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Farmers Insurance Laying Off 11% of Workforce, Citing Industry Challenges

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Re: Farmers Insurance Laying Off 11% of Workforce, Citing Industry Challenges

#41

Post by uoaei »

whalesalad wrote: post #29
JKCalhoun wrote: post #2

All I see in the article is the discussion of "profits". I would think the PR department could come up with something about "trying to keep costs competitive for our customers" or something like that. Instead they're telling California and Florida customers to take a hike ... along with 11% of their employees. When is the last time we heard a company enact a company-wide, 50% cut in officer's salaries and a freeze on…

Why are people surprised when a company operates in its’ own best interest? Why should we expect anything else? Insurance companies are just about moving dollars around and hedging risk. Being perturbed about this is like being mad about your dog barking at the mailman. If someone said I’m going to start free climbing the tallest buildings in the world - but I need insurance - the company will tell you to get lost be…

This is an unhelpful and tone-deaf response. I don't think anyone is "surprised" that companies act in their own self-interest. If they are surprised by anything, it's that the system that made mandatory the concept of insurance for a dignified, modern life (what we name in shorthand as "the economy") continues to allow for rug-pulling of this magnitude which obviously results in net-negative outcomes for society as a whole.

Re: Farmers Insurance Laying Off 11% of Workforce, Citing Industry Challenges

#42

Post by whalesalad »

lifechoseme123 wrote: post #40
whalesalad wrote: post #29

Earlier quoted context omitted.

Why are people surprised when a company operates in its’ own best interest? Why should we expect anything else? Insurance companies are just about moving dollars around and hedging risk. Being perturbed about this is like being mad about your dog barking at the mailman. If someone said I’m going to start free climbing the tallest buildings in the world - but I need insurance - the company will tell you to get lost be…

Re: FL & CA becoming uninsurable-- I have almost zero knowledge in that area. I assume it's because of natural disasters such as Fires, Hurricanes, and sea level rise?

Yes.

Re: Farmers Insurance Laying Off 11% of Workforce, Citing Industry Challenges

#43

Post by nvahalik »

tallanvor wrote: post #22
nvahalik wrote: post #13

I wonder which part of the business they laid off those folks from. The article doesn't say. In general, there are 3 main parts of an insurance company that are "in house": underwriting, claims, and accounting. Accounting isn't really something that can be automated or outsourced. You can't automate claims, but you can outsource. You can automate/outsource _some_ underwriting and/or parts of the underwriting process.…

Some claims can certainly be automated. Not everything requires sending someone out. If, for example, there's a burglary, and a customer submits a list of items stolen and the value is within a certain range, it may be easier and cheaper overall for a company to cut a check rather than have someone spend time trying to verify the claim. There's a higher risk of fraud, but if the personnel savings outweigh it, then th…

For car insurance, this is already happening and is fairly reasonable. A lot of car claims are handled by desk folks because you take it to a repair shop and they figure it out and negotiate it.

But P&C is a different beast.

> and the value is within a certain range

This is called a deductible. We literally had a guy who got denied on a claim end of last week because it didn't meet his deductible. (He provided the list.)

Then literally the next day he re-submits with MORE STUFF. So yeah, the human element, even in a reduced form, will always be required. Stuff that he cannot prove was actually even damaged because he had "thrown it away".

Re: Farmers Insurance Laying Off 11% of Workforce, Citing Industry Challenges

#44

Post by Phileosopher »

nvahalik wrote: post #13

I wonder which part of the business they laid off those folks from. The article doesn't say. In general, there are 3 main parts of an insurance company that are "in house": underwriting, claims, and accounting. Accounting isn't really something that can be automated or outsourced. You can't automate claims, but you can outsource. You can automate/outsource _some_ underwriting and/or parts of the underwriting process.…

You're probably right. From my vantage point (in an independent agent insurance office right now), the easiest way to shrink UW is to make it ALL run by independent workers (e.g., agents).

The irony of this, though, is that the quality of the underwriting risk assessment can suffer, meaning premiums will often be underpaid relative to statistical risk, and create more problems if enough of them push through.

Another money-saving trick I know of in insurance is to severely downsize the claims department. It's lawfully mandatory to process claims, but I'm not sure if there's a statute on how long to process them. One of the carriers my office hates working with can take 3-6 months to process a claim, and often will find some reason or another to not pay it.

If anyone wants a pain point, the insurance industry desperately needs a decent-quality rater/AMS: the tech and UX is hilariously ancient.

Re: Farmers Insurance Laying Off 11% of Workforce, Citing Industry Challenges

#45

Post by lotsofpulp »

silvestrov wrote: post #33
FredPret wrote: post #21

Earlier quoted context omitted.

It'd be great for investors if the top positions were paid mostly / entirely in stock. That way we can entice a good CEO with high pay and our interests will still align.

That leads to short term thinking and pumping of stocks, often done by firing R&D and maintenance people.

There exist both long term and short term incentive plans.

See page 10:

https://www.zurich.com/-/media/project/zurich/dotcom/investo...

Re: Farmers Insurance Laying Off 11% of Workforce, Citing Industry Challenges

#46

Post by Spooky23 »

JKCalhoun wrote: post #2

All I see in the article is the discussion of "profits". I would think the PR department could come up with something about "trying to keep costs competitive for our customers" or something like that. Instead they're telling California and Florida customers to take a hike ... along with 11% of their employees. When is the last time we heard a company enact a company-wide, 50% cut in officer's salaries and a freeze on…

What they are really saying is that they can’t effectively model the risk.

Say you were an insurer… would you want to take risk for Florida hurricane losses knowing what we know?

If we want a functional insurance market in these places, we need a student loan type solution - make the Feds the reinsurer and have the insurance company mostly administer the policy.

Re: Farmers Insurance Laying Off 11% of Workforce, Citing Industry Challenges

#47

Post by whalesalad »

uoaei wrote: post #41
whalesalad wrote: post #29

Earlier quoted context omitted.

Why are people surprised when a company operates in its’ own best interest? Why should we expect anything else? Insurance companies are just about moving dollars around and hedging risk. Being perturbed about this is like being mad about your dog barking at the mailman. If someone said I’m going to start free climbing the tallest buildings in the world - but I need insurance - the company will tell you to get lost be…

This is an unhelpful and tone-deaf response. I don't think anyone is "surprised" that companies act in their own self-interest. If they are surprised by anything, it's that the system that made mandatory the concept of insurance for a dignified, modern life (what we name in shorthand as "the economy") continues to allow for rug-pulling of this magnitude which obviously results in net-negative outcomes for society as…

When the world is rapidly changing what do you expect to happen? Systems collapse. It’s inevitable.

Re: Farmers Insurance Laying Off 11% of Workforce, Citing Industry Challenges

#48

Post by ryanwaggoner »

londons_explore wrote: post #7

I really don't think an insurance company should have 24,000 employees. Even 240 employees sounds like too many to me. They serve 10 million customers. Nearly every customer should be able to use an entirely automated online form for signing up and for making insurance claims. Claims should be settled entirely with the customer uploading a 1 minute video showing what damage occurred, plus the bill to fix it. Assume 1…

All large insurance companies were once 240 people. Why do you think they grew to be 100x that size? Why not just keep their headcount the same and watch their margins explode as revenue goes up 10,000%?

Re: Farmers Insurance Laying Off 11% of Workforce, Citing Industry Challenges

#49

Post by travoc »

londons_explore wrote: post #27
justin66 wrote: post #17

Earlier quoted context omitted.

> Claims should be settled entirely with the customer uploading a 1 minute video showing what damage occurred, plus the bill to fix it. And your plan for when clients are unwilling or unable to conform to your idealized filing process would be what? Simply don’t reimburse them? Or when they’re unsure what’s covered ? Or have some other question that’s urgent and not covered by an online FAQ? It’s a highly regulated i…

If you write it in the policy "To make a claim, you must upload a 1 minute video via our app or website, together with photos of all receipts you want us to reimburse", then you are totally within your rights to deny all claims where the customer can't/won't follow your process.

State Insurance Commissioner disagrees. Enjoy your fines and sanctions.

Re: Farmers Insurance Laying Off 11% of Workforce, Citing Industry Challenges

#50

Post by lotsofpulp »

candiddevmike wrote: post #32
criley2 wrote: post #8

Earlier quoted context omitted.

I hate to be that person, but this is the future. Because of climate change, more of our country is barreling towards "uninhabitable". It's not Farmers fault that we released too much CO2 and now wildfires and hurricanes are way worse and getting even more worse. If the people of California and Florida want insurance so they can build matchbox houses in high risk disaster zones, then they can start a public insurance…

RE: this is the future, what is the reasoning behind the sudden (post COVID it seems) squeezing of profit from everywhere? Seems like every business is pushing profit over employees or customers. Price gauging, layoffs, all of it without any reason besides "more profit". Why the sudden influx of greed?

Every business has always pushed profit. The only thing that changes is whether or not they have the negotiating power to get it.

These are operating margins, not profit margin, but page 7 should still give an idea for which businesses have more pricing power than others. And of course, bigger companies getting bigger means businesses might simply be gaining negotiating power overall.

https://www.yardeni.com/pub/sp500margin.pdf

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