Bad Faith Insurance And Forced To Hire Attorney

Few people in Weatherford, Mineral Wells, Aledo, Willow Park, Hudson Oaks, Azle, Springtown, Millsap, Cool, Brock, or anywhere else in Parker County wants to be forced to hire an attorney to submit an insurance claim. But, like it or not, that is what most people have to do to get fair treatment.
A recent article on insurance singles out Allstate Insurance Company, but this same story could be told about many of the insurance companies. Here is what some of the article said:
Unlike may other businesses, the insurance industry is bound by law to act in good faith with its customers. Because of their protective role in the lives of ordinary citizens, insurance companies have long operated as semi-public trusts. But since the mid 1990’s, a new profit hungry model, combined with weak regulation, has upended that ancient contract. In Texas, the Texas Department of Insurance is the agency that is suppose to be providing oversight on the insurance industry.
Claims has been converted into a money making process, is the report from consultants and people who study the industry.
The change started when consulting giant McKinsey & Company sold Allstate and other leading insurance companies on a new system to boost the bottom line. Rather than adjusting claims the traditional way, which gave claims managers wide latitude to serve customers, insurance companies embraced a computer driven method that produced purposefully low offers to claimants.
Those who took the low ball offers received prompt service, while those who did not had their claims delayed and potentially were reduced to bringing expensive lawsuits to fight for their benefits. An ex Allstate agent told the American Association for Justice, a trial lawyers lobby, the strategy was to make claims “so expensive and so time consuming that lawyers would start refusing to help clients.” The strategy was dubbed “Good Hands or Boxing Gloves” by consultants.
McKinsey, which was reportedly hired by Allstate in 1992, prepared about 12,500 PowerPoint slides to present its plan. The slides were introduced in litigation in 2005, when Allstate turned them over under a temporary protective order. This information was detained in a book titled, “From Good Hands to Boxing Gloves: The Dark Side of Insurance.”
McKinsey’s strategy put profits above all. One slide in the McKinsey presentation illustrated this philosophy by painting the insurance business as a zero sum game: “Improving Allstate’s casualty economics will have a negative economic impact on some medical providers, plaintiff attorneys, and claimants. … Allstate gains — others must lose.”
Allstate has certainly gained: It made $4.6 billion in profits in 2007, double its earnings in the 1990’s. The stunning increase, came through “driving down loss values to an average of 30 percent below the actual marker cost” — that is, paying dramatically less on claims.
An insurance company can make a lot of money on the small claims because if you save a few dollars on a huge number of claims, it’s worth more than saving a lot of dollars on a very small number of claims.
Allstate is the best known user of the McKinsey model, topping the list of the “Ten Worst Insurance Companies in America” published by the American Association for Justice. But Allstate’s rise in profits has led most of the industry to adopt the same approach. McKinsey has worked with State Farm and other companies in redesigning their claims systems. Another book written on the subject is “Delay, Deny, Defend.”
Statistics show that the companies that take in 70 percent of total insurance profits in the United States now abuse their obligations to their policyholders. When Allstate CEO Tom Wilson earned $9.3 million last year, he was not even on the top 10 list of best paid insurance executives according to New York Law School’s Center for Justice and Democracy.