Sunday, February 25, 2024

Jacobson: Survey Shows ‘A Significant Pause’ in Industry Job Growth

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More than half of insurance companies expect to increase staff in the next year, according to the latest labor market study from Aon and the Jacobson Group. Meanwhile, 77% of carriers expect to increase revenue in the next 12 months.

The companies’ research shows that 52% of carriers plan to increase staff during this window, while 38% plan to maintain their numbers and 10% plan to decrease in size. That compares to 77% of carriers that expect to increase revenue, 21% that project flat growth and 2% that foresee a decrease.

While the 52% number may appear promising, Greg Jacobson, CEO of the Jacobson Group, explained that, not counting 2020, it represents “the lowest that number has been since 2012,” when the country emerged from the financial crisis.

“So, there’s been a significant change in thought process as it relates to companies looking to expand their hiring,” he explained. “And it’s slowed down fairly significantly. That said, this does not mean — and we have not seen this — that there are going to be mass layoffs that are going to be impacting the industry.”

Aon and the Jacobson Group have conducted labor market studies biannually for the past 15 years. The companies focus on analyzing the market within the insurance industry, specifically with insurance carriers. The latest study covered about 275,000 employees, or about 17% of the market.

Jacobson acknowledged that layoffs have affected the insurance space recently. He shared that the 10% of companies with plans to reduce staff size in the next 12 months is comparable to recent years.

“I think that overall, what this is saying is that there’s a significant pause, at the very least, in terms of the amount of growth that’s going to be taking place in the industry,” he said. “But not necessarily mass layoffs, as 38% of companies are planning on just keeping the same number of staff that they had over the last 12 months.”

Jeff Rieder, partner at Aon, noted that while rate increases have dominated personal and commercial lines, annuity lines have experienced “significant growth” in the past year, too, and in some cases, growth in revenue is “disproportionate to the growth in exposure,” meaning that a company may have reduced its policy count but is experiencing premium growth “that is perhaps going to start outpacing their surplus positions.”

He also said companies are also seeing changes around automation.

“We know that there’s been investments in artificial intelligence and some other things,” Rieder said, later adding that “in some cases, I think companies are seeing some of the efficiencies of their technology are off.”

As inflation moderates, property and casualty insurance companies will realize the rate increases in the past two years, and “this 2024 renewal cycle will essentially have the full impact of those rate increases coming through and that earned premium coming through as well,” Rieder said. “So, by all accounts, we should be at a much stronger position by the end of this year, barring any major catastrophe or other event. And this could then position companies for more expansion going into 2025 as well.”

According to the labor market study, last year, 67% of companies planned to increase staff, but only 54% of companies did. Jacobson said this marked “probably a bigger difference than we’ve seen in the past.” The difference, especially over the last six months, is more companies are choosing not to fill positions.

Other Notable Numbers

  • Total insurance carrier employment has reached 1.625 million people in the United States. That number is down by about 4,000 jobs from August 2023. Expanded beyond carriers to the number of employees in the entire industry, “we actually hit the all-time high last month” at three million people, Jacobson said. Most of that growth — about 15,000 jobs in the past six months — came from agents and brokers.
  • Citing figures from the Bureau of Labor Statistics, Jacobson said the average total number of open jobs in finance and insurance was 344,000 in 2023. In December, however, that number was 303,000 jobs — a drop from the 445,000 open jobs in December 2022.
  • A total of 16% of companies plan to decrease their use of temporary staff in the next 12 months, tying the study’s all-time high. Just 8% plan to increase their use of temporary staff.
  • Between January 2023 and January 2024, the total industry headcount grew 1.17% versus an anticipated rate of 1.67%. The P&C industry headcount grew 1.22% versus an anticipated rate of 2.07%.

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