Liberty Mutual will lay off about 850 employees as part of a long-term transition to minimize risks, the insurer confirmed.

The Boston, Mass.-based company is the latest in a number of insurers to announce layoffs or other cutbacks in response to what they’ve described as a challenging market. According to Forbes, the latest round of layoffs follows a previous round earlier this year that affected 370 positions.

A Liberty Mutual spokesperson told Repairer Driven News on Wednesday that the most recent layoffs represent about 2% of the company’s workforce.

“As part of a company transformation initiative, we have made the difficult decision to eliminate approximately 850 positions–nearly all in the U.S. –across several functions this month, many of which are effective by the end of the year,” the spokesman said. “Impacted employees will be eligible for severance and outplacement assistance and are encouraged to apply for other positions within the organization.”

Liberty Mutual would not say how many of the positions are claim related, so it’s not clear what effect the move might have on collision repair facilities working with the company on claims.

The layoffs are the latest in a string of cutbacks insurers have made this year.

Gregg Barrett, CEO of the insurance industry expertise firm WaterStreet Company, told Insurance News Net that such measures have become necessary amid the rising cost of doing business.

“Given the myriad challenges, many insurers find themselves at crossroads, leading to reorganizations and strategic shifts,” Barrett said. “Layoffs and structural changes become necessary evils to streamline operations and, in the longer run, aim for profitability.”

He added: “Some insurers are taking a step back and not issuing new policies, or binders, in areas frequently hit by natural disasters.  the surface, this might seem like a cautious move to limit exposure to new claims. However, there’s a flip side – it also means the loss of potential premium revenue from these high-risk areas.

Earlier in October, GEICO laid off 2,000 of its employees and ordered its remaining staff to return to the office, its CEO said in an internal email shared with RDN.

Todd Combs said in his letter to employees that the move was made to “better position ourselves for long-term profitability and growth,” and that the layoff represents 6% of the company’s workforce.

“We have seen significant changes to our company over the past few years, and we have evolved our business practices to help address a very difficult period across the industry,” Combs wrote. “Levels of inflation that we haven’t seen in decades, delays in parts or labor shortages extending time to repair, rising medical costs, and other factors have caused our loss costs and combined ratio to increase, alongside the entire industry.”

In late August, Farmers Insurance said it was laying off 11% of its employees throughout all its business lines to better position itself for “long-term profitability and growth.”

Also in August, Kemper Corp. announced it was exiting the preferred home and auto market to enhance its returns and “support profitable growth” in core businesses. Its specialty business Kemper Auto will not be affected. Kemper is believed to be among the first insurers to exit a segment on a national level, although other companies have stopped doing business in states such as California and Florida.

Other companies have sought savings by reducing the amount of in-person vehicle inspections. Instead, they’re relying on virtual and photo-based estimating despite concerns from repairers that those tools don’t always produce accurate results.

Meanwhile, a recent Swiss Re study found that although a hard market is likely to continue, 2023 is expected to be a “transition year” globally for property and casualty (P&C) insurance.

“Our analysis shows that non-life insurers’ profitability is set to improve strongly in the coming years as higher interest rates and rate hardening more than offset higher claims costs from persistent inflation,” said Jérôme Jean Haegeli, Swiss Re’s chief economist. “This will be vital to enable industry resources to grow at a rate that will match global demand for insurance protection.”

Swiss Re added that despite the positive outlook, profitability within the P&C insurance sector is likely to remain lower than the rising cost of capital this year.

Turning the corner will require insurers to become more disciplined with their capital and use it more efficiently, the study found.

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