GEICO, one of the largest insurance companies in the United States, reportedly closed all 38 of it’s California offices on Monday, resulting in hundreds of workers being laid off.
According to the company, GEICO would not be leaving outright, and will still be offering policies directly online, with all insurance functions continuing as normal. Buying directly through agents by phone, however, will not be possible.
“We continue to write policies in California, and we remain available through our direct channels for the more than 2.18 million California customers presently insured with us,” said GEICO in a statement on Monday.
As of Monday, GEICO has not released the reasons why the offices closed or if the offices in any other states will close in the near future.
The California Department of Insurance is currently overlooking the situation to make sure that GEICO still gives adequate access to Californians and that the office closures won’t disrupt the over two million policies in the state.
“We are monitoring to make sure consumers are protected,” said CDI in a statement on Monday. “California has a strong insurance market with more than 130 companies competing for consumers’ private passenger auto business and more than 70 companies writing homeowners insurance. We encourage consumers to look at their options for coverage in California’s competitive marketplace.”
While the Berkshire Hathaway-owned company has said that a complete pullout will not happen, many of those in the industry said that the removal of offices and agents could lead to some worrying trends.
“When you get rid of the offices like this, it doesn’t exactly bode well for many people,” explained Trevor Connery, a lobbyist who has worked for insurance companies in the past, to the Globe on Monday. “If there is an accident you can still call and everything from the sound of it to get through that, but for people needing someone to help them buy insurance it can be an issue. Some people don’t have internet access or need someone to help guide them through the process. Some insurance language is confusing, and having an agent explain in layman’s terms or offer a competitive quote to make a sale could hurt GEICO.
“But hey, the company probably crunched all the numbers on this. As for them leaving, it could be a declining market, the recession, higher costs in California, or a number of other issues. Honestly, the industry is getting more out of the office more and more anyway, so it may just be the beginning of a trend too. We need to hear the whys first before we can really see, and right now all we have is speculation.
“California is lucky to have the CDI to monitor what’s going on though. Considering the size of a company and the fact that they have millions of customers in California, many of whom are transplants bringing GEICO out here, they won’t leave the state. Just getting it will be more online oriented now.”
The exact reasons for leaving the state are expected to be known soon.
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