The COVID-19 pandemic has provided a chance for a retrospective view of the disability claims industry and will require the examination of lessons learned to navigate our new normal.
Written by Michael Cleveland, President, Advisory Services
How claims organizations will adapt and eventually thrive in the “New Normal”
As we near the two-year mark of the global pandemic – a (hopefully) once in a lifetime event – many are trying to understand the impact it’s had on the absence industry. The old saying, “hindsight is twenty-twenty” couldn’t be more true as we look back on the pandemic, and I am confident that we can, and will, gain valuable knowledge from what has occurred.
I initially broke the pandemic into two distinct periods of time: what I called “pre-vax” and then “post-vax.” Pre-vax was that period of complete uncertainty for everyone. Most people hunkered down, unsure of the future, waiting for a vaccine that would hopefully be the panacea that would take us back to “normal.” The second period was one of hope for many. Life would soon be fully restored with businesses reopening, fewer restrictions imposed, and people beginning to have less fear of travel and gatherings. As we watch Delta and Omicron leave us in the rear-view mirror, I’ve come to understand that a third phase has risen; and I believe that period is truly the “new normal.”
The rush home: The pre-vax period
When the pandemic hit in March 2020, insurers and third-party administrators, like many others, rushed to get their employees set up with remote work capabilities. With this move came varying degrees of pain as some navigated with ease and others, less so. Once the hiccups of work-at-home set ups were over, the wave of absence, paid family and medical leave, and short-term disability (STD) claims began hitting the shore, and it was an epic storm. Many carriers had to build contingency plans around how to manage the onslaught of work.
Next, we wondered how carriers would adapt the traditional brick-and-mortar functions of recruiting, hiring, and training in a remote world. With a lot of determination, our industry overcame that challenge as well. Tenacity is inherent in the group insurance world. I am proud to be a colleague of leaders that navigated deftly through this time.
The Great Resignation: The post-vax period
After successfully navigating the pre-vax period, the impact of the pandemic began to evolve, requiring carriers to pivot yet again. After feeling the effects of the pandemic on the Social Security Disability Insurance (SSDI) program during the pre-vax period, insurers began to see a slowdown in offsets for SSDI, and the beginning of impacts to their long-term disability (LTD) reserves. The operational disruptions continued to occur, but they morphed into different problems not seen during the pre-vax phase: “The Great Resignation.”
The Great Resignation was the alarm du jour and became a huge concern for our industry, as with many others. Families began to realize that they really didn’t need two incomes and reverted to single earner/stay-at-home living arrangements that were more appealing to them. Older workers nearing retirement decided that now was the time. For those of us who are Baby Boomers, that’s not hard to understand. Add in the next group of people exiting corporate America —the entrepreneurs —the highly motivated individuals who have the dream of running their own businesses. With the country reopening, the timing couldn’t be better to leave the 9 to 5 behind and set out on their own.
From a claim perspective, the post-vax period brought on a new onslaught of claims. First, the elective surgeries that had been postponed in 2020 were coming back with a vengeance. Add in the Delta and Omicron variants, and the second wave of COVID-related claims was larger than the first for most carriers. SSDI award timing continued to lag, and now carriers were struggling with the impact to their LTD blocks. The onslaught of two large waves of STD claims, the departure of seasoned workers due to the Great Resignation, and the inability to hire experienced mid-career staff only exacerbated the impacts to LTD.
Adjusting to the new normal
It feels like we’re very close to – if not in – the “new normal” period from a societal perspective — but what does that mean for the claim world? How will we evolve to meet the challenge? While there’s an old saying that goes, “your opinion and a quarter won’t buy you a cup of coffee,” we must consider what the “new normal” landscape looks like and make decisions that will help to navigate the uncertainty.
Here’s my prediction as to how claims organizations will adapt and succeed going forward:
- Embrace a blended approach to office work: While many leaders love it and some hate it, remote work is here to stay. It is true that some people want to be back in the office, but, according to several recent surveys, most would prefer a hybrid schedule. Whatever you choose, a combined approach may be the most beneficial and effective: a mix of full-time in office, a hybrid schedule of two to three days per week, and full-time remote options will most certainly broaden the appeal to staff and widen the recruiting net.
- Recruit for the future: To say that we are in a “talent war” right now is an understatement. Carriers are offering various incentives to experienced staff, incentives never seen prior to the pandemic, except for in leadership roles. While this mid-career talent is critical for success and helps ease the impact of Baby Boomers retiring, it does not address a broader issue looming on the horizon: claim expertise is waning in your organization. Recruiting for the future means finding entry-level talent that is suited for the world of claims. We all know that we’re a special breed in claims, and finding the right people to fit the role, who will learn and grow, and become the keepers of your knowledge is critical. An old friend and former boss from the claim world recently said to me, “the knowledge is leaking out the back door twice as fast as the talent is coming in the front door.” Truer words have never been spoken.
- Get ahead on your LTD results: Now is the time to focus on what impacts the pandemic and its associated pains are having on your LTD block. We all know how critical it is to ensure that these blocks are accurately and effectively managed. The use of analytics to identify pockets of opportunity is critical in the new normal. Given the staffing issues that exist, carriers may need to be creative with ways to get this done, and while it may cause some organizational pain, risk management is the number one imperative in claims now. Many carriers are voicing concerns over this, and those that have made plans to address it will come out ahead of those who don’t.
While it’s been an adjustment for certain, I am excited to be exiting this once in a lifetime event, and I am not entirely unhappy about living in this new world. So far, we have navigated the challenges brought on by the pandemic, but it would be unwise to say there are no more on the horizon. A retrospective approach to the future provides a solid foundation to move forward with innovative ideas and solutions to combat any impending challenges. At Brown & Brown Absence Services Group, we welcome partnering with you as we all adapt to this new normal.