To identify the worst insurance companies for consumers, researchers at the American Association for Justice (AAJ) undertook a comprehensive investigation of thousands of court documents, SEC and FBI records, state insurance department investigations and complaints, news accounts from across the country, and the testimony and depositions of former insurance agents and adjusters. The final list includes companies across a range of different insurance fields, including homeowners and auto insurers, health insurers, life insurers, and disability insurers.
The report is all about the insurance industry and the tough tactics they use to increase profits. Once such tactic is “deny, delay, defend.” Records showed a distinct pattern of insurance companies refusing to pay claims, employing “hardball” tactics against policyholders, raising premiums with warrant, hoarding excessive profits and awarding extravagant salaries.
1. Allstate ranks as the worst insurer for consumers, according to a comprehensive investigation of thousands of legal documents and financial findings.
The rankings show a distinct pattern of insurance industry greed amongst 10 companies that refuse to pay just claims, employ hardball tactics against policyholders, reward executives with extravagant salaries and raise premiums while hoarding excessive profits.
“While Allstate publicly touts its ‘good hands’ approach, it has instead privately instructed its agents to employ a ‘boxing gloves’ strategy against its policyholders,” said American Association for Justice CEO Jon Haber. “Allstate ducks, bobs and weaves to avoid paying claims to increase its profits.”
Allstate (NYSE: ALL) set the standard for insurance company greed and placing profits over policyholders. Allstate contracted with consulting giant McKinsey & Co. in the mid-1990s to systematically force consumers to accept low ball claims or face its “boxing gloves,” an aggressive strategy designed to deny claims at any cost. One Allstate employee reported that supervisors told agents to lie and blame fires on arson and in turn, were rewarded with portable fridges.
Thousands of court documents, materials uncovered from litigation and discovery, testimony, complaints filed with state insurance departments, SEC and FBI records and news accounts were reviewed to compile the rankings and statistics.
The rest of the rankings are as follows:
2. Unum (NYSE: UNM) – Unum’s actions are even more shameful considering the type of insurance it sells: disability. Unum’s behavior was epitomized when it denied the claim of a woman with multiple sclerosis for three years, stating her conditions were “self-reported,” contrary to doctors’ evaluations. In 2005, Unum agreed to a settlement with insurance commissioners from 48 states over their practices.
3. AIG (NYSE: AIG) The world’s biggest insurer, AIG’s slogan was “we know money.” AIG, described by commentators as “the new Enron,” has engaged in massive corporate fraud and claim abuses. In 2006, the company paid $1.6 billion to settle a host of charges.
4. State Farm is notorious for it’s deny and delay tactics and like Allstate, hired McKinsey consultants. State Farm’s true motives became apparent during Hurricane Katrina; for example, it employed multiple engineering firms until they could deny the claims of the Nguyen family in Mississippi. In April 2007, State Farm agreed to re-evaluate more than 3,000 Hurricane Katrina claims.
5. Conseco (NYSE: CNO) Conseco sells long-term care policies, typically to the elderly. Amongst its egregious behavior, the insurer “made it so hard to make a claim that people either died or gave up,” said former Conseco subsidiary agent. Former Conseco executives were fined when admitted to filing misleading financial statements with regulators.
6. WellPoint (NYSE: WLP) Health insurer WellPoint has a long history of putting profits ahead of policyholders. For instance, California fined a WellPoint subsidiary in March 2007 after an investigation revealed that the insurer routinely canceled policies of pregnant women and chronically ill patients.
7. Swiss-owned Farmers Insurance Group consistently ranks at or near the bottom of homeowner satisfaction surveys and for good reason. For example, Farmers had an incentive program called “Quest for Gold” that offered pizza parties to its adjusters that met low claims payment goals. Like Allstate, it also hired the McKinsey consultants.
8. UnitedHealth (NYSE: UNH) The SEC opened an investigation into former UnitedHealth CEO William McGuire for stock backdating, which ultimately led to his ouster in 2006 and returning $620 million in stock gains and retirement compensation. Physicians have also reported that their reimbursements are so low and delayed by the company that patient health is being compromised.
9. Torchmark (NYSE: TMK) According to Hoover’s In-Depth Company Records, Torchmark’s very origins were little more than a scam devised to enrich it founder, Frank Samford. Torchmark has preyed on low-income Southern residents and charged minority policyholders more than whites on burial policies.
10. Like Allstate and State Farm, Liberty Mutual hired consulting giant McKinsey to adopt aggressive tactics. Liberty’s tactics were highlighted when a New York couple’s insurance was “nonrenewed” by Liberty, even though they lived 12 miles from the coast and never experienced weather-related flooding.
T. Robert Hill is the founder of the Hill Boren Law Firm in Jackson, TN and began practicing law in 1969. The firm serves 1,000 clients annually, and is one of the best Memphis TN Law Firms.