As a result of changes in the labor market and the standard American career path, it is becoming increasingly difficult for U.S.-based insurance carriers to hire and retain skilled administrative resources. Retirements and employee turnover are resulting in:
- Lower productivity and backlogs
- Increased costs for recruiting and training
- Negative impacts on turnaround time and service quality
- Distraction of resources from your core business—assessing and pricing risk
For many organizations, the only practical solution involves some type of business process outsourcing (BPO). Despite the fears this term often evokes, you need to understand how strategic BPO can support your core business—selling and maintaining your insurance policies—by taking on administrative processes that have become too difficult or costly to staff locally.
Causes and Effects of High Turnover in Insurance Administration
Solartis VP of Sales and Marketing Carol Mowry McKenzie discusses strategies for retaining administrative resources in a challenging labor market.
Baby Boomers with decades of experience in insurance processes are steadily retiring, and the Millennials graduating from college and entering the workforce today have different plans for their careers. A recent college grad might take an entry-level job in insurance administration, but once they have six months or a year of experience, they’ll either be engaged and seeking a promotion that will challenge them—or looking for a new job that’s more interesting.
For generations, young Americans have been told to pursue their dreams and passions, and image that anything is possible. Is it any surprise that today’s younger workers aren’t satisfied spending years in back-end administrative positions?
The current skills gap in insurance is, to some extent, an unintended consequence of our ambition for our children. However, the costs of this cycle of turnover are too high for companies to ignore.
The Cost of Employee Turnover Is Higher Than You Think
Employee churn in your administrative positions results in costs and negative business impacts throughout the entire organization. Hiring and training new resources takes time and attention away from your core business functions.
average cost of replacing an employee is about 16% of annual salary for lower-level positions earning less than $30,000 per year—and 20% for mid-level positions earning up to $50,000 per year. Based on these figures, replacing an administrative resource earning $30-40,000 per year would cost up to $8,000.
Furthermore, new hires often don’t stay in their roles long enough to be cost-effective to the organization. By the time they’re settled into their positions and operating at full productivity, they’re moving on to a new opportunity.
It’s expensive to keep repeating that cycle—constantly investing in new resources without building any momentum. And the costs keep increasing. As a result of increasing competition for talent, salaries are rising for administrative roles. Added to the costs associated with hiring, training, and lost productivity, this makes employee turnover a major financial drain.
Lack of Internal Skill Development and Negative Impact on Service Levels
Another critical problem associated with high employee turnover is that most of your resources are not retained long enough to become skilled in your business processes. As a result, you cannot be efficient or effective in your administrative tasks.
Without experienced, dedicated staff, you’ll start to develop backlogs and customer service gaps. In extreme cases, administrative backlogs can even affect your ability to write new business—or, more likely, day-to-day customer service will suffer as your administrators scramble to prioritize revenue-related tasks.
How Strategic Outsourcing of Administrative Processes Supports Your Core Business: Underwriting
Strategic BPO enables you to end the cycle of employee turnover, retain skilled resources for your administrative processes, and focus your in-house talent on core business activities that add value and support growth.
Solartis Administer gives you access to a team of dedicated insurance processing professionals with the skillset you need. There’s no time or money wasted hiring, training and retraining entry-level employees. In fact, you eliminate overhead completely with Solartis’ transaction-based pricing model. Instead of paying an employee 40 hours per week, you only pay for the amount of work that actually needs to be done.
Another benefit of our approach to BPO is that you’re standardizing your business process to ensure consistent quality, turnaround time, and overall service levels. Documenting business processes and strictly complying with those standards is a cornerstone of effective outsourcing at Solartis. Our administrative resources typically complete tasks such as issuing a certificate of insurance within one hour—with 99.98% accuracy.
Outsourcing these hard-to-fill administrative roles also allows you to focus on hiring on the most valuable resources for your in-house team—those with deep expertise in underwriting, customer service, sales, or IT.
Overcome Staffing and Turnover Challenges With Solartis Administer
Solartis Administer can help you quickly and cost-effectively resolve your human resources challenges. Our U.S.-based account managers work side-by-side with clients to transition business processes gradually from your in-house resources to our dedicated offshore professionals. Once we’ve eliminated any backlog, you’ll be able to issue policy documents quickly, accurately and efficiently.
By replacing high-turnover roles at the pace of attrition, you’ll avoid layoffs and retain skilled staff—while enabling them to focus on writing policies and expanding the business.