Farmers Insurance Laying Off 11% of Workforce, Citing Industry Challenges • Hacker News Board

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

#101

Post by uoaei » Wed, Aug 30, 2023, 2:11 PM UTC

Analemma_ wrote: post #92

uoaei wrote: post #41

Earlier quoted context omitted.

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…

> it's that the system that made mandatory the concept of insurance for a dignified, modern life You're talking like this is some kind of conspiracy theory, when there's not really any other way it could work. Banks will not give you a mortgage without home insurance, because then it would be an unsecured loan against an asset which would be worthless, with them eating the loss, if the house was destroyed. That's not…

Assuming the structure of the current economic system follows some kind of inevitable (natural?) law is part of why you are unable to reason beyond the logic of the markets we contend with today.

Markets have taken many different forms, have been entrusted with different sets of responsibilities to different degrees, over the course of economic history.

Perhaps it makes more sense now to develop a fiscal institution to run insurance than to continue to rely on a market-based solution.

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

#102

Post by czbond » Wed, Aug 30, 2023, 2:12 PM UTC

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…

You pay for talent. A business at this level is an entity that provides value to a lot of customers, and creates an ecosystem of velocity of cash flowing through employees families, vendors, suppliers, investors, etc.

Cutting officer salaries would accomplish little, except accelerating talent loss.

Man those SaaS products are so expensive, cut those programmers salaries - might be a corollary.

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

#103

Post by bushbaba » Wed, Aug 30, 2023, 2:13 PM UTC

tfandango wrote: post #85

Analemma_ wrote: post #77

Earlier quoted context omitted.

Floridians who want me to shoulder the bill for insuring their beachfront property against hurricane damage can go to hell. Pay for the insurance yourself or move to a place where disasters aren’t common.

I live in Oklahoma. Contrary to popular belief, getting your house destroyed by a tornado is unlikely. But hailstorms are on the rise and roof replacements are becoming more frequent because of them. Insurance has gone up A LOT for everyone, regardless of insurer, and for me despite installing hail resistant shingles last time. I am wondering what happens when people here can no longer afford insurance even though th…

one solution is to exclude hail damage to roofs from basic home insurance policy. Similar to how earthquake and flooding is a separate policy.

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

#104

Post by ethbr1 » Wed, Aug 30, 2023, 2:14 PM UTC

Phileosopher wrote: post #44

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…

Ignorant but curious questions

Do insurance policies get packaged and sold as financial products, or are they re-insured on the backend but continue to be held by the originator?

Related, at what point of policy origination/reinsurance are standards audited and applied? I.e. if I originate a mispriced policy, where does that get noticed/rejected?

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

#105

Post by jghn » Wed, Aug 30, 2023, 2:14 PM UTC

brookst wrote: post #59

Spooky23 wrote: post #46

Earlier quoted context omitted.

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.

You’re quite right, but I’m not sure it’s a practical solution. While those are populous states, as someone not living in either it is not super attractive to start subsidizing people who choose to live in increasingly disastrous zones. Yes, flood insurance and some other examples, but my objection isn’t based on platonic ideals of equally bad policy for everyone, it’s based on pragmatic ideals of not extending bad p…

> it is not super attractive to start subsidizing people who choose to live in increasingly disastrous zones

At the risk of taking this down a political path, I'll take this a step further. States like FL who fall into this bucket are further aggravating as they are also the ones that espouse personal responsibility & small government.

I'm not personally against subsidizing these things. But I am against people screaming until they're blue in the face that they hate socialism and then cry foul when their insurance rates are too expensive for them to afford.

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

#106

Post by sokoloff » Wed, Aug 30, 2023, 2:14 PM UTC

uoaei wrote: post #98

whalesalad wrote: post #84

Earlier quoted context omitted.

The world is physically changing. Weather patterns are shifting. Hot is getting hotter. Wet is getting wetter. Wildfires are becoming larger, more prevalent and more destructive. Sea levels are rising. Ocean temperatures are rising. Parts of the world are becoming inhospitable for human life. We can try as we might to terraform and engineer against it but Mother Nature will win. At some point as an insurance company…

All the facts you state about the environment are true. But it makes zero sense IMO to make this an individual decision governed by the whims of the market and replicated anew across every single person. That is a purely reactive stance and, being humans, we can do better than that. We are smart enough to be proactive about these sorts of things, and considering we already have such an apparatus called "the state" to…

If enough insurance companies decide to stop doing business in Florida, Florida is welcome to create a state-run insurance company to serve its residents.

That's literally the apparatus of the state (in both senses of the word) used to the benefit of the residents. That may just have the effect of moving the problem from "my insurance premiums are too high" to "my taxes are too high", because at the end of the day, someone has to be paid to fade the risks inherent in insuring the property against perils.

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

#107

Post by mechagodzilla » Wed, Aug 30, 2023, 2:16 PM UTC

tfandango wrote: post #85

Analemma_ wrote: post #77

Earlier quoted context omitted.

Floridians who want me to shoulder the bill for insuring their beachfront property against hurricane damage can go to hell. Pay for the insurance yourself or move to a place where disasters aren’t common.

I live in Oklahoma. Contrary to popular belief, getting your house destroyed by a tornado is unlikely. But hailstorms are on the rise and roof replacements are becoming more frequent because of them. Insurance has gone up A LOT for everyone, regardless of insurer, and for me despite installing hail resistant shingles last time. I am wondering what happens when people here can no longer afford insurance even though th…

It's more that those states are becoming the most expensive to maintain intact houses in, with the increased insurance a side effect of that. I know someone in TX that has needed a new roof like 6-7 times in 10 years because of hail damage - the insurance company has been bleeding money on their house for a decade, but that's because the house has actually been sustaining significant damage every single year. The only answers to that over any length of time must be: 1) improve roofing so that they're not sustaining damage so frequently (even if it increases costs), 2) decrease the value of housing so much that replacing the roof out-of-pocket every year just becomes 'cost of doing business', or 3) stop living there because it's just intrinsically expensive. "Pay $1k yearly insurance and average $10k yearly damage" for a whole region is not going to last much longer.

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

#108

Post by InitialLastName » Wed, Aug 30, 2023, 2:16 PM UTC

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.…

I don't know anything about how their market share varies regionally, but Florida and California (states in which they are taking steps towards no longer operating) are a combined 60 million people, which is 18% of the US population; they may just be scaling down all of their operations to match the reduction in population served.

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

#109

Post by huthuthike » Wed, Aug 30, 2023, 2:16 PM UTC

elteto wrote: post #78

Spooky23 wrote: post #46

Earlier quoted context omitted.

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.

There already is a federal program for uninsurable properties (for flooding only, I believe). They take whatever insurers reject. By my understanding, people just keep building on the same spot, even if it floods constantly, therefore they are a huge drain on the program. I don’t see a solution honestly. With global warming large parts of the world will become uninsurable. And we shouldn’t expect insurance companies/…

A lot of these people are stuck in the situation. While they can get flood insurance to rebuild the property, they can't afford to abandon the property, and they can't find anyone to sell it to. So they are in a cycle of rebuilding the property, waiting for a flood, then rebuilding it again.

There is a pretty obvious solution in my mind: The federal government offers homeowners a buyout for them to move out of that property. If they choose not to take the buyout, they are removed from the flood insurance program.

This would save the government a lot of money over time, even if they made the buyout significantly higher than the property value.

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

#110

Post by elteto » Wed, Aug 30, 2023, 2:17 PM UTC

kdmccormick wrote: post #96

elteto wrote: post #78

Earlier quoted context omitted.

There already is a federal program for uninsurable properties (for flooding only, I believe). They take whatever insurers reject. By my understanding, people just keep building on the same spot, even if it floods constantly, therefore they are a huge drain on the program. I don’t see a solution honestly. With global warming large parts of the world will become uninsurable. And we shouldn’t expect insurance companies/…

I'm no free-market zealot, but in this case it seems like the market has spoken. They shouldn't live there! Of course, there are ways to be humane about this, given that tearing people apart from their communities is bad for society. The government could taper off the program slowly, giving communities time to relocate. Or they could provide damage payouts with the stipulation that they are used to relocate somewhere…

I don’t think you are missing any nuance at this point.

If the amount of uninsurable properties is (comparatively) small, it’s way easier to throw some money at them and keep everyone happy. I think that’s the basic premise of the program.

Everything changes when, for example, a large chunk of South Florida becomes uninsurable or inhabitable, potentially displacing hundreds of thousands. I don’t think we have anything in place for that scenario.