Insurance Carriers Have a Call Center Problem

No customers like waiting on hold, but insurance customers who are dealing with coverage problems or claims definitely don’t like it. Unfortunately, insurance carriers are dealing with rising costs and labor shortages, which is taking a toll on insurance call centers.

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Fallout from the Insurance Talent Crunch

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In 2021, the U.S. Chamber of Commerce released an eye-opening report: figures from the Bureau of Labor Statistics showed that the number of insurance professionals who were 55 or older had increased by 74% over the previous decade. The aging workforce meant that 50% of insurance professionals were expected to retire over the following 15 years. To make matters worse, fewer young people have been interested in insurance careers, contributing to an unemployment rate below the national average.

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Simply put, the insurance industry is having a hard time attracting workers and the problem is expected to become worse in the near future.

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Labor Costs Are Rising

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Despite talent shortages, many insurers plan to hire more workers. In fact, according to Property Casualty 360, 65% of property and casualty insurers plan to increase their workforce. 

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This will likely be expensive. When demand outpaces supply, companies have to compete for workers, which often leads to higher wages. Recent inflation has also been putting pressure on wages across all industries. In a 2023 Bankrate survey, 64% of employed Americans reported receiving a pay increase during the previous 12 months, but 60% said their incomes had not kept up with rising household costs due to inflation.

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As a result, insurance companies will have to increase wages to attract workers. Unfortunately, this comes at a time when many insurers are seeing other cost increases, as well – inflation has hit everyone, impacting claims costs just as it’s impacting household expenses. Insurance carriers are also dealing with rising losses from natural disasters. For instance, AM Best says the U.S. property and casualty sector recorded a net underwriting loss of $21.2 billion in 2023.

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Policyholders Still Expect Good Customer Service

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Insurance carriers are facing some significant challenges right now – but don’t bother trying to explain that to insurance customers who are calling to report a claim, apply for coverage, or ask about their policies.

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HubSpot says the average call center hold time is approximately 13 minutes but people will only wait about two to three minutes before they get upset. As wait times drag on, frustration increases, which leads to call abandonment and customer churn. 

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These consequences may be detrimental to insurers’ bottom lines. Imagine a customer calls because he wants to buy coverage. Since no operators are available, he has to wait on hold. After a few minutes, he hangs up – and ends up buying coverage from a competitor. If this happens often enough, the insurer with long wait times will start to lose market share.

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Long wait times during the first notice of loss process are even more frustrating. When policyholders call to report a claim, they’re often dealing with an urgent situation. Their roof may be leaking after a storm or their car may be totaled, meaning they have no way to get to work. Regardless of the details, these policyholders expect their insurers to remedy the situation quickly.

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Claimants may be forced to accept long wait times during the FNOL process, but that doesn’t mean they’ll stick around after the claim is resolved. Accenture found that dissatisfaction among claimants leads to policyholder churn. It’s such a big problem, Accenture predicts it may end up costing insurers $170 billion in lost premiums between 2022 and 2027.

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Can Insurance Call Centers Keep Up?

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Thanks to staffing shortages, many insurance call centers struggle to keep up with normal call volume. What happens when call volume is higher than normal? Wildfires, hurricanes, and even large thunderstorms or winter freezes may cause claims to surge. If insurers can’t keep up, they’ll have a lot of angry customers on their hands. 

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Thankfully, there’s a solution. Stay tuned for Part 2 of this series to find out more.

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