The American Association of Justice, a trial lawyer’s advocacy group, ranked Allstate Insurance Company as the worst insurer for consumers.The group based its rankings on an evaluation of legal filings showing a pattern of greed, refusal to pay legitimate claims, and rewarding employees for claim denials.
The AAJ says its rankings are backed by thousands of court documents produced during litigation against the insurer and complaints filed with state insurance regulators, the SEC and the FBI.Apparently in the mid-1990s Allstate contracted the consulting giant, The McKinsey Group, to help change its claim policy to one of “lowball” offers and systematic denials.
The rest of the list includes:
- Unum.Unum writes mostly disability policies.Unum faced sanctions in 48 states over its denial of disability benefits.The insurer settled out of court in 2005.
- AIG.The world’s largest insurer, AIG, settled out of court for $1.6 billion in 2006 in multiple claims alleging corporate fraud and claims abuse.
- State Farm.State Farm employed hardball tactics through the use of questionable engineering reports to deny claims from Hurricane Katrina victims.
- Conseco.Conseco is in the business of long-term care insurance.Conseco’s delaying and stalling tactics proved beneficial to the insurer as most of the claimants died or gave up before receiving benefits.
- Wellpoint.Wellpoint, a health insurance giant, routinely cancelled polices for pregnant women or the chronically ill.
- Farmers.Farmers seems to be on the low end of consumer satisfaction surveys.
- United Health.This health insurer pays extremely low reimbursements to physicians and is slow to pay on claims, compromising the health of its insureds.
- Torchmark.Torchmark preyed on Southern policyholders for burial insurance.It routinely charged minorities more than white policyholders for the same policy.
- Liberty Mutual.Another insurer that hired consulting firm McKinsey to develop aggressive tactics.
All of these claims denials tactics proved useful in putting money in the pockets of these insurance companies.Over the last ten years, profits for the property/casualty/life and health insurance have risen by 30 billion dollars.
The insurance industry takes in over a trillion dollars in premiums per year; and it holds over 3 trillion in assets.CEOs for the top ten insurance companies earned between 8 and 9 million last year.
A senior executive for the National Association of Insurance Commissioners reported that “insurance companies make money when they don’t pay claims.”Apparently, the strategy is “deny, delay and defend.”For companies like Allstate, adjustors are trained to avoid paying claims and are rewarded for low claim payouts with portable refrigerators and office pizza parties.Allstate CEO Jerry Choate admitted in 1997“[t]he leverage is really in the claims side.If you don’t win there, I don’t care what you do on the front end.You’re not going to win.”
For a real eye-opener into the insurance industry, read the full report.The insurance industry is in dire need of reform.Allstate has enjoyed a return on profits double that of other S&P 500 companies.Meanwhile, its policyholders have suffered cancellations, no renewals and punitive loss-prevention techniques.
Lobby your congressperson for the following reforms.Many state have passed “Insurer Fair Conduct” bills that establish a private right of action against an insurer for the failure to act in good faith.Lobby your representative for a rate approval law that will require an insurer to have the insurance commissioner’s approval before raising rates more than ten percent.Lobby your representative in government for an insurance consumer advocate at the state level.
Finally, be aware of what rights you do have as an insured and as a claimant on another policy.The law firm of Robert N. Katz can help in the claims process or with a bad faith claim against an insurance company.Contact us today for a free, private consultation.