Here is the short version. In a Kentucky woman sued for an automobile accident in which she suffered neck and back injuries. Her car was struck by a truck loaded with firewood which rear-ended her pickup truck. According to reports, it took nearly two years to settle the claim with Allstate. The two sides have very differing opinions on what really happened.
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Because of their protective role in the lives of ordinary citizens, insurers have long operated as semi-public trusts. But since the mids, a new profit-hungry model, combined with weak regulation, has upended that ancient social contract. McKinsey, which was reportedly hired by Allstate in , prepared about 12, PowerPoint slides to present its plan. The slides were introduced in litigation in , when the insurer turned them over under a temporary protective order.
Allstate gains -- others must lose. The stunning increase, said Russ Roberts, came through "driving down loss values to an average of 30 percent below the actual market cost" -- that is, paying dramatically less on claims. McKinsey has worked with State Farm, another insurance giant, and other companies in redesigning their claims systems.
Feinman cautioned in his book " Delay, Deny, Defend " that the two major names "are just the largest players in the industry The top 10 list was led by William R. Berkley of W. With A claim delayed by even a month can spell financial disaster for a family. Madeleine Burdette, a retiree, is an Allstate customer who reported her experience on the popular website AllstateInsuranceSucks.
When her Georgia home burned in November , Burdette was in Ohio, where she lives most of the year. She said the fire marshal in Georgia told her that her house would have to be torn down. Just the outside walls were left untouched. Allstate also said it would have to do a thorough investigation to determine if the fire was caused by arson. If it was arson, the adjuster told Burdette, Allstate would not pay for any damages.
According to former employees , such investigations are a common practice at Allstate and are encouraged by supervisors as a way to avoid paying claims quickly. Burdette, who lives on her Social Security checks, flew from Ohio to survey the damage herself. While in Georgia, she contacted public adjuster Anita Taff.
Public adjusters serve as advocates for individuals who feel they need another set of eyes on a claim. Taff met with Burdette at the house, Burdette said, and discussed the damage with the contractor Burdette had hired.
Upon returning to Ohio, Burdette spoke with Taff over the phone to find out what her impression was. Burdette said she immediately called the contractor and told him not to go near her house. According to Burdette, she received a phone call within 10 minutes from her Allstate adjuster asking her not to hire Taff or any other public adjuster. Burdette had explicitly told Allstate not to pay the contractor a dime, she said, but the company paid him under her policy anyway. She consulted four different lawyers to see if she had a legal case.
While she said they all agreed that she was entitled to reimbursement, she said they also agreed that she lacked the funds to fight the insurance giant. You call up the insurance company. You describe the circumstances. State insurance departments are usually understaffed and overwhelmed.
And even if they had the legal firepower to contend with giant insurance companies, Feinman said, "the regulators are closer to the industry than they are consumers. When combined with penalties that Feinman described as "laughably low" in many states, this close relationship means that regulation does not provide an effective check on insurance companies.
And state governments themselves have incentive to place consumers on the backburner. Because insurance taxes are a major source of revenue for the states, said Roberts, insurance oversight commissions are usually more concerned with keeping companies solvent than resolving the problems of policyholders.
With the exception of the federal Affordable Care Act, insurance is regulated on a state-by-state basis. Although most states set a specific timeline for how quickly an insurance company must initially respond to claims, there is much more leeway when it comes to settling those claims.
For example, in Missouri , an insurer must acknowledge receipt of a claim within 10 days and either pay or deny it within 15 days of receiving all necessary documentation.
However, if the insurer decides it needs more time to investigate, it may keep delaying as long as it updates the policyholder every 45 days. However, the insurer does not have to settle the amount it will pay within that period. Many states have similar provisions that allow insurers to put off paying claims indefinitely.
According to NAIC data , claim delays have long been the most frequent cause of policyholder complaint. As of Nov. These data only reflect confirmed complaints -- the ones that the state insurance commission has investigated -- so the actual number of delayed claims is likely much higher.
ALLSTATE MCKINSEY DOCUMENTS PDF
Notify me of new posts via email. Excellent info provi… on Louisiana Claim licensing, Cla…. A claim delayed by even a month can spell financial disaster for a family. Mciinsey 7, at This blog also documennts to the following news mckinnsey also slamming Allstate and the McKinsey documents:. State insurance departments are usually understaffed and overwhelmed. According to Burdette, she received a phone call within 10 minutes from her Allstate adjuster asking her not to hire Taff or any other public adjuster.
Allstate Releases Massive McKinsey Report
This blog also links to the following news article also slamming Allstate and the McKinsey documents:. Brian S. King Here is the new link:. You are commenting using your Twitter account.