The American Association for Justice, formerly known as the Association of Trial Lawyers of America, has released a report ranking the nation's worst insurance companies. The association says that the rankings are based on distinct patterns of insurance company greed among the 10 worst-ranked companies that refuse to pay valid claims, use hardball tactics against their policyholders, provide extravagant rewards and salaries to executives, and raise premiums while raking in excessive profits.
Researchers at the American Association for Justice spent six months gathering, extracting and compiling information from court documents, SEC and FBI records, state insurance department investigations, and complaints, nationwide news reports and testimony of former agents and adjusters that have worked for the insurance companies.
Robert Hartwig of the Insurance Information Institute, which is sponsored by the insurance industry, criticized the report and told the Sun Herald that consumers should take into consideration the fact that the study was conducted by trial lawyers, who he claims are overly litigious and help drive up insurance costs. Hartwig added that the insurance industry has paid out almost $300 billion in claims and settlements over the past 20 years to policyholders across the country.
While $300 billion seems like a gigantic number, they American Association for Justice points out that it is a drop in the bucket compared to the $1 trillion in insurance premiums that the insurance industry collects each year. The insurance industry also has $3.8 trillion in assets, which surpasses the Gross Domestic Products of all countries but the United States and Japan. With this tremendous amount of income and assets, payouts of nearly $300 billion over a 20-year period is hardly worth a pat on the back.
The study ranked Allstate at the worst insurance company in the country for consumers. Allstate disclosed $4.6 billion in profits in 2007 and paid CEO Thomas Wilson a $10.7 million salary. The company has assets valued at $156.4 billion. The study outlined a trend of Allstate paying out less and less claims over the years. The American Association for Justice concluded that Allstate systematically places profits over its policyholders.
Allstate spokesman Michael Siemienas said that while trial and personal injury lawyers may not like the company, the facts show that consumers do. Siemienas said that Allstate is not surprised to have been targeted in the study by trial and personal injury lawyers because the company has been a leader in the fight against insurance fraud and has pushed for resistance throughout the insurance industry to what it considers "unreasonable demands" by trial and personal injury lawyers.
Other companies on the top 10 worst insurance companies for consumers as ranked by the American Association for Justice included Unum, AIG, State Farm, Conseco, WellPoint, Farmers, UnitedHealth, Torchmark and Liberty Mutual. Among these companies, the study found those with a history of denying and delaying claims sought price increases during catastrophes and were charged with corporate fraud; one was even caught forging signatures of earthquake waivers after a deadly earthquake and altering engineering reports after Hurricane Katrina.
Other slimy behavior by the insurance companies that made the list included manipulating elderly policyholders, using secretive claim-evaluation software to lowball settlement offers that may not cover medical expenses and lost wages, and employing the "three D's strategy" that stands for deny, delay and defend.
The findings of the study serve to underline and emphasize the abundantly evident fact that insurance companies, their adjusters and employees love policyholders - as long as the premium payments continue to be paid and no claims are ever filed. After a claim is filed, their goal is to pay out as close to nothing as they possibly can.
By: Gerri L. Elder
