Farmers Insurance lay off will affect 11% of workforce. CEO says 'decisive actions' needed
Farmers Insurance is cutting approximately 11% of its workforce, about 2,400 employees across "all lines of business," the company said in a Monday press release.
The company's decision is intended to create "a more efficient organization" and work toward profitability which includes a strategy to "reinvent how insurance is delivered" and offer customers comprehensive protection.
“Given the existing conditions of the insurance industry and the impact they are having on our business, we need to take decisive actions today to better position Farmers for future success,” said Raul Vargas, the company's president and chief executive officer.
Vargas was announced to lead Farmers Insurance in October 2022.
“As our industry continues to face macroeconomic challenges, we must carefully manage risk and prudently align our costs with our strategic plans for sustainable profitability," Vargas said. "There is a bright future – for Farmers and for our industry – and it necessarily will look different than the past.”
Pulling out of Florida, limiting insurers in California
Last month, the California-based insurer dropped coverage in Florida and stopped renewing and writing new automobile, home and umbrella policies. The move impacted roughly 100,000 policies in the state.
Farmers joined Bankers Insurance and Lexington Insurance in withdrawing from the Sunshine State. Floridians pay about $6,000 in yearly home insurance premium, which is a 42% increase from last year, said Mark Friedlander, spokesperson for the Insurance Information Institute.
In California, Farmers Insurance moved to cap residential policies at 7,000 a month, the SF Standard reported.
Farmers Insurance became the second most popular California insurer, ranking right after State Farm, according to III's 2022 rankings. But with wildfire risks and high construction cost, State Farm decided to no longer provide new California customers with home insurance, and stopped accepting new applications May 27.
In January, State Farm laid off 451 tech workers.
Another insurer, Allstate, stopped providing California residents with property and casualty coverage in November 2022, citing expensive construction costs and "rapidly growing catastrophe exposure and a challenging reinsurance market.”
Farmers Insurance isleaving its business in Florida
Insurance companies leave Californiadue to wildfire risk. What homeowners can do.