Six years ago, the American Association for Justice set out to identify the worst insurance companies for consumers, investigating thousands of court documents, SEC filings, FBI records, state insurance investigations and complaints, news accounts, and testimonies. When they had finished, they said, “One company stood out above all others. Allstate’s concerted efforts to put profits over policyholders has earned its place as the worst insurance company in America.” In more recent news, the New York Times has exposed how Allstate also tries to take advantage of its own agents by trying to take away their right to sue, and continues to battle these agents for years in court.
Allstate’s Deceptive Claims Practices
Those who accept these lowball settlements are treated well by the company, but those who do not settle receive an aggressive litigation strategy that aims to deny the claim at any cost
In the 2008 AAJ report, researchers found that Allstate’s value system is focused solely and entirely on profits for shareholders. That means Allstate uses a strategy of “lowball offers and hardball litigation” The AAJ further found that when policy holders file claims, they are usually offered an “unjustifiably low payment for their injuries.” Those who accept these lowball settlements are treated well by the company, but those who do not settle receive an aggressive litigation strategy that aims to deny the claim at any cost. One training slide shows the image of an alligator waiting for prey and the caption “sit and wait” meaning that delaying claims increases the likelihood that the client gives up. One agent suggests this methodology was meant to make it too expensive and time consuming for lawyers to fight on behalf of the insured.
Former Allstate adjusters were rewarded for keeping claims low, even if that meant deceptive claims practices. One former adjuster says “Adjusters who tried to deny fire claims by blaming arson were rewarded with portable fridges… We were told to lie by our supervisors.”
“Adjusters who tried to deny fire claims by blaming arson were rewarded with portable fridges… We were told to lie by our supervisors.”
When repeatedly ordered by courts and regulators to give up copies of documents which illustrated Allstate’s claims practices, Allstate refused. Instead it took Florida regulators suspending Allstate from writing new business in the state before they finally complied. However, some commentators believe many critical documents were missing.
Allstate dropped 5,000 clients who had been hit by Katrina, and tried to create a loophole for dropping clients even when a law prevented insurance companies from doing so. Allstate would offer Katrina victims a “coverage enhancement” then claim that was a whole new policy, thus exempt from the law which prevented Allstate from dropping the client.
You Either Sign, or You’re Out of A Job.
When repeatedly ordered by courts and regulators to give up copies of documents which illustrated Allstate’s claims practices, Allstate refused.
For thirteen years, 31 Allstate agents have been fighting with the company. Why? Because in 1999, Allstate brought in most of their over 40 agents and told them to sign a piece of paper that would change them from employees to private contractors. This agreement meant they would lose health insurance, lose retirement accounts, lose profit sharing, and would no longer accrue pension benefits. Additionally, they would not be allowed to sue Allstate for any reason. The alternative: They could no longer work within a mile of their own office, even though the office was leased in their own name. They could not keep their business phone numbers. They were told they could not speak with any of their old customers.
If they didn’t sign, they couldn’t make a living as an independent agent. They would have to take 13 weeks severance pay. If they did sign, they could get a bonus, get higher commissions, and still have the option to quit, but get 6 months severance pay. Oh yeah, they would also be agreeing to never sue Allstate.
And those increased commissions? Allstate was already planning on reducing commissions, which meant that so-called increase dried up in 2003.
Ultimately these 31 agents signed the documents. After all, they didn’t really feel they had any other choice. They had invested large amounts of their money and time into a business they thought would last a lifetime.
Sources: http://justice.org/resources/AAJ_Report_TenWorstInsuranceCompanies_FINAL.pdf and http://www.nytimes.com/2014/04/30/business/allstate-case-shows-risk-of-signing-away-the-right-to-sue.html?_r=0 http://www.allstatecase.com/index.php