Allstate Heads List of Ten Worst Insurance Companies
By Gerri Elder
Browsing through the articles on Total Injury, it won't take long to find articles profiling the everyday business practices of insurance companies, which deserve their own circle in Dante's vision of the Inferno. From deceptive contractual clauses to agent bullying tactics to private detectives infiltrating church confession groups, it seems as if there's nothing that insurance companies will stop at to take the highest premiums and pay out the lowest compensation for claims as possible.
All of these shenanigans naturally raise the question: which insurance company is the worst? Is it Cigna, the company who denied a dying teenager a liver transplant because the procedure was deemed "experimental?" Is it Progressive, who sent investigators to pose as potential members at a church Bible study to secretly tape claimants' conversations?
A new study conducted by the American Association for Justice, titled "The Ten Worst Insurance Companies in America," answers this question with an emphatic conclusion: Allstate.
Perhaps you've seen the commercials touting the company's "good hands"; you may not have heard, however, about how training materials developed in 1995 with the consulting firm McKinsey Co. referred to their new claims investigation procedures as the "boxing gloves" treatment.
The study pointed out that Allstate received more complaints than all of its competitors, and related how former insurance adjusters claimed they were rewarded for keeping payouts low, even if they had to deceive claimants to do so. Allstate paid out $18.6 million in Maryland and $70 million in Texas for overcharging consumers on premiums; tried to dump policyholders for failing to sign up for other types of insurance in New York and Florida; and hid contractual loopholes to avoid paying for things like "wind damage" in flood zones.
However, if Allstate were the only offender, the study may not have been worth it: Allstate is merely the best at it. The litany of crooked corporate practices is familiar for the all top offenders, as discovered by research in the study:
- Unum unfairly denied and delayed claims;
- AIG took advantage of catastrophes to drastically raise premiums across the board, and now faces corporate fraud charges;
- Conseco, an insurer for the elderly, routinely delays claims to take advantage of the advancing ages and frequent deaths of its policyholders; and
- State Farm forged signatures on earthquake waivers after the 1994 Northridge, California earthquakes and altered engineering reports of properties after Hurricane Katrina in 2005.
And the list could go on.
As usual, Allstate's response to their position on the list and the charges levied by the AAJ researchers targeted trial lawyers. A spokesman for the company found it natural that a group of trial lawyers would be opposed to their practices, as they have sought to root out insurance fraud and the "unreasonable demands" of injury lawyers.
But the line between good business and bad ethics begins to blur when you're dealing with the insurance business. While some of the practices outlined, such as fraud charges and forging documents, are unethical and illegal in any business or industry, the practice of unfairly denying, delaying or underpaying for claims goes to the heart of the insurance business. Insurance companies make money by limiting payouts to policyholders; the more money they refuse to hand over, the larger their profit margin becomes.
Here are the top 10 worst insurance companies as listed in the report:
- State Farm
- Liberty Mutual