Allstate is raking in huge national profits and still doesn’t hesitate to overcharge Michigan drivers. That’s why our car insurance lawyers are calling out Allstate on our list of the worst auto insurance companies.
Making billions in profits is clearly no problem for Allstate. According to Allstate’s Earnings Press Releases, the auto insurance giant has raked in more than a billion dollars in annual profits 9 out of the last 13 years. Highlights include:
Based on earnings data for the first three quarters (the first nine months) of 2012, Allstate raked in profits of $1.9 billion, which is an average of $637 million per quarter.
Our car insurance lawyers have no problem with Allstate making a profit. What we don’t like is how Allstate does it.
Documents made public in 2008 describe Allstate’s “two-pronged strategy” for “systematically cut[ting] payments to customers as a way to boost profits” and “forc[ing] customers to accept reduced cash payouts or face years in court,” according to the Herald-Tribune’s April 6, 2008, article, “How a get-tough policy lifted Allstate’s profits.”
Here’s how Allstate’s strategy works, as detailed in the Herald-Tribune article:
1. The “company evaluates claims with a computer program” called Colossus, “designed to reduce [claims] payouts by as much as 20 percent of what the company once paid for the exact same [personal] injuries.”
2. Then “Allstate pushes” car accident victims to accept quick, but very low, settlements. The company deliberately tries to settle injury cases “cheap” before people will hire an injury lawyer.
The approach often is combined with an implied, but sometimes quite explicit, threat that if a customer doesn’t accept what Allstate offers right away, or has the nerve to hire an injury lawyer, then the customer will be punished.
The documents reveal that Allstate claims adjusters are trained to suggest that the customer will “spend years in court while … bills go unpaid” — a strategy Allstate spelled out in company guidelines for insurance claims adjusters as something that “forces the claimant and attorney to think about the obstacles they must overcome …”
Our car insurance lawyers are all too familiar with Allstate adjusters sitting on files and not returning calls – the start of delays that continue when an auto accident lawsuit is filed without regard to the customer’s health and welfare. This is part of the three D’s strategy: delay, deny and defend. Allstate routinely delays handling your claim and sending your No-Fault insurance benefits, denies you were hurt and defends their wrongs in court. The 3D’s forces people to hire lawyers and further delay in litigation, before paying out a compromised settlement in the end.
In 2010, Allstate was finally held accountable for its use of the Colossus computer software to reduce the amount of money the insurance giant was paying out on auto accident claims. Allstate entered into an agreement with insurance commissioners across the country whereby Allstate promised to:
In its January 2011 opinion in Allstate Insurance Company v. Dodson (2011 Ark. 19, #10-257), the Supreme Court of Arkansas upheld a $21 million verdict for compensatory and punitive damages against Allstate Insurance Company for defaming Arkansas radiologist Jon H. Dodson, M.D., whose medical clinics regularly providing physical therapy services to injured auto accident victims.
According to the Supreme Court of Arkansas’s opinion, Allstate sought to discourage auto accident victims from using Dr. Dodson’s physical therapy services and to discourage lawyers from sending their injured clients to Dr. Dodson for help.
Based on evidence referenced in the Allstate Insurance Company v. Dodson opinion, one can conclude that Allstate carried out its plan by refusing to pay claims that involved Dr. Dodson’s services and by using Allstate’s agents to get the word out that there was something “illegal” and “fraudulent” about Dr. Dodson’s practice and business.
In rejecting Allstate’s objection to the punitive damage award, which was $15 million, the Supreme Court of Arkansas said the following:
“The enormity of the wrong is great enough to support punitive damages, considering that Allstate continued this conduct over a period of several years resulting in severe damages to [the physical therapist’s] reputation and medical practice. Also supportive of the assessment of punitive damages is the fact that this course of conduct was taken by a nationally recognized insurance agency and, apparently, in accordance with their national claims practices and procedures to curb small, soft-tissue claims.”
In Consumer Reports Magazine’s 2010 Car Insurance Ratings survey, Allstate Insurance Company received the sixth lowest “Reader Score” rating for “overall satisfaction with claims handling.” The auto insurer also received unfavorable ratings for timeliness of claims payments and non-claims-related problems.
Consumer complaints against Allstate Property and Casualty Insurance Company have increased 360% between 2008 and 2011, according to data gathered by the Michigan Office of Financial and Insurance Regulation (OFIR).
Similarly, consumer complaints against Allstate Insurance Company have increased approximately 77% between 2010 and 2011, according to OFIR data.
Allstate Insurance Company was one of the top 5 most-complained-about auto insurers among the nearly 80 auto insurance companies doing business in Michigan two out of the last three years, according to data from the Michigan Office of Financial and Insurance Regulation (OFIR).
That means that during those years Allstate Insurance Company received more consumer complaints than any of the nearly 70 other auto insurers.
Among Michigan’s largest auto insurers, the auto insurance rates for Allstate Insurance Company were among the Top 5 most expensive in all 16 of the major Michigan markets examined in compiling the “Worst Auto Insurance Companies” list, and the rates for Allstate Property and Casualty Insurance Company were among the Top 5 most expensive in 15 of the 16 major Michigan markets examined.
When choosing your auto insurance company, you might want to think twice about landing in the “safe hands” of Allstate.