In an attempt to cut its costs, major US insurer Allstate Corporation is planning to layoff thousands of jobs, according to reports.
In a recent video conference call, Allstate global CEO Tom Wilson told senior team leaders that “thousands of jobs” at all levels of the company’s operations will be affected by the layoffs. The chief executive added that more details regarding the layoffs will come soon.
|ALLSTATE LAYOFFS 2022|
According to a US Securities and Exchange Commission filing, Allstate employed 45,780 as of the end of 2019.
It was speculated in the Bloomberg report that the company may be preparing for a “price war” against its major competitor, State Farm. State Farm is dropping its insurance rates by 11% on average throughout the US – rates in Illinois will fall almost 14% on average – next month.
Although Allstate has provided its auto insurance customers monthly rebates, it has yet to actually reduce insurance rates in the wake of the pandemic.
Allstate Corp., one of the U.S.’s largest home and car insurers, announced Wednesday that it plans to lay off 3,800 employees in claims, sales and support roles.
The layoffs represent about 8% of the insurer’s approximately 46,000 workers.
Of the job cuts, about 1,000 are tied to the company’s pandemic-related refunds to policyholders, Allstate Chief Executive Thomas Wilson said in an interview.
Those refunds were driven by a sharp decline in driving by car owners amid government-order shutdowns and fear of Covid-19, especially in the early months of the pandemic. Many insurers reduced customers’ bills as claims volume fell.
The pandemic resulted in “fewer auto accidents, so you need fewer claims people,” Mr. Wilson said.
Of the layoffs, “somewhere between 25% and 30% are due to the fact that we have fewer claims,” he said.
As of August, Allstate had distributed $1 billion to customers through its Shelter-in-Place Payback plan.
Mr. Wilson said, “Obviously this is not a good time to be reducing staffing with unemployment levels where they are.”
Mr. Wilson also said to ease the pain the insurer will allow employees to stay in the company’s medical plans through the end of the year, and will continue making 401(k) payments. The company’s talent-acquisition staff is also helping people to find jobs.
“We’re not doing much hiring, so we said let’s do the reverse: Let’s find jobs for the people leaving us,” he said.
As part of the restructuring and office closures, Allstate will incur a pretax cost of $290 million, the company said.
The announcement comes two months after Allstate acquired rival National General Holdings Corp. for about $4 billion in cash.
Allstate’s net income increased almost 50% to $1.2 billion in the second quarter.
The insurer announced a transformative growth plan in December that promised to lower customer premium costs and phase out the Esurance brand, moving Esurance marketing spending to technology investment. Allstate said the plan’s goal is to increase its market share in property-liability insurance.
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