“Good Hands” Giving Policyholders a Beating

Since New Mexico plaintiffs’ attorney David Berardinelli published his book, From Good Hands to Boxing Gloves last spring, the spotlight has shown increasingly brighter on Allstate Insurance’s claims handling policies. In May, Businessweek described the book as the “story of the key role played by management consultant McKinsey & Co. in reengineering auto insurance claims operations at Allstate Corp…a story Allstate doesn’t want told.”

On Wednesday, February 7, CNN’s Anderson Cooper addressed the insurance giant’s dirty dealings with a much broader audience.

“CNN's investigation reveals a strategy to increase profits by limiting payments to accident victims. And former insurance insiders say most of the industry has adopted the strategy. Allstate and State Farm, the industry leaders, would not talk to CNN for this report.”

For a transcript of this segment, click here.

Not surprisingly, Allstate declined to be interviewed for the segment. However, interviews with Berardinelli, former insurance industry insiders and victims revealed a profit above all else mentality.

University of Nevada at Las Vegas Law professor Jeff Stempel stated what trial lawyers wish everyone knew:

“We can see that policyholders individually are getting hurt by being dragged into court on fender bender claims. And yet we don't see collateral benefit in the form of reduced premiums, even for the other policyholders. So, I think now we can say to continue this kind of program is, in my view, institutionalized bad faith.”

After 30 plus years of being an attorney for the little guy, I’ve had my share of dealings with Allstate. Presenting any claim to these folks, even if the claim is fair and reasonable is extremely difficult. This is due to the fact that Allstate has adopted the new McKinsey approach to claims handling, which is to deny almost any claim, even if it is reasonable and the Allstate insured was at fault. Allstate has billions of dollars of premium income to spend denying claims. They’re mean, arrogant and will stall and delay until you settle on their terms.

Lately, Allstate has taken a slightly different tack in Texas. In my case, a client, whom I recently represented, received a default judgment on her lawsuit seeking damages from an Allstate-insured who had broadsided her after running a red light. The client and her minor son were each awarded default judgments against the Allstate-insured for less than $30,000 each.

When demand was made on Allstate for payment of the judgments, they refused to pay, contending that their insured had not notified them of service of citation. However, shortly after filing the lawsuit, I had advised the Allstate adjuster that the suit had been filed. Allstate failed to file an answer on behalf of their insured, leaving their insured exposed to $50,000 in judgments, and refused to pay a valid judgment awarded by the court. Thus, the Allstate-insured was injured financially, and my client is being hindered in her efforts to collect the judgments. Yet another example of the “Good Hands” at Allstate.

Until more people become aware of the Allstate tactics and voice their objections, we’ll keep seeing these underhanded dealings from the “Good Hands” folks at Allstate.