This stunning article in the Herald Tribune is a must read for anyone who has Allstate Insurance. Last week Allstate Insurance posted online 150,000 pages of documents that reveal a national strategy on Allstate’s part to force customers to accept lowball settlements or face years of litigation in court.
The documents describe a two-pronged strategy.
“First, the company evaluates claims with a computer program called Goliath designed to reduce payouts by as much as 20 percent of what the company once paid for the same injuries.
Second, Allstate pushes policyholders to accept quick settlements without the help of lawyers. Policyholders who try to fight for more money face Allstate attorneys coached to refuse to negotiate and to drag out litigation.
The approach often forces car accident victims to take what Allstate offers right away or spend years in court while their bills go unpaid — a strategy Allstate spelled out in guidelines for claims adjusters that force the claimant and attorney to think about the obstacles they must overcome …”
Allstate wanted to change the culture of how claims are made. It knew that most lawyers will take a one-third fee, and that cases that are prolonged in litigation, thus more costly, would ruin the economics of hiring a lawyer. Conversely, lawyers who know litigating small cases for a long period of time for a small fee is not worth the effort and over time will quit taking those cases. The result is that people with legitimate claims, who are properly insured, are denied full justice because Allstate has a corporate policy to increase profits.
“The insurance company saw reduced payouts as a way to increase profits. Early on, consultants promised that driving down the “fair market value” of soft-tissue injuries, such as a fractured spine, chronic pain or limited mobility would generate profits “shareholders will notice.” Combined with similar changes to Allstate’s home insurance and collision programs, they predicted, the yearly gain could reach $1.1 billion.”‘
Get this, in a PowerPoint presentation, Allstate executives were advised to convince policy holders that they didn’t need lawyers, and then target those who hired lawyers by delaying the payment of claims or forcing protracted litigation. According the article, Allstate wanted to “send a message to the market.” Those who don’t play the new game will get “boxing glove” treatment.