Allstate Reveals McKinsey Documents as Florida Shuts Them Down in State
By Gerri Elder
To use an infamous metaphor referred to in one of its internal documents, the District Court of Appeals in Florida recently upheld a state suspension that has caused Allstate to take off its boxing gloves.
The Insurance Commissioner of the state of Florida suspended the insurance giant from selling policies in the state of Florida several weeks prior to the decision for consistently refusing to release internal documents on the subject of their claims-handling process.
These documents comprised approximately 150,000 internal training presentations and other documents related to claims handling for insurance adjusters. They also included the infamous "McKinsey documents," so called because they were produced by the consulting firm McKinsey & Co. The McKinsey documents were instrumental in revamping Allstate's claims handling in the mid-1990s, targeting the lowest possible costs associated with claims processing by denying coverage by any means possible.
The most infamous term from the fabled documents is the "boxing gloves" treatment. McKinsey used the Allstate motto "You're in Good Hands" to craft a presentation slide titled "Good Hands or Boxing Gloves."
However, as a result of the court's decision, Allstate decided to take the plunge and post all of these 150,000 documents on its Web site. The sheer volume of this collection has made it hard for lawyers at this early stage to determine whether or not the documents contain any"bombshells," as the Chicago Tribune put it, or whether they merely describe mundane company procedures and records. Also, the prosecutor indicates, merely making a massive collection of documents available on the web isn't complying with the specific request for documents in the court.
Previously, a Missouri court had levied a fine against Allstate for refusing to release the documents, but apparently that ruling was not harsh enough. Instead of complying with the court order, Allstate simply paid the massive, daily fine of $25,000 per day that accrued over a period of months.
In order to get the documents and a national spotlight in a Fayette Circuit Court case in Georgia, a woman helped by an injury lawyer sued Allstate for $1.425 billion.
And unfortunately, while the legal prosecution determines if Allstate complied properly by including all of the McKinsey documents and other necessary items, Allstate will continue to release policies. However, they could be legally stopped within a reasonable period of time if the legal counsel determines that they were not fully in compliance.
Clearly, the lesson learned by opponents of Allstate's intimidating and frustrating practices was that trying to hit them in the pocketbook wasn't going to hurt enough. With profits of $4.9 billion in 2006 and $4.6 billion in 2007, their coffers were well-stocked to deal with legal inconveniences. In Florida, instead, officials decided to cut off the source of those coffers, and to much greater effect.