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Insurance Practices, Claims and Coverage Issues

7/28/2008
David E. Tompkins, Esq.
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Allstate Now Uses the Oldest Excuse in the Book

Allstate Insurance Company has now resorted to the oldest excuse in the book: Blame the Lawyer.

The back story:

Allstate initiated a program in the mid-1990's designed to limit claim payments. The program was designed by a consulting company named McKinsey. Here's a brief summary of the program:

1. Allstate stopped paying claims. By delaying claims as long as possible, Allstate made more mony on its reserves. This was all pure profit.

2. Allstate started evaluating claims based upon a computer program. The program (designed and maintained by Allstate) was called Colussus. Sounds ominous. Colussus is (was) programmed to make lower payments. Allstate then could claim "our computer says your claim is worth $100.00."

3. Allstate stopped negotiating with anyone. Allstate would only offer the computer program offer. If you did not like it, tough. Sue us.

4. Allstate hired "in-house" attorneys. Rather than pay counsel at defense firms their hourly rates, Allstate hired an army of lawyers and paid them a salary. This fixed defense costs, and made them more money. In a later post, I'll discuss the ethical issues this poses for attorneys.

5. Allstate began a practice of deceptively manipulating people to prevent them from getting legal counsel, and discriminating against those that did retain counsel.

Each of these tactics (and more) were a dramatic shift in the insurance industry. Allstate was in the lead. Many other insurers followed suit (State Farm, USAA, and Farmers to name a few) and now follow these practices.

Now, in Florida, as part of a claim involving Allstate, counsel for a negligence victim requested from Allstate the documents (many of which have been produced in the past, including to my firm) outlining this program. This was a run-of-the-mill rear end automobile accident, but Allstate treated the victim to the new program. When asked for documents about the program, Allstate refused.

A judge in Florida, after hearing the case, ordered Allstate to produce the documents. Allstate again refused. The Judge ordered Allstate to comply or face a $25,000.00 per day fine. Did Allstate comply? No.

See, Allstate thinks it is above the law. Allstate believes that the public resourse of the Courts are its private (taxpayer funded) claims evaluation device. If a judge did not do what Allstate wanted, it ignored the judge.

This article, while reporting what I assume is good news, leaves some gaps. Allstate claims that it did not produce the documents because of its lawyer. "We thought our lawyer would handle it." Nonsense. Allstate's typical abusive litigation tactics finally caught up with them. After one year, Allstate had still not done as ordered, and did not produce the doucments. The matter settled on confidential terms, meaning that the plaintiff was so economically beaten down at that point, his grievance could not be heard in public.

Labels:Allstate Car Accidents,hit and run insurance,uninusured drivers,

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