Understaffed Claims Teams and the Talent Challenge

Insurance claims departments in Australia are grappling with a significant talent shortage, which has left many claims teams understaffed. This shortage is part of a broader industry trend: an aging workforce, waves of pandemic-era resignations, and a lack of incoming talent have created a “perfect storm” in insurance staffing. A recent survey found that 90% of Australian insurance employers cannot find enough skilled employees (How Australia’s Insurance Companies are Combating Talent Shortages with International Talent Partnering - Underwriting Agencies Council Ltd). Crucially, claims roles are among the hardest to fill – experienced claims consultants (especially in complex fields like liability and workers’ compensation) are in high demand and short supply. In the U.S., similar dynamics are at play, with nearly 400,000 insurance workers expected to retire by 2026 (What’s Causing the Insurance Talent Shortage (and How Can Carriers Cope)? | Insurance Thought Leadership) and relatively few young professionals entering claims and underwriting careers. The result is that many carriers now have leaner claims teams than necessary, and the effects are being felt in day-to-day operations.

Impact on Claims Operations and Customer Outcomes

With fewer hands on deck, claims case managers and examiners face mounting workloads. Each team member must handle a larger volume of claims, often juggling cases that are more complex than ever. This workload increase can disrupt internal processes – for instance, routine follow-ups might be delayed and claim reviews might not occur as frequently as intended. Manual administrative tasks (data entry, filing reports, sending communications) become especially burdensome when staff is limited. The immediate consequence is a slowdown in claim processing times and potentially more errors, as overwhelmed staff have less time to devote to each file.

A troubling indicator of this strain is the sharp rise in customer complaints about claims handling. In the past year, the Australian Financial Complaints Authority saw a 34% jump in total complaints against insurers, with complaints about delayed claims skyrocketing by 136% (How Australia’s Insurance Companies are Combating Talent Shortages with International Talent Partnering - Underwriting Agencies Council Ltd). Policyholders are voicing frustration about extended processing times (complaints in that category up 76% year-on-year) and lack of communication on their claims. Such service lapses can severely damage an insurer’s reputation and customer retention. In an industry where trust is paramount, consistently slow or poor claims experiences risk driving customers to competitors.

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Complaint categories and their year-over-year increase in volume at AFCA, reflecting the strain on claims service (FY 2022–23).

Internally, the stress on an understaffed team can also lead to higher turnover and burnout, creating a vicious cycle. Claims examiners in life and disability insurance often cite stress and workload as key reasons for leaving. Every departure further erodes institutional knowledge, making it harder to train new staff and maintain consistent claim outcomes. Moreover, when teams are stretched thin, they have less capacity to mentor junior staff, which is critical for building the next generation of claims experts. This talent crunch is therefore both a short-term operational issue and a long-term knowledge transfer challenge for insurers.

Strategies: From Talent Pipelines to Augmenting with AI

Insurance carriers are adopting several strategies to address the understaffing challenge. In the immediate term, some Australian insurers are turning to international talent partnerships – essentially building remote claims support teams in other countries. This can provide relief by offloading back-office tasks and allowing local staff to focus on claimant-facing activities. Outsourcing, however, is only part of the puzzle. Insurers are also trying to attract and retain domestic talent through improved career pathways, training programs, and university partnerships to raise interest in insurance careers. Modernizing the image of insurance (to appeal to younger job-seekers) and emphasizing flexible, purpose-driven work (helping people in their time of need) have become important themes in recruitment.

Critically, technology is playing a growing role in alleviating the pressure on claims teams. Process automation can handle repetitive tasks like data validation, document indexing, and even initial liability assessments, reducing the clerical burden on human staff. More advanced tools driven by artificial intelligence can serve as force multipliers for an understaffed team. For example, AI-powered triage systems can automatically prioritize incoming claims based on complexity or risk, ensuring that limited human resources are allocated where they’re needed most. This prevents scenarios where staff spend time on straightforward claims while complex cases wait unattended.

Another promising approach is using AI to continuously monitor open claims and flag those that require urgent attention or have an opportunity for intervention. EvolutionIQ’s claims guidance platform is one such tool making waves in the U.S. Income Protection insurance space. Its human-in-the-loop AI analyzes each claim in the background and then advises the human examiner if a claim is ready for a proactive step (for instance, suggesting when medical evidence indicates a claimant might be ready to attempt returning to work). By doing so, it amplifies the impact of each examiner – people can focus on the subset of claims where their expertise makes the biggest difference, rather than cycling blindly through a diary of all claims. 

One U.S. insurer reported that after implementing this AI guidance, examiners were able to reduce low-value work by over a third, effectively expanding their capacity without adding headcount. Importantly, these AI recommendations are explainable and transparent, which helps build trust with the claims staff. The technology doesn’t replace their judgment; instead, it acts like a virtual assistant, crunching the data and highlighting what matters, while the human adjuster makes the call.

This collaborative use of AI has even improved job satisfaction for examiners, who can see more tangible progress in helping claimants (e.g. more recoveries and claim resolutions) rather than feeling bogged down in paperwork. In fact, a global survey found 35% of Australian insurers believe an AI-augmented workforce is an effective strategy to retain employees, underscoring that people are more likely to stay when they have better tools to do their jobs efficiently (‘Growing acceptance’: insurers embrace AI to resolve claims  - Insurance News - insuranceNEWS.com.au).

Key Takeaway: Understaffing in claims teams is a serious challenge, leading to slower claims and unhappy customers. Insurers are responding with creative staffing solutions and by leveraging technology to do more with less. Early results show that AI-driven tools like EvolutionIQ can relieve pressure by automating routine tasks and guiding adjusters to focus on impactful activities. By blending human expertise with AI efficiency, carriers can maintain quality claims service even with leaner teams – a critical advantage as the war for talent continues. 

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