Insurance Companies Taking In More, Handing Back Less

• The Insurance Information Institute announced a near-record $61.9 billion 2007 in profit for the industry.  Insurance companies have made an unprecedented $169 billion profit since Hurricane Katrina. (2005)
• Insurance companies are making record profits while raising premiums, stiffing policyholders, and refusing insurance to those who need it most.  Never has the industry taken in more and handed back less.
• Only after Florida suspended their ability to write new policies in the state did Allstate agree to publicly release details of its controversial tactics, such as its “boxing gloves” strategy.
• Since the mid-1990’s, most of the major insurance companies – led by the two largest, Allstate and Statefarm – have adopted a tough take-it-or-leave-it strategy.  (“Boxing Gloves” Strategy)
• The strategy, according to former Allstate and State Farm employee Jim Mathis, relies on the 3 D’s – denying a claim, delaying settlement of the claim and defending against the claim in court.
• The result has been billions in profits for insurance companies.
• The picture is clear: If you challenge the offer by some insurance companies you will be left with no option but to go to court.  In an affidavit in a New Mexico case where Allstate is being sued, one of the company’s former attorneys said the strategy is to make figting the company “expensive and so time-consuming that lawyers would start refusing to help clients.”
• Shannon Kmatz, a police officer and former Allstate claims agent, said company employees were encouraged to get rid of claims quickly and cheaply and even offered accident victims as little as $50, telling them to take it or leave it.
• The cases, CNN found, illustrate a carefully developed strategy to make the victims look like they are trying to defraud the insurers.  But documents CNN obtained indicate profit, not fraud, is the reason companies decided to play hardball in small accidents.

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