Auto insurance giant GEICO will lay off 2,000 staff, or 6% of its workforce, and has issued a return to office mandate, the insurance company’s CEO Todd Combs said in a letter to employees sent this morning.
Staff affected by layoffs will be contacted today, Combs outlined in a company-wide email that was shared with Insurance Business by GEICO.
“To better position ourselves for long-term profitability and growth, and after a thorough evaluation across all lines of business, we are reducing our workforce by roughly 2,000 associates, or 6% of our total workforce,” Combs wrote to staff. “This will allow us to become more dynamic, agile, and streamline our processes while still serving our customers.”
Those not affected by cuts have been told they will be expected to boost their in-office days, with full implementation of this policy expected to follow from January 1, 2024.
“We believe that being in the same place can foster a sense of community and connection, and that meaningful time together will allow us to build relationships that create trust and strengthen our sense of belonging,” Combs said in the letter. “In that vein, we will soon be increasing our collective presence in the office.
“Your leaders will be sharing your required number of in-office days based on customer and business needs.”
Many staff have been hybrid or fully remote in recent months, Combs acknowledged.
GEICO CEO Combs pledged that the business will offer career transition assistance to employees affected by layoffs, including through career coaching sessions, resume update assistance, on-demand interviewing and networking, and with suggestions on social media presence enhancing.
Affected employees will retain access to the insurer’s Workday platform, meaning they will be able to apply for open jobs at the insurance company.
Existing benefits will continue to be provided during notice periods, Combs confirmed.
“This very difficult decision was not taken lightly,” Combs said. “We recognize we’re saying goodbye to beloved colleagues and friends, and as a leadership team we are committed to supporting those affected in the days ahead.”
The CEO highlighted previous “significant changes” that had been made to the business as it sought to address a “very difficult period across the industry”.
The insurance company has previously shuttered its California agent offices and has been seen to have made layoffs across departments in recent years.
Challenges raised by Combs included levels of inflation not seen in decades, labor parts shortages and delays, increasing medical costs, and “other factors” that have led to combined ratio and loss costs rises “alongside the entire industry”.
“Our future requires our company to adapt swiftly and evolve our business model when needed to stay competitive and win,” Combs said.
The GEICO layoffs follow cuts at rival Farmers Insurance, which slashed its headcount by 11%, or 2,400 staff, as announced in August.
In Combs’ letter, he set out five key priorities for the business moving forwards. These were:
“We will provide details on these shared priorities and the operating principles that will help us get there together in the coming weeks,” Combs said. “Relatedly, we must do a better job of communicating and providing the why behind the decisions we are making to move our company forward.
“This is a priority for our leaders, and you can expect to see a greater emphasis on associate communication in the months ahead.”
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