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Florida Seeking Secret Allstate Documents Showing Bad Faith

Posted by Jane Akre
Wednesday, January 23, 2008 12:08 PM EST
Category: On The Road
Tags: Bad Faith Claims, Wrongful Death, Motor Vehicle Accidents, Auto Accidents, Insurance Claims, Quick Settlements

Florida seeks secret Allstate insurance documents as part of a vigorous investigation

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It reads like a John Grisham novel.

Allstate Insurance has for years kept secret documents on how to low-ball auto claims to keep profits high.

Known as the McKinsey documents, they are now being highly sought by Florida insurance investigators who’ve launched a full scale look at the insurance giants rate-making and claims-paying practices.

Florida’s Insurance Commissioner Kevin McCarty has suspended Allstate from doing business in the state after the company failed to turn over information on its business practices. An appellate court lifted the ban.

A company spokesman tells the Tampa Tribune that Allstate will turn over the McKinsey documents, but they only concern auto insurance, not homeowners and they contain ideas that never became company policies.

The McKinsey documents get their name from the consulting firm McKinsey & Co that Allstate hired in the early 1990s to help draft its business practices. A few lawyers who have sued Allstate have seen them. Most have protective orders from the court guarding the “trade secrets” of Allstate and cannot release them to the public.

McKinsey and Co. also allegedly created documents about how to handle homeowners insurance, also highly sought by trial attorneys in property insurance litigation.

One attorney who has seen the McKinsey documents, Whitney Buchanan, an Albuquerque, New Mexico lawyer says ‘These documents are devastating to them in bad faith litigation.”

Tampa attorney William Merlin tells the Tampa Tribune that McKinsey documents have helped him with claims on behalf of clients in both auto and homeowners cases. Specifically they show the claim was not handled properly and that Allstate tries to discourage customers who are unhappy with Allstate from hiring attorneys.

David Berardinelli, a Santa Fe, N.M., trial lawyer who has sued Allstate made notes from the McKinsey documents and turned them into a book “From Good Hands to Boxing Gloves,” which is available to purchase.

The book includes Allstate’s strategies such as—Make an insurance claimant a low-ball offer in the first 90 days after an auto accident when people are most in need of fast cash. Claims adjusters are supposed to persuade customers to accept the fast-track offers.

Berardinelli says “They are charging people for coverage that they’re never going to get. That is fraud.”

Through a spokesman, Allstate says it considers the merits of each insurance claims and does not have a standardized approach. According to its corporate governance policy, "Allstate has always had an exemplary governance program. Our commitment to strong principles and the highest ethical standards is critical to our goal of driving sustained shareholder value."

As part of its ongoing investigation, Florida has filed a special committee to look at high property insurance rates and whether insurance companies, which received incentives from the state, passed those savings onto policyholders.

The director of insurance for the Consumer Federation of America, Bob Hunter hired by Florida to calculate savings tells the St. Petersburg Times, “It looks to me like they didn’t pass through the savings they were required to.”

Insurance Commissioner McCarty says “There certainly is potential for violation of Florida law.”

Next on the hot seat are insurance executives February 4 and 5 who will be grilled on why property insurance rates across hurricane hit Florida have not gone down. Governor Charlie Crist is talking to trial attorneys about a class-action lawsuit against the insurance industry.

Those writing to TBO.com among them Corpexec says, ‘Finally, the opportunity for the general public to get their heads out of the sand. This is the tip of the iceberg. This has been going on for YEEASRS! Don’t you think that all the big insurance companies, at some levels, talk to each other. Ever wonder why your multiple company quotes look so similar?”

MShrek says:

But what I can see happening is a class action lawsuit by EVERYONE who has ever had a claim against them, and they were forced to settle, or go without. That in itself could potentially result in the recovery of tens of millions to the wronged parties. Also, the immediate "reform" of the insurance business would certainly result in a fairness that we haven’t seen before. All the other insurance companies are watching this.” #


1 Comment

Anonymous User
Posted by jonny
Friday, January 25, 2008 2:46 AM EST

what the hell with that commpany.

Comments for this article are closed.

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