Insurance Market Analysis – 11% of Workers Laid Off At One Carrier
Until earlier this week, my insurance market analysis was one of “wait and see” what happens in the near future. On Monday afternoon, a news blast was sent out from Insurance Journal that came as no shocker. One of the major California insurance carriers had just laid off 2,400 workers. You can find the article here. Due to legalities, I will not name the insurance company in the article.
Imagine nine people in a meeting. You get up to grab a cup of coffee at the back of the room, and one of the attendees has left the meeting. You will notice that missing person. The same is true for the carrier – 11% of the staff is now or will be gone in the near future. This move will be noticed and remembered for quite some time in the future.
Is this a situation of overly aggressive management decisions or the correct response to the market conditions that I covered last month?
By the way, if you have not signed up for the Insurance Journal’s newsletter – you should look into its newsletters. The Insurance Journal has always been a newsletter that I read weekly for an overall insurance outlook, not just Workers Comp.
The Insurance Journal is on my list of places to research for my weekly articles. Their insurance market analysis articles are very informative.
What The Carrier’s CEO Said
I wanted to cover some of the statements made by the carrier’s CEO. The CEO’s statements cover more than just the one carrier that he/she leads. Many insurance carriers are presently developing the same outlook.
- …must manage risk and prudently align its costs as the industry continues to face macroeconomic challenges.
- …the moves are being made to better position itself for long-term profitability by creating a more streamlined organizational structure, and follow a thorough evaluation and reduction of operational expenses across the company.
- … plan to “reinvent how insurance is delivered, simplifying systems and introducing innovation”
Any of the three statements above could have originated from any CEO at any company today. Macroeconomic challenges were bolded as that is the likely source of the layoffs. These challenges may reach beyond any insurance market analysis to the economy as a whole.
I rarely ever comment on any article comments. This one came from someone undoubtedly deep in the insurance business. It was unanimously upvoted by the article readers.
“Our leaner structure will make us more nimble and better able to pursue opportunities for growth and ultimately make the carrier more responsive to the needs of our insured customers and agents,” said the CEO.”
That’s not how customer support and agent services work. Leaner structures (code for running skeleton crews) mean longer wait times, the inability to respond to upticks in service needs, and overburdening employees.
Insurance Market Analysis – Three Contacts Made
Three people that I know work for this carrier. I decided to chat/email them to see how they were doing in the midst of the layoffs. Two of them will likely not suffer a layoff as they are in senior positions.
They both confirmed they do not see a layoff upcoming – yet. The third is now not with the carrier. That makes a 33.3% layoff rate for the people that I know who worked there. My contact was in the Customer Service area. The above comment from the article looks to be correct.