Farmers Insurance is laying off 11% of its employees throughout all its business lines to better position itself for “long-term profitability and growth.”

About 2,400 employees will be affected as the insurer shifts to a “more simplified and streamlined organizational structure,” the California-based company said in a press release.

“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, president and CEO of Farmers Group Inc. “Decisions like these are never easy, and we are committed to doing our best to support those impacted by these changes in the days and weeks to come.”

It’s not clear how the company’s new approach will affect repair professionals, or their customers who work with insurance adjusters daily on claims and repair plans.

When asked for comment on how many claims positions were affected, a Farmers spokeswoman said that information will not be released. 

“Out of respect for those impacted, we will not be sharing specifics by business unit or geography,” Carly Kraft told RDN. “This action is intended to position Farmers for the future by creating a more simplified and streamlined organizational structure. It will not impact our ability to serve our customers or our work with repair shops.”

She added that nothing will change from a repair standpoint, and that Farmers will continue to seek “the best repair options for our customers.”

The layoffs were the result of a “thorough evaluation” on how Farmers could reduce its operational expenses, the insurer said in its press release.

“Farmers is executing a new strategy to reinvent how insurance is delivered, simplifying systems and introducing innovation that supports the success of its employees and agents, while offering comprehensive protection for customers,” it said. “Farmers will share additional details about how it is supporting exclusive agents and independent agents with better systems, tools, and data to help their businesses succeed, and meeting target customers’ broad insurance needs with an industry-leading range of products.”

News of its layoffs came about a month after Farmers revealed it would stop writing auto, residential, and umbrella policies in Florida in a decision estimated to affect 100,000 policies.

At the time, Trevor Chapman, a Farmers spokesperson, said in a statement to RDN that its decision to leave Florida was necessary to “effectively manage risk exposure.”

Farmers is among a number of insurers that have struggled to navigate a shifting automotive landscape that involves costlier and more time-consuming repairs, sophisticated parts, and inflation.

Although Farmers has not yet detailed its future path, some insurers have sought cost reductions by utilizing things like artificial intelligence (AI) and photo-based estimating.

A sprout.ai survey released in June found that more than half of 100-plus U.S. and UK insurance employees have either already implemented AI in claims processing, such as ChatGPT, or are considering doing so.

Vargas acknowledged that changes are afoot for Farmers as it works to overcome industry challenges.

“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,” he said following the layoffs. “Our leaner structure will make us more nimble and better able to pursue opportunities for growth and ultimately make Farmers more responsive to the needs of our insured customers and agents. There is a bright future – for Farmers and for our industry – and it necessarily will look different than the past.”

Images

Main image: iStock/Colleen Michaels

Secondary image: Farmers Group Inc. CEO Raul Vargas (Courtesy of Farmers Insurance)