As much of the insurance industry approaches the one-year mark since offices were shuttered and mass remote work began, some of the COVID-19 pandemic's structural impact on insurers and their employees is beginning to show.
Since the start of the pandemic, many insurers have permanently closed office locations, sold certain real estate properties, laid off employees and transitioned teams of actuaries, executives and other staff to a virtual working environment. The industry is still trying to figure out what to do this year as the worldwide vaccination rollout begins. Tina Witney, a managing director at Deloitte's Insurance Consulting Practice, said the company is likely to wait until at least the second half of the year before bringing people back into the office.
Insurers are likely to allow about 30% of their workforces to remain working remotely permanently, Witney said. Employee sentiment in many places is still split, with about half of employees wanting to return to the office and the other half preferring to work remotely for good, she noted.
The time frame for returning employees to in-office work partially depends on the vaccination campaign, which is in different phases of distribution across the U.S. Those 65 years and older and those with comorbidities are being prioritized in many states.
According to S&P Global Market Intelligence analysis of data pulled from the Bureau of Labor Statistics, approximately 5.9% of the insurance carrier workforce is 65 years or older. Roughly 18.9% of employees are between the ages of 55 and 64.
The median age of employees across insurance carriers and other related activities is 44.2.
Rethinking office space
The pandemic has offered insurers the opportunity to reevaluate their use of office space and their real estate footprints.
Tammi Estes, public affairs senior specialist for State Farm Mutual Automobile Insurance Co., said in an email that the company is planning to bring more of its employees back into its Atlanta, Phoenix, Dallas and Bloomington, Ill., facilities "sometime in 2021 through a phased approach."
But a number of State Farm operations centers will no longer provide employees the option to return to the physical workplace.
"Most employees assigned to these large operation centers have been working from home since March and will continue to do so," Estes said.
Nationwide Mutual Insurance Co. spokesperson Ryan Ankrom in an email said 98% of employees pivoted to working from home at the start of pandemic. Before COVID-19 outbreak, about 18% of associates worked from home.
Ankrom noted that Nationwide recently moved its "return-to-office date" to June 1 but said the company continues to view its plans as being flexible.
"Long-term we foresee up to 50% of our workforce either working from home permanently or working a hybrid model," Ankrom said.
Nationwide in 2020 completed its exit of most buildings outside of four designated campuses, which Ankrom clarified was part of a long-term plan that the company accelerated last April.
W. R. Berkley Corp. announced in late December 2020 that it sold an office complex in New York City and expects to record a pretax net realized gain of about $105 million in the fourth quarter from its sale. A spokesperson for the company clarified that the complex was an investment property and that W. R. Berkley did not occupy space in that building.
Witney said she knew of at least two instances where insurers took advantage of the situation to accelerate closing office spaces they were previously planning to shutter.
Although many insurers have not allowed workers access to office space during the pandemic and have been in no rush to return them on-site, Unum Group has taken a different approach and let its employees use office space on a voluntary basis.
Jeff Sheckley, assistant vice president of Business Resiliency at Unum, told S&P Global Market Intelligence that roughly 10% to 15% of the employee workforce has chosen to work from the office, where additional safety measures have been implemented. There have been no issues with exposures to COVID-19, Sheckley said.
Unum also will implement some sort of hybrid model in the future, but what that entails is yet to be seen, Sheckley said. The company closed an office in Massachusetts last summer, which Sheckley said was unrelated to the pandemic, but there are no future plans to close office space.
Some insurance companies have also made workforce reductions as the pandemic has dragged on.
Genworth Financial Inc. recently confirmed that some positions at the company were eliminated after the company's long-awaited merger with China Oceanwide Holdings Ltd. was put on hold indefinitely. Some of the issues surrounding the deal were related to logistical problems caused by the pandemic.
Allstate Corp. announced in September 2020 that it was undergoing a restructuring plan that would impact nearly 3,800 employees primarily in claims, sales, service and support functions. The company said it expects to incur a pretax charge of about $290 million, with the majority of it going toward severance and employee benefits.
The company also said it expects to incur real estate exit costs resulting from office closures of nearly $80 million pretax. These actions are expected to be completed in 2021. A spokesperson for Allstate declined to comment.