Industry Benchmarks - Insurance Carrier HR Metrics

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Industry Benchmarks - Insurance Carrier HR Metrics

In the insurance industry, the average revenue per employee is $755,319. The turnover rate for insurance carriers is about 12% as of 2018. It appears the time-to-hire for insurance carriers is between 30 and 40 days. On average, insurance carriers likely have a cost per hire around $4,000.

EMPLOYEE TURNOVER RATE

  • There is a talent crisis in the insurance industry, according to the 2019 Talent Trends Guide published by Jacobson Group.
  • Historically, insurance companies show a lower rate of turnover compared to other industries, but the turnover rate is rising.
  • According to a 2019 Semi-Annual U.S. Insurance Labor Outlook Study published by Jacobson Group, "more than 60% of carriers said in January that they expect to increase hiring this year over last."
  • According to insights published in 2016, "only 11 out of 100 employees last longer than 36 months in the insurance industry."
  • The insurance industry turnover rate is usually around 10%, but in 2018 this was "up about two points" for carriers specifically, according to Jacobson Group.

TIME TO HIRE

  • According to 2018, the average time-to-hire across all industries is 38 days. For the insurance industry specifically, this figure is about 32 days.
  • In a 2017 case study, it was reported that Acceptance Insurance (a leading auto insurance carrier in the U.S.) has an overall time to hire between 30 and 40 days.

REVENUE PER EMPLOYEE

  • The last year that the U.S. Census Bureau reported information on the total revenue and employee count of the insurance carriers market (NACIS 5241) was in 2012, and at the time the industry had a revenue of $1.661 trillion and 1,448,112 employees.
  • IBIS World reports updated statistics for the 'insurance carriers and related activities' market in the U.S. (A revenue of $4.686 trillion and 7,126,431 employees). However, this includes data for two sub-sectors that do not fall under NACIS code 5241, which are 'insurance brokers and agencies' (NACIS code 52421) and 'third-party administrators and insurance claims adjusters in the U.S.' (NACIS code 52429).
  • IBIS World shows that the 'third-party administrators and insurance claims adjusters in the U.S.' has a revenue of $241 billion and an employee count of 432,281.
  • IBIS World shows that the 'insurance brokers and agencies' market in the U.S. currently has a total revenue of $164 billion and an employee count of 1,026,351.

COST PER HIRE

  • The average cost-per-hire across all industries is $4,425.
  • Lacey Brandt, the CFO of Workable stated the following "Cost-per-hire depends on company size and the number of hires. Larger companies making a lot of hires can keep the cost lower than smaller companies. But, generally, aiming for an average cost-per-hire between $3,000 and $5,000 is good practice."

Research methodology

TRIANGULATING EMPLOYEE TURNOVER RATE

Much of existing employee turnover rate data addresses in the insurance industry as a whole, however, we were able to find some direct data that touches on insurance carriers, although small triangulation was needed. In this case, it was reported by Jacobson Group that the insurance industry turnover rate is usually around 10% and that in 2018 this figure was "up about two points " for carriers specifically. This would equal about a 12% turnover rate for insurance carriers (or 10% + 2 = 12%).

TRIANGULATING TIME-TO-HIRE

In order to address this part of the request, we analyzed numerous surveys, studies and reports to look for direct data showing the average time-to-hire benchmarks among insurance carriers overall. While we were not able to find this information after exhaustive research, we were able to take a top-down approach to triangulate this figure by first reaching the topic from a broad perspective and then narrowing it down to the insurance carrier level by analyzing case studies. To do so, we first located data showing the average time-to-hire across all industries and then located data showing the average time-to-hire within the insurance industry specifically, and then finally we were able to locate a case study showing the time-to-hire for an insurance carrier specifically. While we had originally hoped to find case studies for a number of different insurance carriers, this data was not widely nor readily available, after exhaustive search across various recruiting and time-to-hire case studies because either the case studies located were not focused specifically on insurance carriers, or the data being provided was not detailed enough to provide the specific time-to-hire data needed for this request. It is possible that such case studies exist, however, further research would be needed in order to perform a more extensive deep dive in this area. Overall, these three sets of data aim to illustrate how it appears insurance carriers' time-to-hire is likely on par with the overall average (i.e. between 30 and 40 days).

TRIANGULATING REVENUE PER EMPLOYEE

To triangulate this, we first found the NAICS code specific to insurance carriers. Using this NAICS code we searched the U.S. Census Bureau (American FactFinder) to locate the U.S. revenue and employee count for this market. Although we found this data available there, the most recent data provided was from 2012. Therefore, we tried to locate more updated statistics showing the revenue and employee count for this industry. We found them on IBIS World which provided this data for 2018/2019, however, it was focusing on insurance carriers 'and related activities'. Therefore, we had to separate the data out for the 'related activities'. To do so, I examined the report we were able to see that the report was factoring in a few sub-sectors of the insurance industry that were listed under NACIS code 5242 as opposed to 5241. Assuming that these were the 'related activities' as the rest fell under NACIS Code 5241, we, therefore, subtracted the revenue and employee count for these related sectors (this data also available on IBIS World). By doing so, we were able to narrow down the data to only include insight related to insurance carriers (NAICS code 5241).

Calculations:

(For Revenue)
$4.686 trillion - $241 billion - $164 billion = $4.281 trillion.

(For Employees)
7,126,431 - 432,281 - 1,026,351 = 5,667,799

Therefore, the insurance carrier market in the U.S. has a revenue of $4.281 trillion and a total employee count of 5,667,799. This averages out to an industry benchmark of about $755,319 in revenue per employee (or, $4.281 trillion/5,667,799 = about $755,3219).

TRIANGULATING COST PER HIRE

After searching exhaustively across various benchmarking reports, surveys, case studies, articles, market reports, industry reports, recruiting best practices, and statements from industry experts, there did not appear to be a direct answer to this report. One reason for this lack of data is that there appears to be a lack of cost per hire data in general, probably due to the fact that numerous unique variables go into determining a companies cost per hire and therefore, this a number that can be tricky to pin down. Even across the various resources that do discuss cost per hire, the vast majority seem to be circling back to the data presented in the 2017 Talent and Acquisition Benchmarking report, which provides an overall cost per hire figure across all industries. Despite this, we were able to come up with an estimate based on available data. To do so, we first considered statements made by the 2017 Talent and Acquisition Benchmarking report which notes that the average cost-per-hire across all industries is $4,425, along with the following statement made by Lacey Brandt, CFO of Workable: "Cost-per-hire depends on company size and the number of hires. Larger companies making a lot of hires can keep the cost lower than smaller companies. But, generally, aiming for an average cost-per-hire between $3,000 and $5,000 is good practice." This data indicates that the average cost per hire within a given industry likely falls on a spectrum between $3,000 and $5,000. By considering the employee count and turn over rate among insurance carriers, we were able to come with a logical hypothesis for where on the scale insurance carriers likely fall, based on whether they tend to be 'larger companies making a lot of hires'. To do so, we first analyzed how many employees the average insurance carrier in u.s. has. We first took the total number of employees in this market (which was triangulated in the revenue per employee section above) which is 5,667,799 and aimed to divide this with the total number of companies in this market. The U.S. Census Bureau reported a total of 35,344 companies operating in this market as of 2016 (source 13). This means that on average, a single insurance carrier employs about 160 employees (or, 35,344 / 5,667,799 = about 160). This would place the average insurance carrier in the medium-sized business category, with a medium-sized business having between 100 and 999 employees. (source 14) If large-sized companies that make a lot of hires (high turnover rate) have a lower cost-per-hire, and insurance carriers are medium-sized businesses that historically show a lower rate of turnover compared to other industries (source 6), then this would likely put the cost per hire among insurance carriers around the middle of the typical cost per hire scale (or about $4,000).

Sources
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