Insurance Loses Jobs, But Not In IT

According to a report from the Bureau of Labor Statistics, the insurance industry in the United States lost 4,000 jobs—0.2 percent of the workforce—in November, almost entirely from insurance carriers.

However, there is some good news on the jobs front for insurance IT, despite recent job cut announcements from firms including Aetna (6,000 positions), ING Americas (1,600 positions), MetLife (1,900 positions) and Fidelity Investments (760 positions). It appears that few of the carrier staff cuts are coming from technology side of the business. At the same time, carriers evidently are not planning on adding technology staff in 2002, either.

IT Staff To Remain Steady

"I imagine the size of our IT staff will remain the same in 2002, around 3,500 people," says John Madigan, vice president of corporate human resources at The Hartford, ($170.6 billion in assets). "We are looking at all open positions and asking if we really have to fill them. If not filling a position will not have an impact on our customers, it will remain open for now," he says.

Kelly Cannon, vice president of information systems at Columbus, OH-based Nationwide Insurance ($194 billion in assets), expects that hiring will remain flat next year, with the IT staff holding steady at about 1,400 people. Other carriers, including Travelers and Minnesota Life (St. Paul, $21.2 billion in assets), are forecasting a similar hiring trend, with Minnesota Life expecting to hire exactly two people in 2002, reports Jean Delaney Nelson, vice president of information systems.

In a report from RHI Consulting, a Menlo Park, CA-based staffing solutions and consulting services provider, 15 percent of CIOs surveyed across all industries expect an increase in IT staff in the first quarter of 2002, with four percent expecting staff reductions. The net 11 percent increase is the lowest total in the seven-year history of the survey. However, predicts Andrew Benedetti, Philadelphia branch manager, RHI, technologists in the financial services industry will fare better than technologists in other areas. "All indications are that IT spending in financial services is not going to be significantly reduced," Benedetti says. "That said, companies are going to need staff."

Minnesota Life's Delaney Nelson also sees insurance doing better than other industries in terms of workforce levels. "We will fare better, but it won't be like it was two years ago," when insurance companies were hiring with double-digit growth. "Insurance companies tend to be more conservative and we are a less-volatile industry. We don't over-hire during the boom times, so we don't have to lay off large numbers of employees when there is an economic downturn."

Insurance Carriers Don't Overreact

Nationwide's Cannon agrees. "We didn't see a spurt of staffing growth in '99 and 2000, so we are not seeing a huge drop-off, compared to the boom or bust cycle you see in New York City," he says.

In fact, the focus on widespread IT layoffs may be a geographic and home-city bias phenomenon perpetuated by the media, contends Diana Beecher, chief information officer, Travelers Property & Casualty (Hartford, part of Citigroup, $902 billion in assets). "The world looks at financial services based on what happens in New York City," Beecher says. "It looks pretty dramatic because all of the layoffs in New York get a lot of press coverage. I always wonder if it is the same across the country. I know it is not as dramatic in Hartford."

Nationwide's Cannon feels that his company's location helps insulate it from large swings in employment. "We are in a stable business P&C insurance and we are in a stable geographic area traditionally," he says. "BancOne, one of the other large financial services employers of IT talent in the area, just announced it was planning to hire 600 more IT staff members."

In fact, insurance companies may actually benefit in some ways from the downturn in the economy. "There are some areas in IT that really needed to go on a diet," says Travelers' Beecher. "The pain is not being felt in the financial services area, but pure technology companies have had a lot of layoffs." Beecher cites successful and profitable IT companies, such as Cisco. "Cisco is a very sound company, but it is under a lot of stress and has had a lot of layoffs."

And at Nationwide, Cannon says he has seen a dramatic increase in applications for open positions. "We are benefiting from an IT staffing standpoint in two ways," he says. "We are getting many more applications overall and the people we are seeing have much more experience and technical capabilities. We don't have to look as far or for as long when we want to fill a position." Cannon relates that as soon as a Nationwide IT position is posted either online or in a newspaper, a flood or resumes is received-a marked difference from the few responses the carrier would receive even just a year ago.

Greg MacSweeney is editorial director of InformationWeek Financial Services, whose brands include Wall Street & Technology, Bank Systems & Technology, Advanced Trading, and Insurance & Technology. View Full Bio