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State Farm layoffs reported in Wash., Ill., on top of scheduled 2018-21 closures

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Business Practices | Insurance | Market Trends

Collision repairers in multiple states might notice some changes at State Farm this year in light of two scheduled office closures and two new restructuring moves reported by Washington and Illinois media.

State Farm Petaluma, Calif., and Parsippany, N.J., facilities are scheduled to be closed sometime this year, State Farm had announced in May 2017. Nine other facilities are to be shuttered between 2019 and 2021.

All of the 4,200 employees (out of 70,000) affected by those 11 closures “will continue to have job opportunities in other State Farm locations,” the company wrote in a news release at the time.

That publicly announced plan doesn’t appear to be the extent of the company’s cost-cutting, however.

The Chicago Tribune reported Wednesday that about 890 information technology slots at its corporate headquarters would be cut. The employees could either apply for other departments or 380 of those jobs which will be sent to Atlanta, Dallas and Phoenix, according to the newspaper.

The Tribune reported that the Bloomington, Ill., headquarters will add 550 claims jobs — including 250 which were cut from its Tacoma, Wash., workforce.

The Tacoma News Tribune in January reported that State Farm would close two Tacoma “call centers that handle claims” employing 1,400.

Six hundred of the jobs will be moved to a State Farm location in nearby DuPont, Wash., the News Tribune reported.

Besides the 250 jobs sent to Illinois, another 150 positions will be moved to Phoenix, according to the newspaper. Though a spokesman told the News Tribune staffers could apply for other State Farm jobs, the newspaper pointed out that at least 400 net employees might not be working for State Farm anymore.

The Tacoma News Tribune in 2013 published a State Farm memo that described the two Tacoma locations as being filled with “Claims Initial Loss Reporting (ILR) and Auto Express operation” employees.

According to a State Farm job description, the Auto Express employees are charged to “Receive and review claim information, “Apply claim handling procedures to process claims, initiate payments, and close claim files, “Communicate with customers and associates by phone and through other channels” and “Use State Farm systems and technology.”

Asked about the breakdown of jobs in Tacoma to gauge the impact upon collision repair — how many of the affected employees worked Auto Express, and were any part of the carrier’s “Auto Estimatics” desk and field staff there? — State Farm offered its traditional answer. “We have nothing additional to share with RDN,” spokeswoman Angie Harrier wrote.

Auto insurance made up 65 percent of the company’s property and casualty net written premium in 2017.

Anonymous griping on message board discusses the company’s auto claims business and recent job cuts. It’s anonymous, so take it with a grain of salt, but here’s a few of the more interesting claims:

“Auto Claims Executive VP lied to hundreds in Meeting last summer saying they had no plan, and would not have one until June 2018.”

“We are treated like customer service reps at a call center making minimum wage. There is nothing professional about these ‘professional level’ positions. I can’t think of a worse career choice in 2018. No respect and no future. Long hours, constant criticism, micromanagement, stress, anger, frustration, low pay. Dealing with angry insureds and claimants is hard enough, but you have to also worry about the metrics, management claim reviews, and the peer-to-peer criticism that we are encouraged to give using a SF form. “

“Proximity estimator positions not looking good. Increased single bid areas and select service impacting our presence. Don’t expect to be around much longer, unless you plan to relocate to Phoenix or Concordville. Heard some news that Columbia may pull estimatics out. So that doesn’t leave many options. Only good news is many body shops are hiring.”

“So focused on #s that corners have to be cut impacting our customers….. our Team Managers are either updating their huddle boards, meeting with us to talk about our numbers, in their own meetings to further discuss numbers, and report montlhly on our and their #s”

And, as a counterpoint:

“Profit is and has always been what drives capitalism so yes, SF will continue to pursue it. IMO I don’t look at it like SF doesn’t care about its employees, but rather its end goal. The end goal is not sinking the ship. And if status quo reigns, the ship will most certainly sink.

“Now I know many think the way SF is handling things now may indeed sink the ship anyway, but that remains to be seen. I am not sure what “the prize” or golden ticket is going to be, but SF knows what it’s not.

“But continuing to maintain staff which technology has determined no longer needed isn’t a solid business decision either.”

Future State Farm closures announced in May 2017 include Irvine, Calif.; Kalamazoo, Mich.; and Tulsa, Okla., sites in 2019. 2020 will see closures in Medley, Fla.; Indianapolis and West Lafayette, Ind.; and Downers Grove, Ill. Finally, State Farm will close Bakersfield, Calif., and Frederick, Md., centers in 2021.

State Farm financials released last week indicate that the carrier’s auto insurance business made $2.8 billion more in premiums, cut auto claims and loss adjustment expenses $1.6 billion, but ended up $2.8 billion in the red. The carrier’s auto insurance arm lost $7 billion in 2016.

Underwriting expenses — which include things like overhead, agents and ads — actually grew by $200 million from 2016’s $10.0 billion in 2017.

On the whole, the entire State Farm property and casualty business lost $1.7 billion pre-tax, up from $1.2 billion in 2016.

More information:

“State Farm cutting nearly 900 IT positions in Bloomington”

Chicago Tribune, March 7, 2018

“State Farm leaving Tacoma in 2018. Hundreds face layoffs and uncertain futures”

Tacoma News Tribune, Jan. 11, 2018

Featured image: State Farm’s corporate headquarters is shown. (Provided by State Farm)