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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

#231

Post by lotsofpulp »

Retric wrote: post #230
lotsofpulp wrote: post #223

Earlier quoted context omitted.

The alternative to buying a business that has borrowed too much and hence will have poor return on investment is to not invest in the business. It is always a choice to take more risks than the bare minimum (i.e. buying USG debt). If a business borrows money, and people still buy the shares, then that means people are willing to bet the amount borrowed will still allow for a sufficient return on investment. So where…

US government debt is only safe in that it guarantees a small loss. It isn’t an option for say a retirement fund looking for a long term income stream. Money has value, but for an hedge fund or wealthy individual it’s also a hot potato they want to trade for something else. > If a business borrows money, and people still buy the shares, then that means people are willing to bet the amount borrowed will still allow fo…

>US government debt is only safe in that it guarantees a small loss.

Yes, that is what safe means. Risk and reward. Reward without risk is simply expanding the supply of money, aka inflation, aka reduced purchasing power of the currency.

>Suppose the S&P collectively borrowed 10 trillion dollars doing this. Each company that takes part is as you say a worse choice, but the overall market is now inflated with this money so everything becomes a worse investment simultaneously. Which then sends some money back to the original companies who issued dividends/ buybacks with borrowed money.

If everyone did it, then it is not a "worse" investment, it is simply keeping up with the reduction of the currency's purchasing power (e.g. all businesses taking advantage of covid stimulus). But it is a nonsensical premise anyway, since there are insufficient lenders to lend the S&P $10T, and the limited number of lenders will, on average, do due diligence when lending, even to S&P companies.

Anyway, back to the point was hand, which was refuting yborg's claim that business leaders can just borrow willy nilly and pay themselves via gains in stock price via buying back shares.

The only situation this happens is when the business has large stockpiles of cash saved abroad, and so instead of bringing it into the US and having to pay taxes, they are able to borrow money at near 0% interest rates because lenders know they have such huge stockpiles of cash abroad and healthy cash flows. Delaying tax liabilities is simply the logical thing to do when the government has set fiscal policy such that you can find lenders to lend to you at near 0% interest.

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

#232

Post by kyleee »

MrMember wrote: post #221
sokoloff wrote: post #131

Earlier quoted context omitted.

> Some coastal states have passed laws prohibiting the consideration of climate change in insurance and governmental decisions. There's a significant feeling I have of "I hope residents of those states are happy with the outcomes created by their state government's choices."

In California home insurance companies cannot take into account any future forecasts (including climate change) when setting rates, only past events. There are also yearly caps on how much they can raise rates. The results of these policies on the state of home insurance in California speak for themselves.

Certainly the democrats could just change that in CA right?

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

#233

Post by kyleee »

pc86 wrote: post #154
Tangurena2 wrote: post #148

Earlier quoted context omitted.

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…

Why should we buy them out? Nobody forced them to buy beachfront property in the first place. If the property ends up being abandoned, it's abandoned, and the owner should lose their investment. You're acting like a buyout is inevitable when it's not. The last thing we should do as a society is a multi-hundred-billion / trillion dollar buyout of beachfront hotels and luxury property.

I agree in an ideal world; but in the real world there is a 0% chance Obama is taking a loss on his Martha’s Vineyard property.

What the perso you are responding to is saying is that we should start in incentivizing people out of such properties now versus it happening over a longer period at a higher cost. Either way some people are going to probably have to move so we may as well get ahead of it

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

#234

Post by nvahalik »

londons_explore wrote: post #54
nvahalik wrote: post #19

Earlier quoted context omitted.

> 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. Ah yes, the perfect recipe for fraud! > Assume 1 claim per customer per decade Herein lies the problem in some parts of Florida/California. If Florida gets hu…

> Ah yes, the perfect recipe for fraud! There are a few things you can do to dramatically reduce the fraud risk. Take the video of the damage immediately and through your own app. Now you can confirm with decent certainty the where/when of the incident and stop double-claims. You can also refuse to pay for any damage unseen in the video. No more "I hurt my back" type claims weeks later - unless you said your back hur…

> Take the video of the damage immediately and through your own app. ... You can also refuse to pay for any damage unseen in the video.

A good adjuster—especially an independent adjuster—is actually incentivized to find and pay for related damage. Not only does this (marginally) increase their billable, but it also leads to happier insureds and reduces the possibility of a subsequent claim (since those take time and money to handle—plus your deductible is per loss not like medical insurance where it's per year).

> This means that users will typically repair stuff 'on the cheap', rather than using very expensive repair/rebuild services that they'd use if they knew for sure insurance would be paying.

Except that, depending on the policy and the roof type, you may or may not be able to do that. We've seen entire roofs have to replaced due to aging or lack of the same material. Granted, it's not all policies, but it does happen. You can't get the same material due to age of it. Or the manufacturer went out of business. Or you find someone who does the work right and they find MORE damage than the adjuster originally found which requires a supplement.

People like to crap on insurance companies but I've seen them pay for absolutely STUPID stuff that they likely had no reason to pay for... but they did.

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

#235

Post by nvahalik »

ethbr1 wrote: post #104
Phileosopher wrote: post #44

Earlier quoted context omitted.

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?

> 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?

I've never seen this happen. Smaller carriers carry re-insurance since most smaller carriers are limited geographically and it's entirely possible a big-enough event would cause an issue where they couldn't pay out to cover all claims. State-based carriers (smaller farm mutuals, for instance) could be VERY susceptible to this.

In Texas after Hurricane Ike this caused a slew of changes to our underwriting guidelines along along the coast with rate changes and where we focused on recruiting agents and policies. (e.g. recruiting further north and west).

> Related, at what point of policy origination/reinsurance are standards audited and applied? where does that get noticed/rejected?

A lot of policies are bound for 30 days initially and then can be cancelled if the underwriting guidelines fail for the policy. Some companies may not even bind coverage until after underwriting is completed. As an agent if you sell a policy that isn't priced correctly, MOST of the time it gets caught by underwriting. They have ranges of limits that you can go between. For instance, normally contents coverage on a house can be some percentage of the insurance home value (let's say 40% to 120%). Let's say your house is insured for $250k... but you bought a $120k brand piano. Normal contents coverage might be 80% = $200k for your clothes, computers, electronics, kitchen stuff, etc, etc. That piano would require you to either 1) exceed 120% (which would require EXPLICIT underwriting approval) or you'd have to get a rider/endorsement for a special item. (which would likely also require more underwriting approval.)

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

#236

Post by nvahalik »

ethbr1 wrote: post #94
nvahalik wrote: post #43

Earlier quoted context omitted.

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 li…

I was under the impression that most insurance was moving to an efficiency:cost-optimized model. I.e. Creating fraud scoring engines and auto paying claims they greenlight (usually incorporating history and total value as major signs). Essentially saying "there's not enough potential fraud value here for it to be cost effective for us to apply human review." Although someone submitting claims at an abnormal rate woul…

> I was under the impression that most insurance was moving to an efficiency:cost-optimized model.

Can't speak for every avenue, but I can definitely say this is not happening with property insurance. The claim amounts are sometimes big enough that it warrants additional review or subrogation.

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

#237

Post by nvahalik »

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…

> 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.

P&C companies have mandatory requirements for how long it takes to handle claims. During catastrophic events, those timelines are usually extended: because it can be dangerous and there are lots of claims.

Adjusters want to get paid and they don't get paid until the claim gets closed. So it behooves them to work quickly.

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

#238

Post by tallanvor »

nvahalik wrote: post #43
tallanvor wrote: post #22

Earlier quoted context omitted.

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 li…

Even for other things. For example, I have pet insurance for my dog. She had a cracked tooth that needed to be removed. I had receipts and documentation from the vet ready to go, but I didn't end up needing any of that. I went through their online form to choose what procedure was done and how much I paid. It then offered me the chance for automatic handling (with the ability to request that it be reviewed by a human if I wasn't happy), and it approved reimbursement minus my deductible, and the money was in my account about 3 days later.

Obviously there will always be claims that require human assistance, but if even 50% of claims can be automated, that's still a significant savings for the insurer.

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

#239

Post by Retric »

lotsofpulp wrote: post #231
Retric wrote: post #230

Earlier quoted context omitted.

US government debt is only safe in that it guarantees a small loss. It isn’t an option for say a retirement fund looking for a long term income stream. Money has value, but for an hedge fund or wealthy individual it’s also a hot potato they want to trade for something else. > If a business borrows money, and people still buy the shares, then that means people are willing to bet the amount borrowed will still allow fo…

>US government debt is only safe in that it guarantees a small loss. Yes, that is what safe means. Risk and reward. Reward without risk is simply expanding the supply of money, aka inflation, aka reduced purchasing power of the currency. >Suppose the S&P collectively borrowed 10 trillion dollars doing this. Each company that takes part is as you say a worse choice, but the overall market is now inflated with this mon…

The US Bond market is $52.9 trillion and the S&P has a 37 billion dollar market cap. This isn’t the kind of thing that could happen in an afternoon, but it’s not as crazy as you might think.

Lending like this shouldn’t change purchasing power for real world goods much, the point is it specifically impacts investors.

> Anyway, back to the point was hand, which was refuting yborg's claim that business leaders can just borrow willy nilly and pay themselves via gains in stock price via buying back shares.

Sure, but my point was what happens to individual companies is different than what happens to markets. If half the companies on the S&P did this then the other half would see a small price spike. The price spike in other companies would also increase the valuations of companies that borrowed, not by enough to fully offset the borrowing but still more than zero.

Borrowing isn’t required here, if Google issued a dividend for the majority of it’s reserves a significant fraction of that money would get reinvested in stocks and a small fraction of which would go back to Google.

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

#240

Post by [deleted] »

whalesalad wrote: post #173
rhyme-boss wrote: post #133

Earlier quoted context omitted.

It would be appropriate to do something about your dog barking at the mailman, like hire a professional and learn how to teach him not to do that.

People often forget that many dog breeds were bred for work - like alerting and defense. If you have a 3 year old child crying in a restaurant, can you get mad at it? No. You can pat it on the back and take it outside to respect the space and other patrons, but you can’t get mad at a child for crying. Same analogy. Don’t get mad at nature doing nature things.

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