Insurance layoffs: Everything you need to know

Insurance layoffs: Everything you need to know | Insurance Business America

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Insurance layoffs: Everything you need to know

Insurance is among the top sectors for job security, but insurance layoffs are on an uptick

Finance and insurance are among the top industries offering workers the most job security, with layoff and discharge rates of 0.5%, equivalent to about 31,000 jobs, according to the latest data from the Bureau of Labor Statistics (BLS). But while these figures seem low – especially if you consider that these are combined numbers from two separate sectors – the statistics actually represent a 0.2% uptick from the previous months, or about an 11,000 to 13,000 increase in the number of layoffs. 

This means that although the insurance industry is considered to be among the most stable sectors, given the current business climate, it is also not immune to insurance layoffs.  

Insurance Business lists down the most recent instances when insurance companies had to let go of workers due to economic reasons. The list includes some of the industry’s biggest names, which shows just how any business, regardless of scale, can be impacted by an economic downturn. 

May 18, 2023: Pie Insurance slashes workforce by 14% 

Insurtech firm Pie Insurance announced recently that it was cutting its workforce by 14%, which affected 66 staff. In his letter to employees dated May 18, CEO John Swigart cited the decline in the current funding environment as the primary reason for the insurance layoffs and the move was necessary for the company to maintain profitability.   

The layoffs were part of a wider budget revision process that Pie Insurance has taken in previous months. Swigart added that while they already identified more than $25 million in expenses that can be removed from the firm’s budget, a workforce reduction was needed to achieve its profitability targets.  

All departments within the organization were affected, with Swigart noting that the decisions were based on the roles required to achieve the company’s goals and not because of individual impact or performance.  

May 18, 2023: Asurion LLC cuts 60 jobs in Nashville 

Asurion LLC, a company that offers device insurance and warranty and support services for consumer electronics and home appliances, has reduced its Nashville workforce by 60 in May. The company also announced that it was selling almost 100 retail stores to franchisees and closing another 24 stores nationwide. This will reduce its number of stores to 730 throughout North America.  

Asurion cited that the moves were in line with its goal to invest more resources in its home portfolio, which played a key role in its “strong year-over-year growth.” 

Asurion is considered among Greater Nashville’s largest private companies by revenue, although its overall figure dipped 18% to $8.4 billion in its latest financials. This was also the smallest revenue it has registered since 2017.    

May 17, 2023: USAA reduces workforce by 300 in latest round of insurance layoffs 

USAA said in May that it was planning to eliminate 300 positions nationwide in another round of insurance layoffs, bringing this year’s total to nearly 800 retrenched employees. This comes as the specialist insurer reported its first annual loss in a century.   

The company – which provides a range of insurance policies exclusively to members of the US military, veterans, and their families – had already dismissed 475 employees in March. A spokesperson for the company said the insurance layoffs were needed because of “shifting business needs.” 

In its latest financial report, USAA revealed a $1.3 billion net loss, marking a significant dip from the $3.3 billion in profit it achieved the previous year. This also represented the insurer’s first loss since it was established in 1923. 

Humana purchased SeniorBridge in 2012 to manage chronic and home care services for seniors. Apart from New York and Florida, SeniorBridge operated in Arizona, Connecticut, Ohio, New Jersey, Texas, and Virginia. 

In February, the health insurance giant also announced plans to exit the Employer Group Commercial Medical Products business. This includes all fully insured, self-funded, and Federal Employee Health Benefit medical plans, as well as the company’s associated wellness and rewards programs. Humana noted that the exit will be conducted in a “phased manner” in the next 18 to 24 months, adding that the move was part of the firm’s shift to government-funded programs and specialty businesses.    

Here’s a list of other prominent insurance layoffs that happened in the past year.  

Root Insurance, January 2022: Ohio-based insurtech firm Root Insurance announced that it has cut 20% of its workforce, or about 330 employees. CEO and co-founder Alex Timm said that the move was necessary because of the pandemic’s impact on the company, as well as supply chain and inflationary pressures, leading to record loss cost increases.  
Blue Shield Insurance of California, January 2022: Blue Shield Insurance of California has revealed its plans to layoff more than 370 workers. The bulk of the affected staff were based in Sacramento, but cuts were also made in the health insurer’s head office in Oakland, as well as across the state.  
GoHealth, August 2022: Health insurance brokerage GoHealth slashed a fifth of its workforce after experiencing a sixfold surge in net loss from the first quarter of the year. In a message to employees, CEO Vijay Kotte said that the decision “was not made lightly,” but was necessary to “secure our long-term future and enable GoHealth to achieve its full potential.” 
Hippo Insurance, September 2022: Israeli-founded insurtech company Hippo Insurance dismissed 70 staff, or about a tenth of its workforce, which was aimed at what the firm said was “further drive efficiency and increase focus on strategic priorities.” The retrenchment came as Ran Harpaz announced his resignation as Hippo’s chief operating officer and chief technology officer.  

When insurance layoffs happen, this can have significant ramifications for businesses in the industry. Here are some of the major impacts.  

Drop in productivity 

Although some may think that employees who survive layoffs have added motivation to work harder to prove their value and secure their position within the company, this is not how it typically plays out.  

A recent survey of staff who kept their jobs amidst a company layoff revealed that almost three-fourths of respondents admitted to seeing their productivity drop after a layoff, while a third saw colleagues’ productivity also decline. An overwhelming 87%, meanwhile, said that they would be unlikely to recommend their organization to others looking for work.   

Potential loss of clients 

The same survey also found that more than 80% of those who survived layoffs have seen a decrease in the quality of customer service. Around 77% also admitted that they saw more mistakes being committed by employees. These can result in the potential loss of clients, especially in a fiercely competitive industry like insurance. 

Increased workload 

After insurance layoffs, employees may be obligated to pick up responsibilities and projects left behind by retrenched colleagues. This sudden increase in workload, however, can leave staff feeling ill-prepared and overwhelmed, leading to a drop in performance.  

The situation can also impact the mental health and wellbeing of workers, with some ending up feeling resentful and burned out.  

Even amidst a constantly changing economic environment, insurance remains among the most stable sector for workers based on data gathered by the BLS. However, no matter how seemingly secure an industry is, layoffs can still happen. Here are some of the reasons why insurance layoffs occur.  

Cost-cutting measures: The need to cut expenses is among the common reasons why insurance companies layoff staff. This may be due to a dip in revenue, loss of investors, or increase in debt. Some insurers try to exhaust all means to cut costs, turning to layoffs only as a last resort.  
Decrease in operations: An insurance company may choose to close a part of its operations or outsource work to independent contractors. This is often also done to cut costs and may cause members of affected units to lose their jobs. 
Technological advancements: With the emergence of insurtech, automation becomes a common trend among insurers. This may reduce the need for some employees.   
Mergers and acquisitions (M&A): Mergers and acquisitions can bring major changes to an insurance company. Businesses may opt to streamline processes and business units, which can lead to some employees being laid off. 

If you had been laid off from work, the good news is that the insurance industry offers a myriad of employment opportunities. Our guide to the best websites for searching insurance jobs can help you find the role that fits your skills and experience.  

Layoffs are never a pleasant experience, even for those left behind. While slashing workforces may be necessary in certain instances for businesses to stay profitable, companies should not ignore the needs of the staff who remain. Here are some steps insurers can take to support those who survive insurance layoffs. 

Regular check-ins with managers: Experiencing job insecurity firsthand can have a profound effect on the mental health and productivity of workers. For companies where layoffs are necessary, it’s vital to have managers that are properly trained in giving support to and handling difficult conversations with employees.  
Redistributing workloads: It can sometimes be inevitable for workers to pick up extra responsibilities and absorb the projects of those who were let go. During these times, companies must learn how to redistribute workloads in a way that will not cause burnout and disengagement.  
Open communication: Opening lines of communication, especially those in the top positions, can help build trust and transparency. This includes giving employees information on the financial health of the company. 

Insurance layoffs are often done to improve the financial situation of a company. But if not handled correctly, insurers may find themselves in a worse financial position than before. The best insurance companies to work for know exactly how to deal with difficult situations. Find out which insurers made our list by clicking the link.  

The top insurance employers understand what it takes to make each workday both challenging and fulfilling. A positive work culture, an engaged workforce, and competitive compensation are some of the factors that you must consider when looking for an insurance company to work for.  

These are the types of insurers you can find on our Best in Insurance Special Reports page. Here, we feature only the best insurance companies across the US. These firms are nominated by their peers and vetted by our panel of insurance experts as respected industry leaders. This page is the place to go if you’re on the lookout for an insurance employer that shares your values and paves the way for your professional development. 

What do you think of the recent insurance layoffs? How much impact do the layoffs have in the industry? Share your comments below. 

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