A friend forwarded me a great article by a columnist who writes for a Philadelphia newspaper. It exposes some of the horrible practices that I've noticed over the years by one of America's largest insurers, Allstate. Some of Allstate's practices are so extreme that I've had Allstate adjuster say to me "I know this case is worth more, but this is all I'm authorized to pay. I don't blame you for filing a law suit."
Herb Denenberg writes for The Bulletin. Denenberg notes Allstate's recent guilty plea to six federal indictments and discusses several anti-consumer practices of Allstate, including complaints by CFA, the Consumer Federation of America (http://www.consumerfed.org/). Part of his article quotes the CFA report,
"The Allstate Corporation has been at the forefront of the insurance industry in unjustifiably raising home and automobile insurance rates relative to the amount paid out in claims, in using questionable practices to settle claims and in attempting to shift costs to taxpayers."
EXCESSIVE RATES AND PROFITS BUT ANEMIC PAYOUTS TO POLICYHOLDERS. The report notes that Allstate paid out only 59 percent of the premium dollar on claims to policyholders from 1997 to 2006. The industry average is 65 percent. In other words, CFA argues Allstate should have cut its premiums or perhaps paid out more in claims. But in CFA’s view, Allstate is now charging too much for the benefits delivered to its policyholders.
HIGH CONSUMER COMPLAINTS. The complaints filed against Allstate, many relating to claims practices, are more numerous than almost all of its major competitors. Of 13 major auto insurers, Allstate had the second highest complaint ratio in two recent years. This is based on data collected by the National Association of Insurance Commissioners.
QUESTIONABLE CLAIMS SETTLEMENT PRACTICES. CFA says Allstate has adopted an automated claims settlement procedure designed to cut claims payments to policyholders, without regard to the validity of the claim and without an examination of the claim. As a result, CFA says it can document a systematic underpayment of claims based on aggregate data. The data show that Allstate reduced its payouts by about 20 percent relative to the industry for the year 1996 through 2006.
You can read the entire report at The Denenberg Report
Chris Nichols
Pardon me, but I don't think your report says what you think it says.
I don't think the article actually references criminal charges, just an "indictment" from a consumer-rights group.
Please keep in mind that I was an insurance defense attorney for a few years, and then I decided that I had seen many unfair insurance practices in the industry, so I became a plaintiff's attorney for several more years, and I still handle a few simple plaintiff cases. In my opinion, Allstate has the worst reputation for unfair insurance practices that I've heard of.
But let's look and see what the report actually says. Here's the first paragraph of the actual Denenberg Report you cite:
"The Allstate Insurance Company has plead guilty to a six-count indictment alleging it is the leading insurer when it comes to anti-consumer insurance practices. That’s my interpretation of its response to an important new report from the Consumer Federation of America."
I looked through the report for any actual court docket numbers or case numbers, and I couldn't see them. It looks like the "indictment" is a moral indictment and criticism by a consumer-rights group rather than an actual criminal indictment.
Am I missing something?
Posted by: Bruce in Carolina | January 07, 2010 at 12:47 PM