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In Tough Hands At Allstate (strategy to limit claims payouts)
Business Week ^ | May 1, 2006 | Legal Affairs

Posted on 03/22/2007 7:02:31 PM PDT by amchugh

It's fighting accusations that its methods deny policyholders legitimate benefits

David Berardinelli is something of a bon vivant. The Santa Fe (N.M.) plaintiffs' lawyer collects fine wine, has chefs from local restaurants over to cook in his home, and restores classic Porsches. He's also about to become a published author.

His book, From Good Hands to Boxing Gloves, won't burn up the best-seller lists. But it's already making waves. It tells the story of the key role played by management consultant McKinsey & Co. in reengineering auto insurance claims operations at Allstate Corp. -- and it's a story Allstate doesn't want told.

(Excerpt) Read more at businessweek.com ...


TOPICS: News/Current Events
KEYWORDS: allstate; insurance
I know this is an old article, but it just popped up at the InsuranceTransparencyProject.com blog (oh how exciting, a blog on insurance). This article generated mixed feelings for me, sort of like watching a weasel win in a fight with a snake.
1 posted on 03/22/2007 7:02:33 PM PDT by amchugh
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To: amchugh

Such are the reasons why I don't buy Allstate.


2 posted on 03/22/2007 7:30:08 PM PDT by Aroostook25
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To: amchugh

No surprise. AllStateFarm are two companies I avoid. And I sell insurance for a living:

http://www.badfaithinsurance.org/indexdetaillist.html


3 posted on 03/22/2007 7:31:54 PM PDT by proudpapa (Forget Rudy McRomney it's Duncan Hunter in '08!)
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To: Aroostook25
You'd have to have rocks in your head to buy Allstate. A minimum of research would tell you they just don't pay claims without a fight.
4 posted on 03/22/2007 7:38:00 PM PDT by Eric in the Ozarks (BTUs are my Beat.)
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To: Aroostook25
I got into it with the crooks, after 18 years. Screw Allstate, Theiving ba$trds.

Riding with Statefarm. So far, my agent has contacted me a couple of times to lower my rates (same coverage)!
5 posted on 03/22/2007 7:38:50 PM PDT by Issaquahking (Duncan Hunter for president!)
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To: Eric in the Ozarks

My mom didn't know. she is still fighting them to get paid for a claim. But, unlike many, she IS fighting them.


6 posted on 03/22/2007 7:43:48 PM PDT by Sunsong
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To: amchugh

I was driving to work one day, and the DJ on my radio station was going off on his auto insurance coming. Words like "thieving bastards", "lying SOB's", etc.

And then he came up with this.

"I feel it would be a service to the public to warn them about these thievig bastards. However, management says I can't mention their name on the air. So, let's just say that they may call themselves the good hands company, but all they did was give me the finger!"

I was laughing so hard I had to pull over.


7 posted on 03/22/2007 7:49:15 PM PDT by studly hungwell (Mohammad and Marx: Spreading mysery and death wherever their ideas go.)
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To: amchugh
I was a licensed insurance agent in Maryland in 1981. I have a claim with an insurance company now. The first claim in 17 years, I have never litigated an insurance company in court. Besides small claims squabbles, two in my life, I have never brought suit, even after back surgery from an on the job accident and two serious accidents in the 70's.

I was astonished at the manner in which the insurance company handled the claim I had after their driver ran two stop signs and t-boned me.

I oddly enough know the insurance industry and adjudications of suitability for hire, and the impact of credit rating upon them as well.

I knew that there had been a hegelian shift, or that the Maryland Insurance commissioners had become negligent in their oversight.

In short, I have not settled and thus had the emergency room bills sent to a credit collection agency as a result of the non-settlement.

Without attempting to put to trial the issues in this forum I can say that the insurance company repeatedly broke what would have been Maryland law when I sold insurance in 1981.

I have spoken with the insurance commisioner's office in MD and he essentially gave me the standard response that a formal complaint, blah blah...

But in summation the boxing gloves approach is coercive to lets say: a military personnel individual whom's spouse was injured, expenses were mounting, treatment was in progress, and the credit collectors had flagged that clearance of the spouse.

Ironically the Ins. commisioner was aware of the predatory lending and the impact it had had on clearances with active service members.

But he seemed unaware that 70% of all contested adjudications of suitability were declined for medical bills.

It has been years, a half decade since I have posted on this forum, but far from being boring, your article illuminates something that seems terribly wrong to me.

I abhore insurance fraud, hate the entitlement crowd, but also know from passing the insurance exam that what this company is doing is 'not in good faith' and constitued fraud, willfull ignorance, and was in violation of law.

Your article shed light on how a telemarketer type adjuster, whom admitedly had not taken a insurance exam, could use an expert system and provide crisp answers one moment, and then the next under focused questioning break the law with misrepresentations of the insurance law.

I'm not that happy of a camper with the Republicans, but still lurk by here for content.

Best article I have read in weeks.

It clarified how things deteriorated so badly in MD and why there needs to be people of principle to take a stand.

Great article, far from boring.
8 posted on 03/22/2007 8:11:17 PM PDT by InsNerd (Insurance Nerd)
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To: amchugh

For those of you in the Mid-Atlantic area, I highly recommend Erie Insurance. Their rates are competitive and their customer service is excellent.


9 posted on 03/22/2007 8:16:21 PM PDT by NittanyLion
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To: Sunsong
Good for her. We lived in the south metro of the Twin Cities in 1998 when a series of hail storms when through in late March/early April. Every house in a ten mile swath had damage. Our insurance company, The St. Paul (now part of Travelers) had adjusters at our house within four days and authorized a new shingle roof, window replacement, siding, etc., without argument. Because we had a mortgage, the entire claim check was sent to Wells Fargo, which cut checks to us as I brought in the roofing company, the window repair and so on.
I'll never forget the claims manager, after all the repairs were done ($100,000 +) who said, "If you find any hidden damage, just call and we'll write you another check."
Our insurance man reported other home owners with The St. Paul had the same experience. The company knew they were going to get clobbered, so why not turn it into good PR ?
10 posted on 03/22/2007 8:19:02 PM PDT by Eric in the Ozarks (BTUs are my Beat.)
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To: amchugh

btt


11 posted on 03/22/2007 8:20:18 PM PDT by Cacique (quos Deus vult perdere, prius dementat ( Islamia Delenda Est ))
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To: amchugh

I worked at a personal injury firm over the summer. I went in a little embarrassed about doing personal injury work. I left convinced that the insurance companies are the real crooks - and Allstate was one of the worst.


12 posted on 03/22/2007 8:24:20 PM PDT by jude24
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To: InsNerd
Agree. All State, State Farm, Nationwide and Farmers are all commercial pirates whose claims doctrine is to deny every claim, pay a few which they then hold up in advertisements as standard practice and spend millions to scam the public and grind claimants into the litigational mill grist. State insurance commisioners are political animals who know better than to buck these big time monied powers and thus turn their collective head, deflect complaints with rote fluff and otherwise leave the average citizen at the tender mercies of these business criminals. Were it not for the abilities and determination of a cadre of lawyers, the bad guys would get away with their tactics without a fight.

These insurance giants are not going to change their historic doctrine unless several states' legislatures, governors and insurance departments grow some cajones and enforce the statutes that exist but are ignored in practice.

13 posted on 03/22/2007 8:57:13 PM PDT by middie
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To: Eric in the Ozarks
The company knew they were going to get clobbered, so why not turn it into good PR ?

Good thinking on their part. Thanks for your posts and the story.

14 posted on 03/22/2007 9:00:00 PM PDT by Sunsong
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To: Eric in the Ozarks

You'd have to have rocks in your head to buy Allstate. A minimum of research would tell you they just don't pay claims without a fight.



Well yeah, there's that , but they do have higher premiums.


15 posted on 03/22/2007 9:01:22 PM PDT by freedomfiter2 (Duncan Hunter '08 Pro family, pro life, pro second Amendment, not a control freak.)
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To: amchugh
I am an independant auto damage appraiser, about five years ago Allstate started sending me claims, right after I completed the first file, and sent it to them they called, and whined about this, and that, the second one an appraiser who worked for me did, I went over it carefully with him before we sent it in, again whine, whine whine.

The third claim came, I went out to inspect a motorcycle, the owner was talkative, he wasn't happy, the Allstate staff, had tried to chop, chop, chop, over the phone, he was to the point of going to a lawyer, I went over the bike carefully, wrote a fair estimate, and sent it to Allstate, immediately more whining. By then I had figgured out what they were doing, they wanted me to go out and beat prices down, after their staff made the vehicle owner mad, in other words, put me at the head of the line for a law suit.

A couple of days after I sent that file in, a supervisor called, talked to my wife, (office manager) the supervisor said that they didn't want me, or my appraiser doing any of their files, my wife said it's just the two of them, there is no one else. The supervisor said they wouldn't be sending us any more work.

That made my day, it saved me from calling Allstate, to tell them I wouldn't do any more work for them.

16 posted on 03/22/2007 10:21:14 PM PDT by c-b 1 (Reporting from behind enemy lines, in occupied AZTLAN.)
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To: amchugh

I was hit by someone with Allstate insurance. They were at fault and got the ticket but put me through 9 months of crap. I hate them.


17 posted on 03/22/2007 10:22:18 PM PDT by packrat35 (Beware the Big Government Republicans!)
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To: amchugh

I find this article and all the negative posts on this thread improbable. Allstate has a deep-voiced black man as their TV spokesman. That alone guarantees their sincerity.


18 posted on 03/23/2007 1:02:25 AM PDT by GATOR NAVY (QMC(SW) Ret.)
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To: amchugh

the only issue is this guy should have his pants sued off for revealing propriatary business information. Allstate isn't forcing anybody to buy their insurance.


19 posted on 03/23/2007 1:07:32 AM PDT by balch3
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To: packrat35
My wife was injured by an Allstate driver who ran a red light. Witnesses stayed at the scene, police report clearly showed it was the other driver's fault, even the other driver openly admitted that fact.

My wife was out of work for 7 months due to her injuries. This was at a time when I was out of work (thanks Outsourcing) and we had no health insurance. Allstate would not pay a penny for any medical tests or procedures, things my wife absolutely needed. We were trying to be reasonable, but they just kept up their "settle the claim now before knowing the true impact and full costs of the injury" stance.

We have paid auto insurance for 35 years, and both have zero tickets and zero accidents. And yet this is how we were treated when their at-fault driver broke the law and injured my wife.

It's a wonder I am not in jail, for going Postal.

20 posted on 03/23/2007 4:57:15 AM PDT by Buffalo Bob
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To: Temple Owl

ping


21 posted on 03/23/2007 5:00:24 AM PDT by Tribune7 (A bleeding heart does nothing but ruin the carpet)
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To: packrat35

Did you have a police report? We've had cars hit twice. We had police reports both times. Allstate and State Farm were the insurers of the people who were responsible for the accidents, and we had no problems getting our claims handled.


22 posted on 03/23/2007 5:00:28 AM PDT by mewzilla (Property must be secured or liberty cannot exist. John Adams)
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To: balch3
the only issue is this guy should have his pants sued off for revealing propriatary business information. Allstate isn't forcing anybody to buy their insurance.

The problem with that is that right now it's his word against theirs. They can't sue him for revealing proprietary business information without tacitly admitting to the allegations.

23 posted on 03/23/2007 5:07:49 AM PDT by tacticalogic ("Oh bother!" said Pooh, as he chambered his last round.)
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To: balch3

Evidence in a case is public information unless the judge seals it.


24 posted on 03/23/2007 8:43:36 AM PDT by amchugh (large and largely disgruntled)
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To: mewzilla

Yes we did, but Allstate dithered around for 9 months before I got my money. Its a long story that I won't waste time with, but I will FOREVER hate those (deleted).


25 posted on 03/23/2007 12:51:37 PM PDT by packrat35 (Beware the Big Government Republicans!)
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To: amchugh

Scuttlebutt from the legal arena: State Farm recently (within the past 4 years) won a few big lawsuits it did not expect to win, and got a little cocky. They negotiated with far more vigor (and often walked from the table) in situations where they previously would not have. Apparently, the attitude is spreading.


26 posted on 03/23/2007 12:56:41 PM PDT by Teacher317 (Are you familiar with the writings of Shan Yu?)
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To: InsNerd

Glad to see you're not "merely" a lurker anymore. Welcome to FR!

And thanks for the insight. I despise the insurance industry (worked as a wage-slave for'em during my undergrad days).


27 posted on 03/23/2007 1:00:20 PM PDT by Teacher317 (Are you familiar with the writings of Shan Yu?)
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To: Teacher317

http://www.thenation.com/doc/20070409/kors

thanxs

Benefits delayed = Benefits denied

Justice delayed = Justice denied


28 posted on 03/24/2007 7:52:06 AM PDT by InsNerd (Insurance Nerd)
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To: balch3

you seem to miss the point, I don't own allstate. I didn't buy it, the post was about 'good faith' settlements as outlined by existing law, transparency, sox practives and controls, and coercive tactics to circumvent the above issues.

F.Y.I. I own Geico but have to seek a good faith settlement from allstate.


29 posted on 03/24/2007 7:53:42 AM PDT by InsNerd (Insurance Nerd)
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To: amchugh

http://news.yahoo.com/s/ap/20070411/ap_on_re_us/katrina_state_farm

By MICHAEL KUNZELMAN, Associated Press Writer
Wed Apr 11, 9:22 AM ET

NEW ORLEANS - E-mails sent by officials of an engineering firm that assessed Hurricane Katrina claims suggest that State Farm Insurance Co. wanted engineers to blame damage on flooding so that it could make minimum settlements with policyholders.

ADVERTISEMENT

The e-mails, obtained Tuesday by The Associated Press, indicate that State Farm was threatening to dismiss Raleigh, N.C.-based Forensic Analysis & Engineering Corp. less than two months after Katrina hit on Aug. 29, 2005.

Attorneys for homeowners suing State Farm claim the e-mails support their argument that the insurer pressured its engineers to alter their reports on storm-damaged homes so that policyholders’ claims could be denied.

State Farm denies that the company pressured engineers to alter their conclusions.

State Farm and other insurers say their homeowner policies cover damage from wind but not rising water, including wind-driven storm surge.

The e-mails between Forensic president and CEO Robert Kochan and Randy Down, the firm’s vice president of engineering services, outline complaints about the firm’s work from Alexis “Lecky” King, a State Farm manager in Mississippi.

In an e-mail dated Oct. 17, 2005, Kochan says the firm will continue working with State Farm, but discusses needing to “redo the wording” of a report after a discussion with King “such that the conclusions are better supported.”

It also says King didn’t want local engineers to inspect properties because they were “too emotionally involved” and were “working very hard to find justifications to call it wind damage when the facts only show water induced damage.” She was also apparently upset that a report was based upon eyewitness accounts, the e-mail said.

In a reply dated Oct. 18, 2005, Down questioned the insurer’s motivations and questioned if there was an ethical problem with State Farm telling the firm what to put in reports. He also suggested that on another occasion, State Farm asked the firm to remove information from a report because “they would then have to settle.”

“I really question the ethics of someone who wants to fire us simply because our conclusions don’t match hers,” Down wrote in an e-mail dated Oct. 18, 2005.

“But what about the obvious fact that SF would love to see every report come through as water damage so that they can make the minimum settlement,” he wrote.

Chip Merlin, a Tampa, Fla.-based attorney who has sued State Farm on behalf of dozens of homeowners, said the e-mails are “the first paper evidence we’ve got where you can see engineers expressing concern about being pressured to change reports.”

“Whoever Randy Down is deserves a gold star on his forehead for being one of the most ethical individuals,” Merlin added.

Zach Scruggs, an attorney who is part of a legal team that sued State Farm on behalf of hundreds of homeowners, said Forensic turned over the e-mails as part of the pretrial discovery process for one of the lawsuits. The e-mails, he added, “confirm everything that we have always suspected.”

“What it says is pretty shocking,” Scruggs said. “This outlines the whole scheme of theirs.”

Kochan, in an interview, said plaintiffs’ attorneys are taking the e-mails out of context. King “just felt like we weren’t doing a technically accurate job,” but she wasn’t pressuring Forensic to change conclusions so that claims could be denied, Kochan said.

Down, who has since left Forensic and started his own engineering company, said in an interview Tuesday that he was relying on “secondhand” information about State Farm’s complaints and wasn’t directly involved in Forensic’s work on Katrina claims. He said the threat to fire the firm came “out of the blue.”

“The question was why,” Down added. “The initial internal discussion I heard is that they didn’t like our reports.”

State Farm spokesman Phil Supple rejected the notion that the company pressured engineers to alter their conclusions on storm damage so that claims could be denied.

“Our employees are committed to conducting themselves in an ethical and appropriate manner,” he said. “Any suggestions to the contrary are simply wrong.”


30 posted on 04/11/2007 6:55:48 PM PDT by InsNerd (Insurance Nerd)
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To: amchugh

I see a circumstance where the pattern is institutionalized and really begs the question of RICO statuates where the insurance company is practicing organized crime. I think the CEO should be held to the same standards of Enron and Worldcom.

My suspicions are substantiated by anecdotal first hand knowledge as an individual whom did pass the MD insurance exam and a very knowledgeable indivdiual on variable annuity life insurance policies... I know a great deal about this subject and the practices should warrant a criminal probe.

In 1981 when I was licensed this would have been criminal.


31 posted on 04/11/2007 7:01:00 PM PDT by InsNerd (Insurance Nerd)
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To: InsNerd

Thanks for the Specialist Town link. Saw it earlier, and debated making a post of it, but people here are usually unwilling to read from sources like the Nation. Good article though.


32 posted on 04/11/2007 8:16:21 PM PDT by amchugh (large and largely disgruntled)
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To: InsNerd

They’ve got a tough lobby working on their behalf. I’m not sure they aren’t shielded by current law.


33 posted on 04/11/2007 8:17:33 PM PDT by amchugh (large and largely disgruntled)
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To: musicman

Bookmark


34 posted on 04/11/2007 8:20:32 PM PDT by musicman
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To: amchugh

If the facts are purposefully distorted, willfull ignorance, in good faith, that is FRAUD. I have already contacted the MD State Department of environment and initiated a discussion with the individual in charge of handling waste fluids from cars, and examining the practice of returning wrecked automobiles to people whom due to on-going medical care, have not settled with the insurance company. I’m going to run an ad in the Baltimore sun of a drainage grate accross the street from where I stay which has a blue spray painted chesapeake bay warning on it, I may head to their headquarters and photograph the one there...

You have to change the law, go to the public comment sessions, get that on record, and then get it into the press..

I have started in MD. I heard something profoundly interesting in a discussion on medicaql reveiw boards and the VA, the assertion was: “anybody who questions the system or challennges it is pressumed to be gaming it.”

Well the assertion that there was not injury, the time it takes to get cracked teeth extracted, allow for gum fill, post set, and then a temp, and the final tooth takes close to a year! And thats PAYGO in absence of PIP.

So the question needs to be asked, if you dump that vehicle back onto the street, whom is responsible for leakage of fluids as a consequence of moving that totaled vehicle?

How many vehicles where this handled this way?

Current law, as it is legislated, is subject to the public comment, and the question I’m asking deserves a response which the Insurance commision ignores as they hold no public comment but the state of Maryland water quality has agreed to address.

It is bad enough they rippoff the injured and the insured, but pissing in the village well, and passing that cost to the taxpayer, is against the law!

Trust me as farm owner, I know the applicable law here on runoff, they are in violation of the law. Nobody has stipulated that yet....

While the law does specifically stipulate an assualt with per-se a baseball bat, it states bodily harm, and fraud goes to a systemic and organized effort to deceive and profit from establshed business practices.


35 posted on 04/12/2007 4:52:25 AM PDT by InsNerd (Insurance Nerd)
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To: Buffalo Bob
Ahhhh...Allstate. Twenty-five years ago my husband's car was rear-ended and totalled by an Allstate-insured driver. We were young and inexperienced and listened to them tell us how what they were offering was really fair. It wasn't.

Much arguing between them and my husband, and finally we got them to give us a semi-fair price for the vehicle, as long as we waived any medical claim. (My husband had been taken to the emergency room but our insurance had covered it. We were unsure if he would have any long-term dmaage from the accident.)

Well, we signed the agreement because we needed to buy a new car, and received a draft which we deposited. After about a week, my husband said, "Hey, they didn't ask for the car title."

We called a lawyer we knew who told us that our signature and the draft consituted a completed transaction, so the car was still ours.

So, I rendezvoused with a junk dealer from Kentucky (we were in Evansville, Indiana) along with my two children and sold him the car for a tidy spot of cash.

Three days later that claims adjuster called for the title and BOY was he mad! HA! I still smile when I think about it, all these years later.

36 posted on 04/12/2007 5:08:51 AM PDT by Miss Marple (Prayers for Jemian's son,: Lord, please keep him safe and bring him home .)
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To: amchugh
I’ve had AMICA for almost 40 years - house and car. Never had a single problem with them in all that time.
37 posted on 04/12/2007 5:12:10 AM PDT by oh8eleven (RVN '67-'68)
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To: amchugh

http://www.allstateinsurancesucks.com/


38 posted on 04/12/2007 5:26:21 AM PDT by Liberty Valance (Keep a simple manner for a happy life :o)
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