CNN anchor 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 of low-impact, soft-tissue injury accidents around the country. The series was then broadcast on CNN. The video links to the two segments are listed below.
These three major insurance companies joined together (add Liberty Mutual) and hired the legendary business consulting firm McKinsey and Company. McKinsey, in their customary fashion, looked at the insurance companies' business practices and made recommendations on how to increase profits in a report entitled "The Three Ds: Delay, Deny and Defend."
In delaying a claim, insurance companies place significant financial pressure on a policyholder or claimant. That pressure can force a policyholder or claimant to accept a much smaller 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, since attorneys often work on contingency fee schedules. So, in the absence of good legal representation, policyholders and claimants are once again forced to accept "lowball" settlement amounts from insurers.
In defending a claim, the insurance companies take the position of forcing the policyholder first into the Appraisal process found in most policies. This requires that each party choose a representative, and then the representatives choose and umpire. The agreement of any two of the three chosen constitutes the claim amount. 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 intent of making the legal process so costly for personal injury attorneys that they become even more reluctant to accept new clients for small cases.
So far, the "Delay, Deny and Defend" tactics have been wildly successful for any insurance company that has adopted the tactics. Industry profits have risen considerably over the past few years, despite significant 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
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