Allstate Corp. intends to use a pool of recently laid-off tech workers to help the insurer revamp its operations.
To help it reach new clients and markets, the company, best known for auto and home insurance, is investing in technology such as artificial intelligence and telematics, which set premiums based on customers’ driving habits. According to Chief Financial Officer Jess Merten, massive job cuts at tech companies may make the hiring process easier.
“We’re looking to sort of upgrade talent throughout the organization, so there is an opportunity as folks get let go from other places,” Merten said in an interview in Chicago. “Top talent is part of our transformation strategy.”
The push comes as Allstate, which had approximately 54,300 employees at the end of 2021, battles rising costs that contributed to a net loss of up to $385 million when it reports fourth-quarter results next month. The insurer has also set aside reserves for unpaid claims and costs associated with Winter Storm Elliott.
Nonetheless, it intends to proceed with a number of changes aimed at propelling it forward. These include technology that tracks how people drive and user-friendly mobile applications that enable customers to perform simple tasks like changing their address without having to contact call centers. Another plan is to use AI to provide insurance quotes.
“When you’re talking about Facebook, it may not appear innovative,” Merten said at one of the company’s downtown offices. “That’s an innovative approach within the insurance industry.”
Tens of thousands of workers who have lost their jobs at tech companies in recent months may be able to assist. Google parent Alphabet Inc. joined a slew of other industry titans on Friday in drastically scaling back operations in the face of a faltering global economy and soaring inflation. According to consulting firm Challenger, Gray & Christmas Inc., the technology sector announced 52,771 layoffs in November, for a total of 80,978 over the course of the year.
Repair Costs
Supply-chain disruptions caused by the global pandemic have driven up the costs of parts to repair things such as cars and houses, while a shortage of skilled workers is also fueling costs. While overall inflation has come down, the components that drive Allstate’s costs haven’t fallen as fast.
“I would expect — and I have no crystal ball — that you continue to see labor pressure in the body shops,” he said.
Higher inflation and macroeconomic headwinds won’t slow Allstate’s transformation, according to Merten. Even with a long-term goal of reducing costs, the company isn’t planning large job cuts similar to the ones in the technology and banking industries.
“We know what the formula looks like to make money in auto insurance, and what we’re not going to do is give up on our transformation,” he said. “We can’t wait for inflationary factors to slow down or moderate and then get back after it. What we’re trying to do is simple things like be easier to do business with.”
Allstate, which has previously said 75% of its employees work remotely, is in no rush to decide on where its new headquarters will be. The company sold its campus in Northbrook, Illinois, last year and is no rush to decide on a new location, he said.
“I think creating space that feels like pre-pandemic isn’t going to be what attracts people,” he said. “We’re really thoughtful about what we do, how we do it in what works for the masses of people, because you want them to come in and be like: ‘That was great.’”