How the insurance industry shortchanges accident victims to earn billions more in profits

Recently discovered secret documents held by Allstate
Insurance Company show how the company purposely
shortchanged legitimate claims to reap billions more in
profits.

The documents were created by a business consulting firm
hired by Allstate in the early 1990's. The firm, McKinsey
and Company, recommended that Allstate adopt a policy to
intentionally pay out less money to accident victims who
filed legitimate claims. Although the claims filed by
accident victims were clearly valid and involved legitimate
injuries, Allstate found that by intentionally undercutting
the value of the claim by 20, 30 or even 50%, Allstate
could earn much more in profits. This policy was
revolutionary in the industry since no other company
adopted a specific policy of intentionally undercutting
valid claims and forcing people to file lawsuits
unnecessarily.

Allstate soon learned that the policy urged by McKinsey
would help them reap billions more in revenue. Allstate
found that most accident victims would not fight the policy
by hiring an attorney and filing a lawsuit. Most victims
would simply accept Allstate's lowball offer, even if
begrudgingly and with animosity towards the company.
Allstate realized that when the company settled thousands
of claims at a 10, 20, 30 and sometimes 50% discount, it
meant the company could recover literally billions more in
profits. Given the numbers involved, it is very easy to see
how Allstate could reap a windfall, albeit at the expense
and disadvantage of legitimate accident victims.

The consulting firm of McKinsey and Company is located in
New York. The documents created by McKinsey and utilized by
Allstate are now known as the "McKinsey documents." These
documents have been requested in many lawsuits filed
against Allstate across the nation. Allstate has vigorously
contested releasing these documents. In one case Allstate
has violated a court order by refusing to release the
documents. The judge was not pleased and thereafter fined
Allstate $25,000 for each day that it refused to comply.
Allstate has appealed that ruling.

When other carriers learned about the astronomical profits
Allstate was earning from its new "business model," many of
them followed suit including State Farm, Farmers and
Safeco. The model essentially turned the insurance industry
upside down on its head as far as the ability to earn more
in profits without having to sell more insurance policies
or without having to raise premiums.

I have experienced Allstate's "business model" first hand
in dozens of cases that I have handled for injury victims
over the years. The model is now used by several other
insurance companies who do business in Washington state.
These insurance companies have a specific goal to make it
as expensive and time consuming as possible for accident
victims to recover fair compensation for their injuries.
With this goal in mind, many times accident victims will
not even receive an amount sufficient to cover all of the
medical bills. The backlash has resulted in more lawsuits
which clog our justice system and are a tremendous strain
on our limited resources.

Seattle's King 5 TV investigated Allstate's practices and
interviewed some accident victims who have encountered the
unfair settlement practices utilized by Allstate and other
carriers.

In Washington State, a new law was adopted by the
legislature to protect accident victims who encounter the
hard-ball tactics employed by Allstate's new business
model. This law was then appealed by the insurance industry
and petitioned as Referendum 67 which is up for a vote this
November. The insurance industry has spent more than $8
Million to defeat Referendum 67.

The Washington State Insurance Commissioner has publicly
voiced support for Referendum 67. Many Washington
newspapers have also endorsed the passage of Referendum 67
including The Seattle Post Intelligencer, The Olympian, The
Everett Herald, and the Tacoma Tribune.

Referendum 67 needs to become law to combat the unfair
settlement practices utilized by the carriers who purposely
undercut and devalue legitimate claims. Without Referendum
67 insurance companies like Allstate will continue to earn
billions more in profits at the expense of legitimate
accident victims.

----------------------------------------------------
Christopher M. Davis is the managing partner of Davis Law
Group. He brings over 15 years of practical yet innovative
experience to personal injury cases. He practices law in
Seattle, WA. You can learn more about Mr. Davis at
http://www.InjuryTrialLawyer.com or at
http://www.WashingtonAccidentBook.com .