State Farm notifies employees of voluntary exit progam
State Farm has notified employees via email that a voluntary exit program will start soon, according to a report from WGLT, a public radio station covering the Bloomington, Illinois area, where the insurance company is headquartered.
WGLT says the exit program will start “if and when” changes are needed and does not rule out the possibility of layoffs.
“These changes are part of our continued efforts to shape a stronger, more flexible organization for the future,” Gina Morss-Fischer, State Farm spokesperson, told the radio station. “Each business area will determine if, when, and how it would plan to use the new program and process based on its needs.”
According to the radio station, the last voluntary exit plan for the company was in 2017.
Morss-Fischer also said the company doesn’t expect the number of employees working in McLean County to change significantly. She said there are currently about 13,000 people working in the county, where the company is headquartered.
The State Farm P-C group of companies reported earned premium of $103.0 billion and a combined underwriting loss of $6.1 billion in 2024. This result compared to an underwriting loss of $14.1 billion on earned premium of $87.6 billion in 2023. The change over 2023 reflects significant improvement in auto lines underwriting results which was partially offset by an increase in homeowners incurred catastrophe claims.
The State Farm auto insurance business represented 65% of the P-C companies’ combined net written premium. Earned premium was $67.5 billion. Incurred claims and loss adjustment expenses were $56.2 billion and all other underwriting expenses totaled $14.0 billion. The underwriting loss was $2.7 billion.
Comparable 2023 figures were: earned premium, $56.1 billion; incurred claims and loss adjustment expenses, $53.4 billion; all other underwriting expenses, $12.4 billion; underwriting loss, $9.7 billion.
State Farm has received pushback in California for its rate increase request, amid criticism of its response to Los Angeles County wildfires. The company received a 17% emergency rate increase in May from Insurance Commissioner Ricardo Lara.
The insurance company is currently seeking to raise homeowners’ rates in the state by another 11%. A judge ruled last week in favor of a Pacific Palisades homeowner who requested a review of the insurer’s claims handling practices during a rate hearing.
Politicians in Illinois have also been critical of the company after it increased homeowners’ insurance there by 27.2% in July.
“Today, I’m directing the Illinois Department of Insurance to take all available regulatory action to enforce the law and ensure a level playing field for Illinois homeowners,” Gov. JB Pritzker wrote in a social media post. “I am also calling on the General Assembly to enact a legislative solution during veto session that prevents insurance companies from taking advantage of consumers through severe and unnecessary rate hikes like those proposed by State Farm.”
It’s possible that politicians in the state could pick up legislation that would create a rate-setting process in the state for home and auto insurance during the veto session.
WGLT reports that State Farm remains the top auto and property insurance company in the U.S., but is losing ground to Progressive, which sits within one percentage point market share of State Farm at the end of June.
Gerald Glombicki, senior director at Fitch Ratings, told WGLT that many insurance companies are using AI and other technologies to lower payroll costs. He said insurance companies could be leaning on early retirements and early exits as AI is introduced.
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