An industry full of organizations that are all too familiar with adapting and overcoming challenges in an ultra-competitive market, staffing firms have been put to the test more than ever. The past few years have taught us change and uncertainty can happen when you least expect it. Unsurprisingly, the staffing industry was no exception to this lesson.
Whether it be the tight labor market, increasing client contract requirements and decreasing limits, or the rise in cyber liability claims, staffing firms must adapt and overcome these challenges.
Attracting and Retaining Talent in the Tight Labor Market
With a struggling economy and employees leaving jobs at historic rates, attracting and retaining talent is proving to be a difficult obstacle for employers. Many employees have left the workforce since the pandemic began, and those who have stayed have shifting expectations of their employers. According to a study by Monster.com, 96% of workers are actively looking for a new job in 2023.
While pay and benefits remain strong motivators for employees, they are putting a greater emphasis on flexibility and where and how they conduct their jobs. Top talent can be depended upon to work in an environment that best suits them and employers should take note. Now that a large portion of the workforce have gotten a taste of flexible work, it’s not something they’re ready to lose. To attract and retain the most desired talent, employers must be willing to accommodate these needs when feasible.
Increasing Client Contract Requirements Balanced Against Decreasing Limits
The staffing industry is currently facing two competing demands: increasing insurance limit requirements and client contracts while also decreasing availability of that limit from insurance carriers. Not only are insurance premiums increasing but carrier capacity for offering those limits have reduced amid this hard liability market.
To overcome this alarming trend, staffing firms needs to be comfortable questioning the necessity of limit requirements in client contracts. Otherwise, they’ll need to go to the excess marketplace to find limits above what their primary caretaker is willing to offer.
Rising Cyber Liability Claims
According to Norton in 2023, 2,200 cyberattacks happen every day. Due to this sudden rise in cyber and ransomware attacks, the cyber liability market has drastically hardened. Not only have premiums and rates rapidly increased, but underwriting requirements to even obtain coverage have become increasingly difficult. Despite rising rates and deductibles, decreasing limits, and increasing coverage restrictions, there are steps that organizations can take to mitigate their cyber exposure and liability claims.
It’s critical for staffing firms to review their cybersecurity measures well in advance of their renewal to make any changes necessary and mitigate exposure. Updating one or two key controls can make the difference between getting a quote or receiving a declination. This can impact pricing by as much as 400%.
Additionally, employers can help minimize the threat of a cyberattack by adhering to the following cybersecurity measures:
- Implement an appropriate cyber liability insurance policy
- Create a formal process to update software, firewalls, and antivirus programs
- Safeguard laptops and mobile devices with encryption codes
- Conduct regular staff training on your cybersecurity procedures
- Implement a cyberattack response plan
Whether it be the impact of the “Great Resignation,” increasing contract requirements and decreasing limit availability, or the rise in cyber and ransomware attacks, the staffing industry shouldn’t expect these challenges to go away on their own anytime soon. It’s important to partner with a reliable insurance broker who has a deep understanding of the industry and its many challenges so your coverage can not only keep up but stay ahead of emerging risks. To learn more, get in touch with an MMA advisor today.
