GEICO closes California insurance offices, lays off hundreds

GEICO has closed all of its 38 California agent offices that sell auto and homeowners policies and other lines and has also ended the practice of selling insurance through telephone agents in the state.

Three offices in Sacramento, one in Roseville, three in Fresno and one in Modesto were among offices that have closed in the last few days. The closures are resulting in more than 35 layoffs in the Sacramento area and hundreds statewide.

The GEICO office in Roseville only opened in July 2021. GEICO put out a press release at the time saying it would meet the insurance needs of all Placer County residents.

The California Department of Insurance is following GEICO’s actions, said California Deputy Insurance Commissioner Michael Soller.

“We are monitoring to make sure consumers are protected,” he said in a statement.

A GEICO spokesperson would not comment on the new changes but said the company was not leaving California.

“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,” the company said in an unsigned emailed statement to The Sacramento Bee.

The changes leave online options through a computer or a mobile device as the only way to obtain a GEICO policy in California

GEICO is one of the largest property and casualty insurers in California but Soller said consumers have options. He said more than 130 companies compete for private passenger auto business and more than 70 companies write homeowners insurance.

GEICO’s actions in California come as company commissioned Walk-In agents and phone sales remain open in other western states. GEICO is also advertising on its website for a new sales agent at an office in Naples, Florida.

It’s unclear if GEICO is losing money in California and the moves are part of a strategy to reduce business.

“The company’s actions will make it harder for consumers to buy GEICO policies, particularly those who are computer challenged or prefer to meet an agent in person”, said former California Insurance Commissioner Dave Jones in an interview.

Jones, who served as Insurance Commissioner from 2011 to 2019, said the reason GEICO has local offices is for consumers who want to meet their insurance agent in person.

Or GEICO put it this way on their website about the local agents: “Their primary role is to prospect and generate insurance leads and policies that GEICO would otherwise not capture.”

On Thursday, several GEICO customers who attempted to meet with local agents at the GEICO office at 5211 Madison Ave. in Sacramento were turned away.

They were told to call a 800 number.

“We are permanently shut down and can’t write new policies,” said an agent on Thursday to a reporter.

The doors to the office were locked and multiple signs were posted on the agency windows, saying it was temporarily closed today. The signs have hung on the windows since last week when policy sales were stopped.

The agent, who opened the door for less than a minute, stated that the closure was permanent and due to corporate decisions by GEICO, not the local agency, which is independently owned.

GEICO hires local agents, according to its website, who must spend between $100,000 and $250,000 to open an office. The agents make their money on commissions and can only sell GEICO products.

The insurer stopped new policy phone sales in California several months ago.

GEICO is part of Berkshire Hathaway, the publicly traded company run by famed investor Warren Buffett.

Source : insurancenewsnet