Three Ways Auto Insurance Companies Victimize You after an Auto Accident: Delay, Deny, & Defend
Insurance companies are a business, and like any other business, their primary objective is to make money. For insurance companies, in addition to charging premiums for auto insurance, they also make money by keeping money in their accounts, i.e., not paying injury victims a fair compensation for their injuries and damages after a car crash.
In the mid to late 2000s, Allstate employed a Delay, Deny, and Defend tactic after hiring McKinsey and Company to help them increase revenue. McKinsey implemented a system that used a computer to value claims. McKinsey also advised Allstate to delay claims if claimants didn’t accept a low offer early on in the claims process. According to a December 13, 2011, article in the Huffington Post, “Allstate has certainly gained: It made $4.6 billion in profits in 2007, double its earnings in the 1990s. The stunning increase, said Russ Roberts, came through “driving down loss values to an average of 30 percent below the actual market cost” — that is, paying dramatically less on claims.” Shortly after realizing Allstate was doubling its profit, other insurance companies followed suit.
The new method became known as good hands or boxing gloves. According to David Berardinelli, author of From Good Hands to Boxing Gloves: The Dark Side of Insurance, it has enabled Allstate to make a huge profit. The “game” involves “good hands” initially. If claimants don’t accept the low offers during the “good hands” phase, they get the “boxing gloves.” In the boxing glove stage, the adjuster will delay and then deny the claim, forcing claimants into litigation, which brings the last tactic, defend against the claim.
Insurance companies will do almost anything to make it difficult on claimants. The tactic is intended to discourage claimants from fighting claims in the future and to delay paying claims. Insurance companies are willing to spend more money on expert witnesses and attorney fees to defend a claim that they wrongfully delayed and denied, than they will offer to an injured claimant. I have seen, through discovery in litigation, an insurance company offer an injured plaintiff $12,000 yet pay an expert witness $18,000 to say the plaintiff’s shoulder injury was unrelated to the crash.
Insurance companies are also delaying claims by requesting additional documents at the end of the 30 days they are given to respond to a demand. Often times the additional documents are unnecessary but it gives them additional time to delay the matter. They say they can’t make a liability decision until they speak to their insured, even after obtaining the crash report that clearly places their insured at fault.
After delaying the claim, the insurance company may deny the claim. Sometimes the insurance company will use the excuse that they finally spoke to the insured, and they feel the injured claimant is 50% at fault for not realizing the insured ran the red light, and that the injured party should have been able to avoid the collision. After denying the claim, they defend their decision and make you fight for fair compensation. It is more economically beneficial to the auto insurance company to make you a victim twice than to be fair and reasonable with you.
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