CNN host Anderson Cooper recently did a two-part series on the business practices of the nation’s largest property/casualty insurance company and Allstate Insurance. It was the culmination of an 18-month CNN investigation into low-impact soft tissue injury accidents across the country. The series was then broadcast on CNN. Video links to the two segments are listed below.
These top three insurance companies got together (add Liberty Mutual) and hired legendary business consulting firm McKinsey and Company. McKinsey, in its usual way, analyzed the business practices of insurance companies and made recommendations on how to increase profits in a report titled “The Three Ds: Delay, Deny, and Defend.”
By delaying a claim, insurance companies place significant financial pressure on the policyholder or claimant. That pressure can force a policyholder or claimant to agree to a much lower claim settlement amount.
By denying a claim, insurance companies force policyholders and claimants to seek legal representation. Many personal injury attorneys are reluctant to take on a client for a small loss, as attorneys often work on contingency fees. Thus, in the absence of good legal representation, policyholders and claimants are once again forced to accept “low” settlement amounts from insurers.
When defending a claim, insurance companies take the position of forcing the policyholder first through the Appraisal process found in most policies. This requires each party to choose a representative and then the representatives choose and arbitrate. The agreement of any two of the three chosen constitutes the amount of the claim. But this will add months to any claim process. The next step for the policyholder or claimant is to file a lawsuit. This will add years to the eventual settlement…if they can find legal representation and pay for it.
Insurance companies have taken this position with the intention of making the legal process so expensive for personal injury lawyers that they become even more reluctant to accept new clients for small cases.
So far, “Delay, Deny, and Defend” tactics have been highly successful for any insurance company that has adopted them. Industry profits have risen sharply in recent years, despite major catastrophic events such as Hurricane Katrina and other Gulf Coast hurricanes since 2004.
Here are the links to the CNN reports.
anderson cooper part one
anderson cooper part two