GEICO Shuts All of Its California Sales Offices

GEICO abruptly closed all of its physical sales offices in California last week, telling its customers that its insurance policies in the Golden State from now on exclusively will be handled digitally through the insurance giant’s website or by using its mobile app.

The office shutdown, which according to several reports was accompanied by “hundreds” of layoffs, involves 38 offices across the state. At the same time the physical offices closed, the company said it was ending the practice of selling policies through telephone agents in 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,” GEICO said, in a statement distributed to media outlets across California.

“The GEICO Local Offices that closed are sales offices owned by independent contractors. There is no effect on claims, and our claims teams remain available to assist all customers,” the company said, giving no indication how pending office leases for the sales office would be resolved.

There also was no indication from the company whether it is trimming operations in a 267K SF office building the insurance company owns in Poway, CA.

The shutdown was so abrupt that media outlets across California reported confused customers showing up at GEICO offices to discuss policies arriving to find hand-written signs taped to the doors advising them the office had closed.

The California Department of Insurance issued a statement saying it is monitoring the GEICO office closings to make sure that all consumers holding GEICO policies are protected.

In response to a query from the Sacramento Bee, GEICO said it does not plan to stop doing business in California. Industry experts, however, said there are factors that are pushing insurance companies to rethink their offerings in the Golden State.

Steve Young, a lawyer for Independent Insurance Agents & Brokers of California noted in an interview with abc10, a TV affiliate, that the state’s regulations increasingly are making it difficult for insurance companies to do business in the state.

“There’s a very complicated insurance rating law that is in effect here that makes it very difficult for insurers to have confidence that they can get the rate that they need from an actuarial perspective to ride these risks going forward,” Young said.

According to a report in the Sacramento Bee, GEICO’s sales footprint in the capital region expanded last year, with leases being signed for new offices in Roseville and several other cities in the area.