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Hiring Threats - Assess Your Risk
Hiring Threats - Assess Your Risk
Mara Miller avatar
Written by Mara Miller
Updated over a week ago

We spend a lot of time talking about attracting and hiring new talent to grow our businesses. It can be exciting to imagine the new employee and the potential value they can bring to your agency and to your clients. However, from time to time, we lose an employee that needs to be replaced fast. Missing a member of your staff has obvious challenges, such as a loss of production and the need to look for a replacement, possibly requiring you as the owner to take on additional responsibilities or delegate them to other members of your current staff.

Employees move on to other opportunities for a number of reasons, and for every reason that we can try to control or provide for, there is another that we can't help but be at least understanding of, possibly even supportive of. I want to talk about how we can be blindsided by this common but not often discussed portion of a solid hiring plan. When we know that we will be losing an employee due to a lack of production or poor performance, a plan is often in place for the immediate, short-term, and long-term business needs of your agency. What do we do when it comes as a surprise to us as an employer?

Each member of staff makes up a percentage of our production or service effort or a ratio of their impact on the business. The smaller the business, the greater that ratio. With such a variety of business models and sizes of Insurance agencies, there is no “one size fits all” approach to staffing. However, the one consistent idea that I would share with any agent or business owner is to Always Be Hiring. A major part of the impact on our businesses from staff attrition is How Long it takes to fill that seat with a team member of equal skill or competency.

Some quick napkin math:

Imagine your staff of 3 sales reps and 2 CSRs is now down one sales rep, for a reason out of your control. For our example, this producer wrote 25% of your agency's total monthly new business premium. If your office writes 70k in premium on new business between those 3 producers a month, it will cost 17,500 a month, less the employee’s base pay, benefits, and commissions, for each month that chair sits vacant. Let's call it a 10k net loss in production per month. In the present market, it can take from 90 to 180 days to find a licensed, experienced insurance sales rep. This quickly becomes an expensive proposition, and this doesn't include your time as the Agent/Owner having to take on potential additional responsibility, even temporarily. Any loss in production and financial impact to you as the business owner can be costly when we are not prepared to stay right-staffed.

Everyone will face staffing challenges in our current market. One of the most avoidable challenges is being unprepared for a vacancy. Aside from being a highly competitive employer, there is only so much we can do to prevent unexpected attrition. Let's touch on a few common, unavoidable situations that most of us can relate to and how to be best prepared for when the time comes to make a replacement hire.

The “Retirement Cliff”

What will it look like for the insurance industry? Retirement is (Hopefully) the inevitable end of one's career. For the insurance industry in particular, there is a larger degree of exposure to this risk than in other business spaces. Presently, less than 25% of those who work in insurance are under the age of 35. According to the America Works report from the US Chamber of Commerce in June 2021, over 50% of the current insurance workforce will retire in the next 15 years, leaving vacancies in up to 400,000 jobs throughout that same time. They go on to say:

  1. “Significant challenges and impediments for finding candidates and filling openings at this time include a limited number of dedicated Risk Management and Insurance programs at universities, high turnover rates in entry-level positions, a poor understanding of different roles across the industry, and a general perception that the insurance industry and its corporate culture is boring. Insurance companies are trying to attract new talent in a rapidly changing digital landscape by focusing on ways to tie emerging technology, data science, and analytics to traditional insurance career paths, including efforts like starting their own innovation labs for new products and processes. Additionally, insurers are making more concerted efforts to promote their businesses as socially responsible, implement flexible work schedules, increasingly allow remote work, and invest in training and advancement opportunities for existing staff.”

Life events: Relocation or change in one's family situation

The last few years have caused many families to reexamine their financial situation and their work-life balance needs. From women leaving the workforce to offset childcare costs to an employee leaving due to their spouse's relocation/promotion, our employees will be faced with decisions that could have them leaving our businesses even though they were happy and productive.

  1. The cost of child care is often the main reason women leave the workplace.

  2. About 55% of families report spending at least $10,000 a year on child care, per Especially for those with multiple young children, paying for daycare while needing to homeschool or find additional help for older children or aging parents can add up.

  3. In two-parent, two-income households where one parent has considered leaving or has left the workforce to become a primary caregiver since the pandemic began, half (50%) say the cost of external child care played a significant role in the decision, according to NextAdvisor data.

Leaving the insurance business, for any reason

There are many reasons that people choose to change career direction, and it represents a real risk to your production ratio. According to Zippia, the insurance industry experienced a turnover rate of 25% in 2020. Though we can not always plan for individual instances of employee attrition, we can have a consistent plan in place to make sure it disrupts the business as little as possible. The US Bureau of Labor Statistics says:

  1. Employment of insurance sales agents is projected to grow 6 percent from 2021 to 2031, about as fast as the average for all occupations.

  2. About 52,700 openings for insurance sales agents are projected each year, on average, over the decade. Many of those openings are expected to result from the need to replace workers who transfer to different occupations or exit the labor force, such as retiring.

So what now?

How do we avoid these setbacks: Always be hiring. We expose ourselves to great financial risk when we have vacancies in our businesses. The top-performing sales rep we are all looking for may increase the value of our business and book, but losing a long-time team member can cost you greatly in day-to-day operations. It doesn't cost anything to keep your door open to great talent.

Attrition Reasons and Statstics

If you have any additional questions regarding this tutorial please feel free to reach out, we are here to help.

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