Claims professionals will be among the 3,800 planned layoffs, according to an Allstate news release dated September 30, 2020. Sales, service, and support personnel are also included in the staff reductions. Allstate panel counsel law firms will want to monitor implications for their case files.
Allstate Chief Executive Thomas Wilson said of the layoffs, “somewhere between 25% and 30% are due to the fact that we have fewer claims” as a result of the COVID pandemic. Many auto policyholders sharply reduced driving while sheltering in place and working from home. As a result, Allstate has distributed $1 billion to customers through its Shelter-in-Place Payback plan as of August.
Fewer employees translate into a reduced need for office space, and Allstate expects to see a significant reduction in its U.S. commercial real estate needs as part of the restructuring plan.
The announcement was made as part of a corporate update on Allstate’s multi-year Transformative Growth Plan. The insurance carrier’s growth strategy is to increase market share in the personal property liability market by expanding customer access, improving customer value, and investing in marketing and technology.
Esurance—the Allstate unit that sold its first policy online in 1999 and now offers car insurance in 43 states, plus homeowners, renters, and motorcycle insurance—is being phased out in 2020 as a separate brand. We wrote about this in January in an article titled, Allstate to Retire Esurance Brand.
Allstate is also growing market share with its recent plans to acquire National General Holdings Corporation in a $4 billion cash deal expected to close in early 2021. See our July post titled, Allstate to Acquire National General. The acquisition will give Allstate a greater market share in personal property liability while also significantly expanding its independent agent distribution.
National General (formerly the GMAC Insurance Group) is a specialty personal lines insurance holding company. Insurance products include personal and small business automobile, homeowners, umbrella, recreational vehicle, motorcycle, lender-placed, supplemental health, and other niche insurance products. The insurer has a significant presence in non-standard auto insurance.
Allstate’s overall goal is to lower costs to support more competitive pricing while also maintaining financial margins. The personal lines insurance giant also wants to generate more money for marketing campaigns.
The Allstate Corporation is the nation’s largest publicly held personal lines insurer, serving approximately 16 million households through its Allstate, Encompass, and Answer Financial brand names and Allstate Financial business segment. Allstate-branded insurance products (auto, home, renters, condo, motorcycle, business, life and retirement) and services are offered through Allstate agencies, independent agencies, and Allstate exclusive financial representatives, as well as through the company directly.
Implications for Allstate Panel Counsel Members
This is a challenging time for Allstate panel counsel law firms. Here are a few tips to navigate the layoffs of adjusters and claims professionals with whom you may have long-standing relationships.
- Connect with Allstate personnel via LinkedIn. This will enable you to stay in contact when they land a new position.
- Speaking of new jobs, Allstate panel counsel members could perhaps introduce claims professionals at risk of losing their job to other insurance carriers who might be looking for claims talent.
- Offer to serve as a reference as claims managers look for new positions.
- Review all your case files to bring them current if possible before any staff disruption might interfere with your service levels.
As claim files decline and Allstate offices are consolidating, now is a good time for Allstate panel counsel members to both try and cement their existing relationship while also aggressively expanding marketing efforts to attract new clients.
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This article is provided for educational purposes only. It is not to be interpreted as legal advice or an opinion in regard to any topic discussed. The article should not be used as a substitute for legal advice from a licensed attorney in your state. Every situation is different and circumstances vary widely depending on the governing state law, policy provisions, and related considerations.