Branch Insurance has conducted a round of layoffs, according to a June 8 LinkedIn post by Co-Founder and CEO Steve Lekas.

Lekas did not announce the number of employees who were let go, but cited “ongoing challenges facing the insurance industry and Branch” as the reasoning behind the decision.

“Today has been the hardest day I’ve had since we started Branch,” he said in the LinkedIn post.

Lekas expanded on the challenges that led to the decision in a company-wide email, which he posted to Medium. He pointed to persistent inflation as one of the main drivers, which he said has been “causing significant challenges across the entire insurance landscape.”

On top of inflation, he added that Branch has grown faster than its loss ratio.

“While we’ve been growing according to our plan — both in members and Branchers — our loss costs have been higher than expected,” he said. “In just four short years, with the help of each and every Brancher, we’ve built something incredibly different and valuable in an industry that has been historically difficult to disrupt. Though this is true, it is also true that as stewards of our members’ capital, we need to meet this moment with a sound and responsible plan for our members, employees, and shareholders. This includes reducing the size of our team.”

Branch is offering support to departing employees through severance pay based on tenure, payment for two months of health benefits continuation through COBRA starting July 1, if elected, and access to career placement services, including a dedicated coach, Lekas outlined in the email.

Laid-off Branch employees also have the option to retain their laptop and equipment, an extended exercise schedule for any vested options, and an invitation into the Branch alumni program. Lekas offered personal help in the transition to all laid-off employees and asked them to reach out through LinkedIn or email.

“To the Branchers impacted by today’s news, please know that as long as we’ve been operating, we have consistently held a very high bar for anyone joining our team: incredibly talented, mission aligned, and culturally additive,” he said. “To be a Brancher is to be special. And this doesn’t change that. I know that each of you leaving today are going to go on and do great things somewhere. It pains me that it can’t be here, but I will make it my business to help you get to that place.”

Next week, Branch will have leaders from across the company on-site for a two-day deep dive into its reforecast along with workshops to organize around the new plan, Lekas said, adding that the macroeconomic environment continues to be a challenge for all insurance companies.

Indeed, this move from Branch closely follows an announcement from Pie Insurance last month that 14 percent of its employees — 66 in total — were being laid off. CEO John Swigart shared the news in an all-hands meeting.

“This decision was made as part of our wider budget revision process that we have undertaken over the last few months,” Swigart told employees in a message posted to Pie’s website.

Detailing the decision, Swigart said that with the deterioration of the funding environment since it raised a $315 million Series D round of funding in September, the future outlook for capital raises “has been pushed out even further, which necessitates these expense reductions.”

Corvus Insurance also previously confirmed to Carrier Management that it conducted a round of layoffs at the beginning of this year, affecting 14 percent of its workforce.

The layoff activity in InsurTech this year continues on the back of a wave of workforce reductions across the industry last year. InsurTechs NEXT and Thimble both pointed to an increased focus on profitability in laying off part of their workforce in July 2022. Technology company Root Inc., the Columbus, Ohio, parent company of Root Insurance, said inflationary pressures causing historic levels of loss cost increases factored into the reasoning behind its January 2022 layoffs. Other notable layoff announcements came last year from Lemonade in July and Hippo Holdings Inc. in September.

After a period of what Ken Jordan, managing partner of the insurance practice at recruiting firm Smith & Wilkinson, described as “hypergrowth,” he told Carrier Management in March that InsurTech has been undergoing a period of transition.

“InsurTech did ramp up very quickly, and with good reason. Traditional insurance companies had not evolved to meet the specific needs of a changing consumer,” he said. “As with any area of hypergrowth, many would enter and a much smaller number would prevail.”

As the insurance industry is grappling with a period of economic uncertainty, he said investors are expecting return on investment rather than the number of customers that have been put on the books.

“InsurTech as a whole is maturing and taking on a partnership mentality versus a disruption mentality,” he said.

Data science leader Dr. Sam Jain, a former Embroker employee who announced on LinkedIn that his position with the InsurTech was eliminated last year, said he believes the layoffs in InsurTech are due to many in the industry chasing growth over profitability.

“After venture capital dried up, insurance companies, InsurTechs, startups or even unprofitable divisions within larger companies faced pressure from their investors or shareholders to become more self-sufficient,” he said. “With revenue growth facing headwinds because of the impending recession, companies chose to cut.”

Lekas said in the company-wide email that despite these challenges, Branch plans to continue to build.

“Before we turn our attention to that work, our attention will stay with the Branchers who are leaving Branch this week,” he said. “Though they leave us, we’ll each work to have their back by helping them navigate this change.”

Carrier Management has reached out to Branch for comment.