The insurance industry is old. There’s no real disagreement about that, regardless of the context. The history of the industry goes back hundreds of years, and its influence and role in transforming society in that time has been immense. 

The workforce powering this global industry is also old. More exits from the industry due to retirement than new entrants coming in is commonplace, and the usual recruiting trail used to bring in college graduates and other early career individuals is failing to bridge the gap. 

Data suggests that job availability and hiring in the insurance sector remains robust. There are still a lot of jobs in the industry, though, that are unfilled, particularly in claims. 

What does all this mean? Well, we have a new generation of professionals in insurance, and while this is good for the industry, the industry needs a lot more of them. It also dovetails with an equally impactful and worrisome issue: a knowledge shortfall with those coming into the industry, particularly involving regulatory, ethical and compliance requirements. 

In an industry that is heavily regulated, bound by legal precedents and inflexible policy conditions employees that don’t know how to navigate the conditions and requirements of policies will make mistakes. Whether those mistakes are in binding policies, reviewing applications, sharing data or handling claims they will inevitably end up costing companies. And that cost is calculated in reputation, fines, expenses and unscheduled payments. 

This problem has been looming for years and was amplified on the claims side in the 2017 hurricane season when four hurricanes hit in six weeks. This was when the industry really started paying attention to the questions of: “Are there enough adjusters amid the current talent shortage?” and “Will they be able to respond to the next catastrophe?”

I handled claims in Florida related to Hurricane Irma, mere weeks after Hurricane Harvey made landfall in Texas and in advance of Hurricane Maria destroying many parts of Puerto Rico and the Virgin Islands. Many companies scrambled to find someone — anyone — to handle the volume of claims. The demand far outstripped the supply.

That is what a talent gap looks like on the ground during a catastrophe. It creates a disconnect in communications with policyholders, coverage concerns, allegations of bad faith claims handling, challenges by savvy litigators, delayed payments and regulatory investigations. 

Less experienced people assessing, handling, reviewing and signing off on claims is bad for policyholders and insurers. 

Faulty data or metrics lead to flawed outcomes, causing decisions that are not sustainable. Ethical lines become more blurred. This all feeds into the narrative that insurers do not operate in the best interests of their policyholders.

And it’s not just during catastrophic events that this happens. Adjusters without relevant experience, making decisions on injuries, damages and investigations, adds up to a subpar work product. An adjuster not trained in signs of arson or deliberately caused damage may green light payment on many claims that in the hands of a more knowledgeable, better trained adjuster would have gotten more scrutiny. 

The value of having bodies to throw at a problem is drastically offset by errors and miscalculations that inevitably occur when disputes arise. Warm bodies do not equate to intellectual capital. 

After that nadir in 2017, we saw this repeated to varying degrees between 2020 and 2022. Several independent insurance adjusters testified at public hearings in Florida that their estimates had been manipulated to reduce payouts to storm victims, something that posed another black eye to the industry in the court of public opinion.

To be clear, in the course of adjusting a claim, estimates change all the time. What should not occur is for them to be changed without the original adjuster’s knowledge and consent. It creates the impression that insurers are more invested in saving money on claims than good faith claims handling. It emboldens critics and feeds stereotypes. This is also at a time when on the insurance side, as noted before, turnover is high for adjusters and many feel disillusioned by their role in the industry. 

Similar problems can be seen in the underwriting and brokering sectors, where an inability to clearly explain what coverage applies, what is excluded and what options are available creates problems. 

Further, regulation of insurance-related companies has become a very fluid process, presenting both challenges and opportunities. The long-established issues around regulatory oversight of insurers and the calls for increasing compliance will remain and intensify. There will need to be an increased emphasis on ethics training, raising awareness of what is considered good faith claims handling. 

So, what can be done? The insurance industry does a great job of promoting its products but a terrible job of promoting itself as a viable career option. Yet the need for more talent is critical and the numbers are not improving. As someone who has also long advocated for greater diversity in the industry, I strongly believe there needs to be an industrywide push to fully incorporate historically Black colleges and universities and other institutions educating students of color in the list of colleges that the industry actively supports and recruits from. Awareness of career opportunities in insurance is very low in many of these sectors of higher education, and they represent an untapped resource that could go a long way to offset the talent imbalance. 

This industry push could be in funding academic programs, endowments, internships and scholarships. These activities would create dialogue and opportunities, but the buy-in from the industry has to be there and be sustained. Identifying talent, recruiting and training are skills that many companies need to adopt more fully. If we are serious about driving more talent from the next generation to the industry, why would this not be a top priority? 

Proper training will go a long way in alleviating the issues currently facing the industry and ensure that a baseline level of professionalism is adhered to.

The risk and insurance field has issues that can be addressed with a comprehensive approach to nurturing talent. There is a career path in this industry from any academic discipline, and that point has to be made and those connections reinforced, particularly in the schools that have never been foremost on the recruiting trail. New issues require new approaches. The days of recruiters throwing up their arms and saying, “I can’t find qualified Black and brown people” should be yesterday’s narrative. They are there and they are available, but the ball is in the court of those in the industry tasked with hiring to reach them. A commitment to supporting a diverse workforce can begin here and translate to an extraordinary workforce of the future.

Dwight Geddes is the founder of Metro Claims & Risk Management and Geddes Management Group in Floral Park, New York, and serves on the national board of directors for the National African American Insurance Association. He can be reached at dwight@metroclaimsnyc.com.