, she approached recruitment by asking candidates “how much do you love your physician? And how much do you want to ensure that they’re protected against malpractice claims so they can take care of you?... That makes it very real for some people, giving an advantage particularly to small single-state carriers that are on the front lines making sure general practitioners can run their traditional small practices.”
Leach believes that while MPL companies may continue to have trouble attracting a young workforce, it may have more success with middle-aged workers with some experience in insurance. “Since MPL has a tradition of great retirement and benefits programs… when you are mid-career, in your mid-40s or early 50s, you’re thinking about retirement a little more.” MPL insurance companies can, Leach thinks, add to that advantage by “making base salary more competitive” to attract workers in their 30s.
How Talent Can Get into and Advance in the MPL Space
People who want to become leaders in MPL should “try to get in at the ground floor,” according to Czarnik. “Be flexible with your expectations; however, for most of the MPL organizations I’ve worked with, if you’re talented, you’re smart, and you’re driven to learn, you will find an opportunity in them.”
One thing Leach added is that it is a good idea to try to get MPL experience ahead of working for an MPL-specific insurer. “If you work for a general insurance company that has an MPL side, even if it’s a small side, or if you work with hospitals or a big self-insurer, you can get experience working in MPL that MPL recruiters down the road “are willing to pay a premium for,” he said.
Up Next
The second part of our two-part MPL Staffing Series, which focuses on healthcare organizations and the potential MPL liabilities associated with staffing in those institutions, will be published in two weeks.