West Insurance Employment: California Job Market to Stay Soft

By | April 17, 2012

The phrase “Go west young man,” may not apply so well to the insurance industry in the nation’s most populous state.

An examination of Bureau of Labor Statistics and Economic Development Department data for California shows hiring for the insurance industry looks to be flat for the next two years. The exception might be in jobs for sales agents.

“What I can tell from looking at both sets of data is that employment’s mostly going to be flat over the projected time periods,” said Kimberly Ritter, an analyst for the Los Angeles County Economic Development Corp., which regularly tracks and examines labor and business data statewide.

In 2011, for insurance carriers and related insurance activity, there were 179,000 jobs in California, which represents a year-over decline of .4 percent. Many of those job cuts were by carriers, the data shows. Employment for insurance carriers declined by 3 percent, while employment for agencies, brokers and other related insurance activities rose by 2.1 percent.

It’s unlikely to improve in the Golden State anytime soon. By occupation, insurance-related employment will likely be down for the next two years, according to Ritter’s reading of the data.

Adjusters, examiners, investigators, underwriters, and claims processing and policy clerks all show declining employment over the next two years, she added. The only job area that shows promise is sales agents, where jobs are expected to grow slightly, she said.

The short term outlook is stagnant. However over the next five or 10 years, it looks like “better growth,” Ritter said.

Still, the long-haul for insurance employment is far from positive. Underwriters will continue to shed jobs, with projections starting in 2008 and going forward to 2018 showing a 700-job loss for California, and insurance claims and policy processing clerks showing 200 jobs lost. Small drops to be sure, but no signs of gains.

However, over that same period, the number of sales agents will grow by 2,100, and claims adjusters and examiners will show a growth of 1,100 jobs, according to the data.

What that all means is that companies will hire slowly, and cautiously, and find way other than hiring to deal with increased demand for their insurance products, Ritter said.

“As far as the insurance industry goes, demand for insurance is going to increase with the next 10 years, but employment is going to increase slower than demand,” she added.

Aside from cautious employers taking some of the steam out of any jobs recovery, that slower job growth will be due to consolidation and corporate downsizing, as well as competition from direct mail and Internet sales, she said.

In other words, clerking duties will continue to be taken over by software and technology, and sales of personal lines like car insurance will be done increasingly over the Internet.

Some good news is that the lackluster growth in the industry may be partially offset by employment gains in healthcare, with the field growing along with the number of aging baby boomers, as well as population growth. And, as housing market recovers the western region along with the rest of the nation should see some demand for insurance and some employment growth, Ritter said.

Despite the less-than-optimistic employment data, not all companies are preparing for an extended hiring slowdown.

“My estimate would be that we will hire an additional 10 percent of our staff,” said Eileen Bacon, senior vice president of human resources for Lockton Insurance Brokers LLC, the southern California subsidiary of Lockton Cos. Lockton has 320 employees in the region.

While the firm is hiring in the region, the brunt of Lockton’s future additions will be to replace individuals who resigned or who have been terminated.

Specifically, Lockton will look to add agents to accommodate the anticipated rebound in homebuilding activity, as well as some to handle more commercial business, Bacon said.

“Homebuilders seem to be coming back,” she added.

Student Interest

One of the areas Lockton will be adding to is its associate account manager program, which recruits from area colleges and universities, Bacon said, adding that the program has a 95 percent retention rate.

And one of the schools Lockton often taps for new blood for its program is the Mihaylo College of Business and Economics at California State University Fullerton, which is seeing an upswing in interest being expressed from potential employers.

Director Weili Lu said the program, designed for students who are primarily interested in careers in the insurance and financial services industry, has traditionally placed about 100 students a year with firms. That dropped off dramatically when the economic mud hit the fan around 2008. The program placed less than 70 students total in the next two years, she said.

“We had some bad years in 2009 and 2010,” Lu said, adding, “but starting from 2011 we saw some pick up, especially this year.”

In late 2011 and so far in 2012, commercial carriers, as well as independent agents, have come to Lu expressing interest in hiring, she said.

In 2011, more than 60 students were hired out of the program, and “I’m hoping 2012 will be more,” she added.

In fact, in February, Lu had two commercial carriers, who she declined to name, come to the school and express interest in hiring, one of which wanted to hire seven commercial underwriters.

A Bright Sign

Mara Klug, vice president of the Los Angeles region for Adecco USA, a national staffing and employment agency, knows first-hand that firms tend to take on temporary workers before launching any serious hiring, so when she sees an uptick in her business, full-time hiring by area firms typically follows.

“The insurance companies that we have worked with historically have not used our services as much in the last couple of years because of the decline in the economy,” Klug said. “But in the last six months we’ve seen an increase in the number of requests from our insurance company clients to help them with temporary employees in support positions.”

These increased employment queries include customer services and claims support, she said.

“A lot of times what has happened during the downturn in the economy, as people left companies, the companies would try to not replace them and have some of the remaining employees take on different roles,” she said. “A lot of times they’ll start with temp employers, and if the person works out well many times they’ll hire them.”

So she takes it as a good sign that in the last six months her clients have started to return to her looking to beef up their workforces with temps, she said.

“I have about four or five customers in the L.A. market that have come back to me because all of a sudden they are needing our services again,” she said, declining to name her clients.

Some of the companies have needed 10 to 15 people in customer services or billing, almost an entire staff’s worth, and others have needed only one or two people in, say, claims support, she said.

“Based upon the information I’ve gotten from my customers, there will be a need for more temporary employees,” she said. “I definitely think there will be more temp hiring.”

And the better news for those in search of employment is that she predicts this trend will continue at least through 2012.

Mixed Bag

Insurance employment across the western U.S. seems to be a mixed bag of good news and bad.

According to the Insurance Journal 2012 Agency Salary Survey, only 20 percent of agencies in the states of Arizona, Colorado, Idaho, Oregon and Washington said they increased staff size in 2011.

The good news is most agencies polled said they stayed the same (66 percent), while only 12 percent said they decreased staff size.

In fact, the status quo seemed to be the favored answer for poll takers in terms of employment size. The poll shows that in 2012, 66 percent of agencies in the region answered that staff size would “stay the same” this year. Less than 10 percent said they anticipate decreasing staff size, and nearly 24 percent said they expect it to increase.

Arizona stood out in the survey as the state in which most agencies responding to the poll (35 percent) expected staff size to increase in 2012, and as the state which had the most respondents say their agencies increased staff size (nearly 29 percent) in 2011.

Oregon had the fewest agencies say they increased staff size (15 percent) in 2011, and that state was among the lowest (23 percent) for western states in which agencies said they are planning a staff increase in 2012. Only 10 percent of respondents in Washington said they anticipate a staff size increase in 2012.

According to the Insurance Information Institute, which provides an employment data compilation that’s current to 2011, California leads the western region in terms of insurance employment with more than 200,000 employees in the insurance sector.

In fact, the western region accounts for roughly 16 percent of the nation’s 2.2 million insurance employees.

Arizona and Colorado have just over 37,000 insurance employees in each of those respective states. They are followed by Washington with almost 40,400 employees, Oregon with more than 26,000 employees and Utah with nearly 16,400. Nevada has almost 11,000 employees, Idaho has just over 8,300, New Mexico nearly 8,200, Hawaii has slightly over 7,000 and Montana has roughly 6,500 insurance employees.

Employment in the insurance industry in the region has fallen in step with U.S. employment, which has dropped more than 620,000 jobs since 2007, according to I.I.I. data.

California shed more than 94,000 of those jobs since 2007. Insurance-related employment losses in other western states since 2007 are as follows: Arizona (12,652), Colorado (11,997); Washington (10,377); Oregon (7,318); Utah (7,082); Nevada (4,976); Idaho (4,101); New Mexico (2,813); Hawaii (2,393); and Montana (1,233). Wyoming and Alaska were not included in I.I.I.’s data

Employment prospects vary greatly by employer, region and job specialty. For a closer look, Insurance Journal editors interviewed property/casualty industry leaders in their respective regions and will be filing the following reports this week:

For insurance jobs listings on Insurance Journal, visit:www.insurancejournal.com/jobs/

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