Allstate’ sin No. 2: Targeting auto accident victims who had “audacity” to hire an attorney

Michigan auto attorneys explain how Allstate tried to punish people for hiring lawyers to sue for their injuries and protect their No-Fault insurance benefits

Last week, I wrote about Allstate’s first “sin,” using Colossus software to reduce payouts to injured auto accident victims. Today let’s talk about Allstate’s sin No. 2, targeting car accident victims over the past decade who hired auto attorneys, and trying to low-ball their injury settlements.

This is part of a series I’m writing on all the reasons I can think of as to why Allstate has started its “claims satisfaction guarantee.” Funny (not “funny” ha-ha, more “funny” ironic) how Allstate can guarantee anything now, after just agreeing to pay a very large settlement to states for its claims handling and mistreatment of injury victims and customers.

Here’s how Allstate’s second of many wrongdoings began … Allstate figured out that when injured car accident victims hired auto attorneys to protect them and their rights, Allstate ends up paying more on those victims’ No-Fault insurance claims. Accordingly, Allstate deduced that the best way to keep payouts down was to discourage accident victims from hiring attorneys.

Incidentally, the insurance industry now estimates they pay 4 times more on average when injured people hire auto attorneys. This explains the new push by many insurance companies, including Allstate, to try to contact and settle directly with accident victims shortly after a crash.

Allstate pursued their strategy to discourage people from hiring auto attorneys in two ways:

1. First, there was the so-called “good hands” approach for injured victims who did not hire attorneys. Their claims were settled relatively swiftly, albeit for low-ball settlement amounts likely dictated by Allstate’s Colossus computer program. (BusinessWeek, “In Tough Hands at Allstate,” May 1, 2006)

2. Second, there was the “boxing gloves” approach for car accident victims who dared to hire auto attorneys. They “face battering in the courts and potentially years of delay.” (BusinessWeek, “In Tough Hands at Allstate,” May 1, 2006) The point of the strategy was: “‘It forces the claimant and attorney to think about the obstacles they must overcome to recover a significant settlement or the benefits of a smaller walk away settlement.'” (Herald Tribune, “How a get-tough policy lifted Allstate’s profits,” April 6, 2008)

Doesn’t sound like the “good hands” people to me.

Next week, I’ll blog about Allstate’ sin No. 3 and No. 4: Targeting and trying to run medical care providers out of business who actually treat the injured and don’t do what Allstate wants, and alleging “irregularities” to refuse payment of benefits.

– Steven Gursten is recognized as one of the nation’s top attorneys handling serious auto accident cases and insurance litigation. He writes about insurance company abuse and the Michigan No-Fault insurance laws, and is available for comment.

– This blog was written by Steven Gursten and Todd Berg, esq.

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