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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

#161

Post by ejb999 »

hypeit wrote: post #112
selectodude wrote: post #90

Earlier quoted context omitted.

The insurance mandates are for things that impact either your life or other people. I don’t want your judgement proof ass hitting me with your car without the ability to fix it, nor do I want you using emergency medicine as a pediatrician. Thus, mandates.

The problem is when you combine "mandated" with "for profit". The two should never go together. If it's mandated, I want exactly zero of my dollars going toward executive compensation, dividends, stock buybacks, advertising, sales... You're currently paying for that neat little 3d animated gecko under threat of US law.

the government doesn't mandate home insurance - the mortgage companies do - if you can pay cash for your house, the govt is not going to mandate you to insure it. If someone (a bank) owns 80% of the equity in your house, better believe they are going to make you insure it.

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

#162

Post by pc86 »

cjrp wrote: post #146
Tangurena2 wrote: post #128

Earlier quoted context omitted.

In the distant past, insurance companies used actuaries to price policies, so that the companies could make informed, rational decisions like "for people in this risk category, if we want to make X% profit, how much do we need to charge for that coverage?" Instead it became "insurance company M is charging $N for this type of policy, we have to charge something similar or else our customers would switch." Along comes…

True, although if you're the only one correctly pricing risk and your competitors are all cheaper then you'll be out of business anyway.

Or you can just stop offering your product in markets where your competitors are priced too cheaply, like Farmers just did.

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

#163

Post by hk1337 »

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…

Could be 11% of the workforce now or 100% of the workforce later.

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

#164

Post by sokoloff »

Tangurena2 wrote: post #148
pc86 wrote: post #129

Earlier quoted context omitted.

So rather than having insurance customers in other states subsidize Floridian homeowners so they can replace their property after damage, you'd rather have taxpayers in all states subsidize Floridian homeowners to buy out their homes? That's the same thing with extra steps, except now people who bought bad properties walk away with a nice bag of cash.

Eventually, we're going to have to abandon much of the vastly overpriced property along the seashore. Parts of Hollywood and Miami are already below sea level. We aren't willing to build the sort of dykes that one sees in Netherlands (homeowners will sue because it blocks their view of the sea), and we're too car-centric to let cities turn into Venice. So we're going to buy those folks out anyway. This year, next yea…

"Some people overpaid for seaside property." "Oh wow, I'm sorry they made such a terrible decision."

"Now you need to reach into your pocket and pay them back." "Nah; fuck off. They can live with their decision."

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

#165

Post by HDThoreaun »

Tangurena2 wrote: post #128
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…

In the distant past, insurance companies used actuaries to price policies, so that the companies could make informed, rational decisions like "for people in this risk category, if we want to make X% profit, how much do we need to charge for that coverage?" Instead it became "insurance company M is charging $N for this type of policy, we have to charge something similar or else our customers would switch." Along comes…

Rates are still set by actuaries lmao. Insurers are getting out of Florida because they legalized insurance fraud and everyone got a new roof on the insurance companies, not the weather.

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

#166

Post by whalesalad »

uoaei wrote: post #101
Analemma_ wrote: post #92

Earlier quoted context omitted.

> 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…

Nothing in life is free. There must be balance. Regardless of whether an insurance company is public or private these bedrock issues of “can we remain in the black?” will remain. A “fiscal institution” that is losing money on claims will fail. Plain and simple.

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

#167

Post by rs999gti »

commonlisp94 wrote: post #24
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…

> the people of California and Florida want insurance so they can build matchbox houses in high risk disaster zones, This has always been the case in Florida. Insurance simply costs more to compensate for risk. Flood insurance is separate in the US (and very costly). California might have more to do with the regulatory and legal environment. > now wildfires and hurricanes are way worse and getting even more worse. Wh…

> What happened to the climate/weather distinction? So, every hot day and hurricane is evidence if the earth warming? Every cold day and blizzard is a temporary local weather event, not indicative of the long term trend?

Bad weather == that's climate change

Good weather == that's just weather

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

#168

Post by pc86 »

sokoloff wrote: post #119
hypeit wrote: post #112

Earlier quoted context omitted.

The problem is when you combine "mandated" with "for profit". The two should never go together. If it's mandated, I want exactly zero of my dollars going toward executive compensation, dividends, stock buybacks, advertising, sales... You're currently paying for that neat little 3d animated gecko under threat of US law.

In 32 of the 50 states, you can post a surety bond instead of buying the otherwise state-mandated auto insurance. That list includes my state. I buy auto insurance because it's more convenient (and cost-effective) than going through the bond posting process, arranging my own claims-handling and legal representation in the event of a loss, etc. I pay $1220/yr for insurance for two cars and two drivers (and for coverag…

Especially when the alternative is half a million dollars cash sitting in an account you can't legally access for anything else, or use as collateral for anything else, and you won't realistically have half a million dollars cash ever.

I looked into a surety bond specifically for auto insurance thinking I might be able to earn a bit of interest on $100-200k cash, get a small dividend, and "break even" in half a dozen years or so. The reality was pretty grim, basically if you're not already actively searching for things to do with 6 or 7 figure sums, it's not worth the time, and that's ignoring the logistics of having someone available for the claims processing side.

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

#169

Post by pc86 »

Manuel_D wrote: post #137
Invictus0 wrote: post #73

Earlier quoted context omitted.

Suppose you are an insurer. You model the risk for your insurance product (suppose it's car insurance) and realize you need to charge $100/mo to make money after paying out all the claims. However, you have a competitor that is bad at modeling risk. They are charging $50/mo for their car insurance, and customers are flocking to them. Should you attempt to stay in this market? If you lower your prices, you will eventu…

Stay in the market because the competitor will be put out of business once their customers actually start filing claims. Then customers come back to you.

This only works if you can stay profitable enough long enough for it to start to happen. The fewer customers you have, the riskier your pool, and the higher your prices have to be. Suddenly $100 becomes $125 becomes $150 for the same or less profit.

It's safer to just get out of the market entirely. You can always go back in but if you stay in too long it could wipe you out entirely.

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

#170

Post by hnmoonlaunch »

gpapilion wrote: post #125

Is this a side effect of low interest rates not allowing the traditional investment returns expected for the risk? Largely these folks held commercial real estate and bonds. I keep thinking the near zero interest rates messed up a lot of things, and we’ll continue to see them pop up for the next few years.

Yes. Insurance companies hold gigantic reserves of cash that must beat inflation and for the past 40 years the "safe" return was bonds of all varieties.

And they do not have access to the newly created 'temporary' facility to mitigate bond loss as the banks do.

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