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Research Shows 43% of Workforce Spending in Insurance Goes to Gig Workers, Outsource Providers

by Precise Leads

September 20, 2018

There are some 41 million independent contractors working today and the insurance industry has employed its fair share.

Nearly half of the insurance industry’s payroll expenses now go toward outsource providers, independent contractors, freelancers, and other contingent workers who don’t qualify as full-time employees. That was the finding of a study compiled by SAP Fieldglass and Oxford Economics after interviewing 51 insurance executives in a dozen countries.

As the industry adapts to a rapidly changing insurance landscape, it’s vital to keep up with consumer demand and required logistical needs in order to deliver quality service. While every insurer and agency’s strategy will be a reflection of their own unique profile, it’s worth understanding the trend toward a larger, more skilled external workforce.

Crunching the Numbers

Three-quarters (78%) of the executives said that hiring gig workers helps them maintain operations to keep up with market demand. Nearly half said hiring outside workers ensures their companies can respond quickly to opportunities, and 47% emphasized the need to compete in a rapidly digitizing marketplace backed by a skilled contingent workforce.

Within the insurance industry, outsource providers are mostly technology consulting firms and call center operators. In addition, the industry’s external labor pool typically includes data scientists, programmers, financial analysts, and claims adjusters.

To find these skilled workers, 69% of insurers said they rely on outsource providers, followed by having their own talent development department source them (59%). Some 51% turned to online freelance job sites (51%). Less used were staffing agencies (35%) and alumni networks (16%).

The Benefits and Challenges

The industry shouldn’t have any problem finding available contingent workers to supplement their full-time employee rolls. There are some 41 million independent contractors working today, so it’s not surprising many gig workers have found their way into insurance.

Nevertheless, having an overall human resources strategy that blends both full-time employees and external talent is essential. Yet only 20% of insurers told researchers they were confident their company had such a plan.

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As the SAP Fieldglass/Oxford Economics report emphasizes, taking the time to train and integrate external workers into a larger company culture results in better work by all employees. In fact, more than 60% of the executives agreed these independent contractors improve operations by bringing in people with different skills and backgrounds.

Executives also noted having a contingent workforce in place had very little impact on how full-time employees experienced the office. Only 35% said it had a negative effect on company culture, and less than half reported any confusion over longevity and pay among full-time staff members because of the contractors in their midst.

There were some challenges, though. Sourcing the right skill sets at the exact moment needed ranked as the top roadblock for more than 80% of the insurance executives. Most other difficulties involved financial issues, such as overcharges and duplicate payments. Fewer complaints were lodged regarding work quality and missed deadlines.

Working Together

Employing temporary or independent contractors gives insurance agency owners the option of scaling up or scaling down their workforce in response to the workflow at any given time. When a high volume of claims come into the office, adding a temporary claims adjuster tides your agency over until the hectic period passes.

Even if employed for only a few months, independent contractors serve as a part of your team and, accordingly, another face for your agency. Make sure they understand the agency’s culture and what is expected of them, but don’t forget to treat them as you would any other employee. A satisfied employee — whether full time or temp — will treat your clients with respect and compassion, especially when someone has suffered a challenging loss.

Lastly, although you may hire independent contractors when needed, keep up your recruitment efforts to find full-time agents and staffers who will contribute to your agency in the long run. With a fierce battle for insurance talent today, you’ll need both contingent and full-time workers to meet your goals and prepare your team for success.

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