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Replacing veteran workers compensation adjusters with younger and less experienced employees can slow resolution of claims, experts say.
It's a concern that CEOs of third-party claims administrators say they hear often around the workers comp industry.
While experienced adjusters exiting the workforce pushes TPAs to turn to recent college grads for replacements, the younger employees quickly adapt new technologies and help diversify their workforces, experts say.
Claims-management knowledge no longer resides only with veteran adjusters; today, it's embedded in best practices and technology, such as predictive analytics tools, that help less-experienced workers perform the job.
“Does the adjuster that walks in today have the same knowledge and experience as the 25-year veteran walking out? No,” said Scott R. Hudson, president and CEO of Gallagher Bassett Services Inc., an Itasca, Ill.-based TPA. “But the institution doesn't have to lose that (knowledge). A lot of the tools we are building and the systems, they are now the repository of the knowledge as opposed to the individual.“
“We hear that all of the time,” said a skeptical Maureen Gallagher, managing director and workers comp brand leader in Southfield, Mich., for broker Neace Lukens. The “enormous amount of reliance on (technology) systems” doesn't make up for the industry's loss of experience. Resolving workers comp claims is about working with injured workers and addressing sensitive, personal issues, she said.
“You can teach somebody work comp, but you can't teach them experience,” Ms. Gallagher said. “That takes time and I don't see that happening.”
Similarly, helping employers resolve claims requires creativity to negotiate settlements within the confines of the workers comp system, she said.
Her clients generally are not aware that veteran adjusters are retiring, but they are increasingly dissatisfied with how their claims are handled, which Ms. Gallagher said could be attributed to a less experienced workforce.
“It's more the experience issue than the age issue,” she said. “It just so happens that the very good work comp claims adjusters are in their 40s and 50s and getting up there.”
According to the U.S. Bureau of Labor Statistics, the median age of all “claims adjusters, appraisers, examiners and investigators” was 42.6 in 2011, while the median age of the overall U.S. labor force was 41.7 and is expected to reach 42.8 by 2020. BLS does not track adjuster age by line of insurance.
Employment of claims adjusters, appraisers, examiners and investigators is expected to grow 3% from 2010 to 2020, slower than the average for all occupations.
Because today's workforce is more mobile and transient, insurers no longer invest the considerable expense they once did to groom young claims adjusters with months of training, said Joe Picone, chief claim officer in Glen Allen, Va., for Willis North America Inc.
While some TPAs say they invest in training young adjusters, Mr. Picone and other industry observers say that in general, insurance industry training is not as extensive as it once was and that many claims representatives now see their jobs merely as a career stepping stone.
That increases reliance on decision-making tools that prompt adjusters to ask claimants certain questions, with certain responses generating additional questions and courses of action.
“We are definitely seeing the use of decision-making tools (as) a Band-Aid for the lack of technical skills we are seeing,” Mr. Picone said.
Yet as older adjusters exit the profession, recent college grads bring enthusiasm and adapt to new technology more easily, he said.
Recruiting younger adjusters also allows a TPA to diversify its workforce by age and ethnicity, said David A. North, Memphis, Tenn.-based president and CEO of Sedgwick Claims Management Services Inc.
“A significant issue for us is as we look across the landscape (is) the U.S. workforce is becoming increasingly diverse,” Mr. North said. “We find the more we can match the characteristics of the claimant population with the adjuster population, the more likely it is we are going to get a better outcome.”
Managing claims has become more of production-line process than a professional endeavor and has a weaker foundation today because of less extensive adjuster training, said Fred O. Pachón, vice president of risk management and insurance at Santa Barbara, Calif.-based Select Staffing Inc.
But there are effective claims adjusters at both ends of the age spectrum, he said.
“There are still lots of old- and new-timers trying to combine old and new practices,” Mr. Pachón said. “These are the ones that I believe will be the most successful.”
Mr. Picone agreed that adjusters must embrace the latest tech tools, but they also must understand that the tools can't replace the “art of claims adjusting.”
“The key is that you can make use of these wonderful technology tools we see coming out,” Mr. Picone said. “But for the new generation, really train them that (technology) is just there to help you. You still need to do critical thinking on every loss. You need to be creative on every loss.”