Thread regarding Allstate Corp. layoffs

Having an inept president and his horrible policies certainly don't help the economy. Inflation is mu---r on the industry.

I will add a factor I haven't seen mentioned...reinsurance costs have skyrocketed 20-30%. All the major reinsurers are in Europe so they are largely unregulated. They have been hitting US insurance companies with large rate increases and likely higher deductibles to qualify as a cat loss.

Another aspect mentioned overall inflation and repair/material cost increasing but a big part of that comes from new car shortages due to computer chip shortages during COVID created an unprecedented increase in the value of used cars. Insurance companies have always based their pricing models on used car values decreasing over time and we saw values up 30-40%.
Also with inflation comes more people having less disposable income for upkeep/maintenance of their cars/homes which leads to a higher frequency of claims including fraud.

I have read a number of articles that most carriers don't see a path to returning to profitability until 2025 at the earliest and that is only if 2024 has moderate weather. As an aside, the whole RTO policies many companies are forcing is only going to drive up auto claim frequencies higher though it is possible the price of gas increasing could help to stave off some of that.

Isn't it is interesting how many outside factors can influence insurance companies bottom lines?

Well the amount it cost to repair anything has gone up, more than the companies can raise rates by, that means they need to find savings in other areas which is cutting people. That way they save on labor and insurance cost.

The other issue is that California limits how much insurance companies can raise rates, this results in companies either pushing that cost to other states or reducing their risk in those states by limiting the business.

@1tze+1p7Iemug not sure where you get your info but State Farm is taking significant rate increases, on average more than Allstate. The State Farm owners I know are pi---d at the increases, but what they are doing is having lower premiums to get in new business and then at renewal hitting them with a rate hike hoping they will stay.

Transformative growth. 😂

There is a macro effect that often flies under the radar and that is today’s economic cycle runs cover to allow companies and not just carriers to shed costs at large levels, weather the PR storm and hit reset on their cost structure.

Yes, things cost more and big storms do more damage, but both should be better and faster mitigated at this stage of transforming how you compete with the sophisticated modeling, data analytics, digital capabilities and consumer centricity that should be available and fully leveraged..unless of course you decide to go back to old school ways.

here is the list of factors for you:

• inflation
• offshoring
• middle-manager bloat (happens in companies over time)
• lowered profits or losses
• changing business models (vendor/supplier companies)
• automation and digitization
• car repair cost increase
• property building cost increase
• pricing wars

that'd be it for now, there will be more challenges coming our way

That business is never "coming back to Allstate." This is the kind of magical thinking that passes as strategy in Allstate's leadership.

It’s a rate war. The industry is taking rate to make up for inflation in building materials (property and auto claims). A few carriers (State Farm, e.g.) are only modestly raising premiums, which causes a flood of market share to migrate to those carriers from Allstate. That’s why we've been losing market share. Allstate is trying to lower expenses to stay competitive.

Kind of short sighted, though, b/c holdouts will raise renewal premiums which would drive that business back to Allstate eventually.

Inflation is a big factor for sure.

In Allstate's case, they're way late to the modernization party. And they've fallen back on old school ways to deliver that have been proven not to be able to keep up with quickly changing markets. Suren's old fashioned PMO/SAFe approach being a great example. And his latest factory approach being another. Companies were doing this 20 years ago.

There is no unifying vision so you have self aggrandizing "senior manager" schmucks all pursuing their own agendas and/or bonus checks. Staking out their little piece of turf. And make sure the officers never see the day to day reality of what they're doing.

Allstate tends to hold on to and even favor people who refuse to approach anything differently and who will actually see their business unit go extinct before they do. How many of these people have been here for decades? How many do you see pay lip services to the 'changing behaviors and mindsets' and keep on doing the same old sh-t? How many have you seen who can't or won't perform and yet consistently are retained every time Allstate cuts staff?

Well those chickens are coming home to roost now.

They have old school mentality. Some of those folks have been there over 20 plus years and do not like change…

Inflation is a huge factor. It costs more to fix things. A lot more.

Inflation

The recent increased emergence of vendor/supplier companies within the insurance and other industries. The overseas vendors/suppliers are a rapidly growing and big business with a lot of competition between them. The COVID "work from home" has exposed that many jobs can be done from anywhere and outside the USA at lower costs.

Automation, AI, and customer online self service eliminates need for different service areas and agencies causing those supporting departments to no longer be needed. Also reduces a lot of human bodies needed for billing, claims, customer and agency service roles.

Insurers are experiencing losses (that's when they pay out more in claims than they take in in premium).
Allstate hasn't shown a profit in two years.
...and yes, there's plenty of dead wood around (but those aren't necessarily the people losing their jobs).

Many insurance companies are full of useless positions that don’t add to the bottom line. Allstate is in that boat. The business is very cyclical. The further away an employee is from selling or servicing a policy, the more likely they are at risk. It’s really as simple as that

Inflation is one factor. Another is offshoring jobs is cost reducer.