CONNECTICUT INSURANCE INDUSTRY LABOR DATA

Location:
INSURANCE; LABOR;


July 28, 2009		2009-R-0265
CONNECTICUT INSURANCE INDUSTRY LABOR DATA

By: Janet L. Kaminski Leduc, Senior Legislative Attorney

You asked for Connecticut insurance industry labor data. Specifically, you asked if there have been any studies to determine how many jobs the industry, while laying off local employees, has (1) outsourced to offshore vendors and (2) given to workers here on a visa.

SUMMARY

We contacted two state agencies to try to obtain this data: the Departments of Labor (DOL) and Economic and Community Development (DECD). Neither agency tracks the number of jobs (1) outsourced to offshore vendors or (2) given to workers here on a visa. We found no other source that has completed a comprehensive study of this topic.

To obtain information, we instead researched reports about employment activity in Connecticut's insurance industry in The Hartford Courant from 2000 to the present. We provide, in tabular format, a chronological study of major insurance companies that the Courant reported, in articles by Diane Levick and Kenneth Gosselin, as having laid off employees or outsourced jobs, whether offshore or locally (see Table 1). The reports indicate a trend, particularly in difficult economic times, of consolidating offices, reducing the local work force, and outsourcing work, particularly in the information technology (IT) arena.

We also provide average employment levels in Connecticut's insurance industry from the Connecticut DOL for 2000 to the present (see Tables 2 through 4). It appears that the employment level peaked in 2002 at 67,828 positions and has eroded since then. Over the past year, from June 2008 to June 2009, the employment level has dropped from 66,100 to 64,200, a loss of 1,900 jobs, which represents 2.9% of the jobs. According to the Courant, the industry's employment peaked in July 1990 at 83,300 and ended 1999 at 71,500. Thus, from July 1990 to June 2009, the Connecticut insurance industry's employment level dropped from 83,300 to 64,200, a decrease of 19,100 jobs or about 23% of its workforce.

Finally, we provide information on nonimmigrant visas. The U.S. Citizenship and Immigration Services department operates the visa program, through which U.S. employers may employ foreign workers, subject to criteria Congress sets. An H-1B visa relates to workers with theoretical or technical expertise in a specialized field and a bachelor's degree or higher (or its equivalent), such as engineers, computer programmers, accountants, and doctors. Congress caps the number of H-1B visas that may be granted in any fiscal year at 65,000, with some exceptions (e.g., the first 20,000 H-1B visas for nonimmigrants with an advanced—masters' or higher—degree) are exempt from the cap. The federal stimulus bill enacted in February 2009 restricts the ability of certain banks and other financial institutions from hiring H-1B workers unless they have offered positions to equally- or better-qualified U.S. workers.

REPORTED EMPLOYMENT ACTIVITY

Table 1: Connecticut Insurance Industry Employment Activity as Reported
in The Hartford Courant (2000 – 2009)


*Article Date*	*Insurer*	*Activity*
*2009*
July 24	The Hartford	The Hartford has cut nearly 270 jobs in its investment products division nationwide. The number of the layoffs in Connecticut could not immediately be obtained from the company. (Later reports expect fewer than 20 layoffs in state.)
July 21	UnitedHealthcare, Health Net	UnitedHealthcare, part of UnitedHealth Group, has agreed to buy licenses and rights from Health Net of the Northeast to assume its members as they renew coverage. Although the companies would not comment on the potential for layoffs, the deal could result in job cuts in Connecticut, and Health Net is planning for severance costs.
June 27	The Hartford The Phoenix Cos.	The Hartford cut 475 jobs in Connecticut since late 2008 with more cuts likely this year. Phoenix, by late July or early August, will have eliminated 210 jobs in Connecticut this year (including 75 confirmed in April).
June 19	The Hartford	The Hartford expects cuts in its property and casualty claims operations, including 50 in Connecticut, through outsourcing and consolidating offices. This includes sending the work of about 9% of its 4,600 claims operations' employees (more than 400) to offshore resources. The claims operation outsourcing vendor, New York-based ExlService Holdings, Inc., uses labor in India, the Philippines, and the United States. The company laid off about 200 Hartford area employees this year by late May and 125 in late 2008.
April 23	The Phoenix Cos.	Of the 250 job cuts previously announced, Phoenix has notified 170 employees so far, including 75 in Hartford.
February 28	The Phoenix Cos.	Phoenix announced it will eliminate 250 of its 1,100 jobs, or about 25% of its workforce. In 2008, it eliminated 160 jobs, 13% of its workforce.
January 14	ING	ING announced it will lay off 750 U.S. employees, including 96 in Connecticut.
January 6	CIGNA Corp.	CIGNA announced it will cut about 1,100 jobs and consolidate some offices, but did not estimate how many jobs will be cut in Connecticut. Cuts here are expected to be substantial because CIGNA HealthCare is based in Bloomfield and is its single largest location.
*2008*
December 18	Aetna	Aetna is laying off 1,000 employees nationwide, including 375 in Connecticut.
December 13	Lincoln Financial Group	Lincoln is eliminating 120 jobs nationwide, including 15 in Connecticut.
November 5	Health Net	Health Net will be outsourcing IT jobs to IBM and Cognizant, but will not say how many employees will be affected.
*2007*
December 11	The Hartford	The Hartford has contracted with IBM, which operates its Connecticut data center, to build a second data center in Boulder, Colorado. The Boulder center is not expected to affect jobs in Connecticut. When The Hartford outsourced its Connecticut data center to IBM in early 2007, it affected about 400 workers, about 320 of whom were offered jobs with IBM and the other 80 of whom were redeployed within The Hartford or retired.
March 8	The Hartford	The Hartford is eliminating 63 jobs in the property and casualty claims operations as it outsources the work to Accenture, which will offer jobs to 15 of the affected employees.
January 24	The Hartford	The Hartford announced it is outsourcing its Connecticut data center to IBM under a five-year contract, affecting about 400 employees.
*2006*
July 11	Lincoln National Corp.	Lincoln is cutting 75 jobs in Connecticut, moving the work to North Carolina and New Hampshire. The move results from a merger with Greensboro, N.C.-based Jefferson-Pilot Corp.
April 7	CIGNA Corp.	CIGNA is laying off 380 employees, including 256 in Connecticut, as it cuts costs, redeploys resources, and consolidates offices. At the same time, it is adding 75 jobs in Connecticut. Of the 380 layoffs, 50 of the jobs are being outsourced to the Philippines through Accenture, but none from Connecticut. This is in addition to the company's previous outsourcing announcements.
March 10	CIGNA Corp.	CIGNA is laying off 91 employees, 65 in Connecticut, as it outsources work to the Philippines through Accenture.
January 28	The Hartford	The Hartford is cutting 192 jobs in the Hartford area due to outsourcing work, some of which will go to foreign workers. At least half of the displaced workers will be redeployed throughout the company.
January 27	St. Paul Travelers Co.	Travelers is (1) adding 1,000 jobs nationwide, a substantial number of which may be in Connecticut, (2) cutting 100 IT jobs in Hartford as it outsources the work, and (3) adding another 500 jobs through outsourcing contracts. This is in addition to about 500 jobs it already has outsourced, most of which have gone to India.
January 7	CIGNA Corp.	CIGNA is cutting 109 jobs nationwide, including 56 in Connecticut, as it outsources the work to the Philippines through Accenture. The company already outsources some work to India and Costa Rica.
*2005*
May 11	The Hartford	The Hartford is looking into potential vendors for outsourcing IT jobs. In April, the life unit said it will cut 50 IT jobs in Windsor and add more foreign workers throughout the year.
*2004*
September 8	CIGNA Corp.	CIGNA is eliminating 60 jobs, including 30 in Connecticut, as it outsources the work to Pennsylvania-based Diversified Information Technologies, which will send some work to India.
August 19	Aetna	Aetna is likely to ship more IT jobs overseas. It is planning an expansion of its offshore outsourcing, but job cuts, which could happen over time, include an undetermined number of Connecticut workers. The company already has about 1,000 overseas employees and outsourced positions. It has agreements with the Indian firm InfoSys and New Jersey-based Cognizant, which uses workers in India and Ireland. In June 2004, Aetna confirmed it was laying off 102 IT workers, including 50 in Connecticut.
May 27	CIGNA Corp.	CIGNA is outsourcing part of its IT operations to Germany-based Siemens Business Services, affecting 270 employees, including 72 in Connecticut. Earlier in the year, CIGNA announced 3,000 job cuts nationwide. In the first quarter of 2004, it eliminated 239 jobs in Connecticut, with more expected.
February 6	CIGNA Corp.	CIGNA previously confirmed that it eliminated at least 4,180 workers in 2003 and late 2002, including several hundred in Connecticut. An internal document obtained by the Courant shows that CIGNA studied the potential savings of sending more IT work offshore. It estimated that by replacing 200 IT workers with foreign labor, it could save $3.7 million in the first year and $16.8 million in the second year. The analysis assumed an offshore wage of $20 an hour, compared to a U.S. wage of $75 an hour. The company already contracts with the Indian firm Satyam.
*2003*
December 30	Aetna	Aetna entered into a co-sourcing contract with IBM, under which IBM employees will work alongside Aetna employees. IBM is not expected to use visa workers.
December 17	ING	ING entered into a seven-year outsourcing contract with IBM, affecting 100 IT workers in Hartford. Of the 100 employees, 60 were offered jobs with IBM, 30 were laid off, and 10 were redeployed within ING.
October 23	Aetna	Aetna is laying off 32 IT workers, including 18 in Connecticut, as part of its consolidation and streamlining efforts. Separately, it has outsourcing contracts with the Indian firm InfoSys and other vendors.
October 3	The Phoenix Cos.	Phoenix laid off 123 employees, including 77 in Connecticut. These come on top of 93 positions that were eliminated earlier in the year, 84 through lay offs and the rest by attrition.
July 3	Hartford Life	Hartford Life is outsourcing some of its IT functions to the Indian firm Satyam and eliminating eight jobs. At the same time, a handful of Satyam employees are working at Hartford Life on visas. The company also contracted during the year with Cognizant, which uses labor from India.
May 13	The Hartford	The Hartford will lay off 850 employees by the end of June 2003, including about 640 in Connecticut. It is also eliminating 650 vacant positions, about three quarters of them in Connecticut.
May 1	CIGNA Corp.	CIGNA is laying off 135 to 150 IT employees, about half in Connecticut. Meanwhile, it is increasing its use of the Indian firm Satyam for certain IT work. As of early March 2003, 74 Satyam workers were located at various CIGNA offices and five were working in India.
March 21	CIGNA HealthCare	CIGNA HealthCare is cutting 3,900 U.S. jobs and hiring more people for its claims service center located in Ireland, where it now has about 150 employees. It could add as many as 175 more over the next three years. In May 2002, CIGNA cut 56 jobs from its Bristol, Connecticut service center.
*2002*
November 1	Aetna	Aetna, which has already announced 7,150 layoffs for 2002 and 2003, will record a fourth-quarter charge that is expected to include an undisclosed number of additional job cuts and office consolidation. An additional 1,600 jobs will be eliminated through attrition. As of September 30, 2002, Aetna had laid off 3,400 of the 4,400 employees to be cut nationwide under an announcement it made last December; about 360 of the layoffs were in Connecticut. It also just started the 2,750 layoffs it announced in September; 317 of them in Connecticut. Aetna also cut 74 Connecticut jobs in the second quarter of 2002 that were outside the two major rounds of layoffs.
August 14	ING	Last December, ING announced it would eliminate 325 jobs in Greater Hartford, part of a 15% reduction of its U.S. workforce. Since then, about 80 jobs have been eliminated or moved out of state. The company is closing its Avon offices, moving about 130 workers to Hartford.
May 29	Aetna	Aetna is eliminating 24 jobs related to the sale of two of its three aircraft as it outsources to a contractor the work of flying management around. This is in addition to the 6,000 jobs Aetna previously said it plans to eliminate nationwide this year.
May 1	CIGNA Corp.	CIGNA plans to shift some IT work to India, replacing some U.S. consultants, but with minimal impact on regular employees' jobs. Some CIGNA IT employees are concerned about future job losses.
*2001*
December 14	Aetna	Aetna is cutting 6,000 jobs nationwide, 16% of its national workforce. The cuts are made up of 4,400 layoffs, including 360 in Connecticut, and 1,600 through attrition.
*2000*
December 14	Aetna	Aetna is cutting 5,000 jobs nationwide, few of them in Connecticut. The company was unsure how many would be through layoffs; it will rely on attrition as much as possible.
October 27	Aetna	Aetna laid off 205 employees and fired for cause 364 in 1999. It laid off about 50 and fired for cause about 68 in the first nine months of 2000. The figures include previously disclosed job losses from the sale of businesses and outsourcing as well as firings for various reasons. The disclosure was made to the Connecticut Insurance Department, which is reviewing a proposed sale of certain of Aetna's businesses to ING.
March 6	Industry data	Connecticut's insurance industry ended 1999 with 71,500 employees, a gain of about 600 from December 1998, but far from the July 1990 peak of 83,300.

AVERAGE EMPLOYMENT LEVEL

The information for the below tables is from the Connecticut DOL's labor market information available online at http://www.ctdol.state.ct.us/lmi/research.htm. The data is for Insurance Carriers and Related Activities, as represented by the North American Industry Classification System (NAICS) Code 524.

Table 2: Annual Average Employment in

Connecticut's Insurance Industry (2000-2007)

*Year*	*Average Employment*
2008	65,694
2007	65,302
2006	65,510
2005	65,263
2004	65,602
2003	67,822
2002	67,848
2001	67,362
2000	66,388

Table 3: Quarterly Average Employment in

Connecticut's Insurance Industry (2008)

*Quarter*	*Average Employment*
4^th	65,321
3^rd	65,488
2^nd	66,110
1^st	65,857

Table 4: Average Employment in Connecticut's

Insurance Industry (June 2009 vs. June 2008)

*Month*	*Average Employment*
June 2009	64,200
June 2008	66,100
Change	-1,900 (-2.9%)

NONIMMIGRANT VISA PROGRAM

U.S. businesses use the H-1B visa program to employ foreign workers in occupations that require theoretical and practical application of highly specialized knowledge and a bachelor's degree or higher (or its equivalent), such as architects, scientists, engineers, computer programmers, doctors, and accountants, according to the U.S. Citizenship and Immigration Services (USCIS).

Local Concern

Although there are numerous types of visas, it is the insurance industry's use of the H-1B visa program that has been called into question on occasion.

In 2003, U.S. Representative Nancy Johnson surveyed five Connecticut insurance companies—Aetna, CIGNA, The Hartford, Phoenix, and Travelers Property Casualty—concerning their use of the H-1B visa program. She determined, based on information the companies provided, that they were complying with the law as it existed then (Staff reports, Johnson Pursuing Visa Issue, Hartford Courant, May 17, 2003, at E2). But because many of the rules on how businesses can employ foreign labor using H-1B visas do not apply unless the visa workers make up at least 15% of a company's total workforce, Johnson announced she wanted the Judiciary Committee to explore the issue.

Later that year, U.S. Representative Rosa DeLauro also looked into the issue and was expected to introduce a bill that, among other things, would “close loopholes on restrictions limiting foreign workers who come in on H-1B visas” (Martin, Vivian B., Winners and Losers in the Global Economy, Hartford Courant, July 3, 2003, at A13). Martin reported, “High-tech companies have said they need H-1B visas because they can't find American workers with the skills they need, but this claim is hotly disputed by some of the unemployed.”

H-1B Visa Reform Act of 2004

On December 9, 2004, the USCIS announced that President Bush signed the Omnibus Appropriations Act for FY 2005, which included the H-1B Visa Reform Act of 2004. The reform act imposed and increased various fees on U.S. employers using the H-1B visa program. It also provided new exemptions from the congressionally mandated annual H-1B cap.

H-1B Visa Cap

A U.S. employer seeking to hire H-1B workers must file a labor condition application (LCA) with the U.S. Department of Labor (U.S. DOL) and submit the certified LCA with the H-1B petition to the USCIS.

By law, Congress limits the number of visas that may be issued for a fiscal year (October 1 to September 30) to control the number of foreign workers that can enter the United States under a particular visa classification. The current H-1B visa cap is 65,000, subject to certain exceptions. Employers may submit petitions to the USCIS for H-1B workers as of April 1 for an October 1 start date.

Excluded from the fiscal year cap are H-1B nonimmigrants who are employed by, or have received a job offer from, (1) institutions of higher education or a related or affiliated nonprofit entity and (2) a nonprofit or government research organization. Additionally, under the 2004 reform act, the first 20,000 H-1B petitions filed on behalf of aliens who have earned a U.S. masters' degree or higher are exempt from the cap. After those 20,000 slots are filled, USCIS is required to count such cases against the cap for the remainder of the fiscal year.

Recent Change under the Stimulus Bill

On Feb. 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act of 2009 (“stimulus bill”), Public Law 111-5. Section 1661 of the stimulus bill incorporates the Employ American Workers Act (“EAWA”) to (1) limit certain banks and other financial institutions from hiring H-1B workers unless they have offered positions to equally- or better-qualified US workers and (2) prevent banks from hiring H-1B workers in occupations in which they had laid off US workers. The EAWA took effect on Feb. 17, 2009 and sunsets February 17, 2011.

The EAWA prevents a company from displacing U.S. workers when hiring H-1B specialty occupation workers if the company received funds through the Troubled Asset Relief Program (“TARP”) or under Section 13 of the Federal Reserve Act (collectively referred to as “covered funding”). Any company that has received covered funding and seeks to hire H-1B workers is considered to be an “H-1B dependent employer.”

Under the EAWA, an “H-1B dependent employer” must attest to the U.S. DOL when filing an LCA that it:

1. has taken good faith steps to recruit U.S. workers (defined as U.S. citizens or nationals, lawful permanent resident aliens, refugees, asylees, or other immigrants authorized to be employed in the United States) using industry-wide standards and offering compensation that is at least as great as those offered to the H-1B nonimmigrant;

2. has offered the job to any U.S. worker who applies and is equally or better qualified for the job that is intended for the H-1B nonimmigrant;

3. has not “displaced” (i.e., laid off from a job that is essentially the equivalent of the job for which an H-1B nonimmigrant is sought) any U.S. worker employed within the period beginning 90 days prior to the filing of the H-1B petition and ending 90 days after its filing; and

4. will not place an H-1B worker to work for another employer unless it has inquired whether the other employer has displaced or will displace a U.S. worker within 90 days before or after the placement of the H-1B worker.

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